16 November 2011

Presentation tothe Portfolio Committee on Trade and

Industry

Agenda

• The NLB structure• Funding Process• The recommendations of the NGC

located in the NLB Structure • The NLB responses

NLB Structure

Operates the National Lottery and National Sports Poolsunder Licence

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%

45% 22%

5%0%

Weekly transfer

CentralApplications

Office

NGOsCBOsApplications

Payments

GIDANI

REGULATION DISTRIBUTION

OTHER LOTTERIES

NLBDA

CharitiesDA

Art & CultureDA

Sport

CentralApplications

Office

NGOsCBOs

Advertised Call for Applications

Application Process

Payment

NLDTF

GrantAgreement

Applications

Forms

Recommendation 1: Operational Model

Operates the National Lottery and National Sports Poolsunder Licence

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%

45% 22%

5%0%

Weekly transfer

CentralApplications

Office

NGOsCBOsApplications

Payments

GIDANI

REGULATION DISTRIBUTION

OTHER LOTTERIES

1

Recommendation 2: Enforcement

Operates the National Lottery and National Sports Poolsunder Licence

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%

45% 22%

5%0%

Weekly transfer

CentralApplications

Office

NGOsCBOsApplications

Payments

GIDANI

REGULATION DISTRIBUTION

OTHER LOTTERIES

1

2

Recommendation 3: Governance

Operates the National Lottery and National Sports Poolsunder Licence

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%

45% 22%

5%0%

Weekly transfer

CentralApplications

Office

NGOsCBOsApplications

Payments

GIDANI

REGULATION DISTRIBUTION

OTHER LOTTERIES

1

2

3

Recommendation 4: Problem Gambling

Operates the National Lottery and National Sports Poolsunder Licence

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%

45% 22%

5%0%

Weekly transfer

CentralApplications

Office

NGOsCBOsApplications

Payments

GIDANI

REGULATION DISTRIBUTION

OTHER LOTTERIES

1

2

4

3

Recommendation 5: Capacity

Operates the National Lottery and National Sports Poolsunder Licence

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%

45% 22%

5%0%

Weekly transfer

CentralApplications

Office

NGOsCBOsApplications

Payments

GIDANI

REGULATION DISTRIBUTION

OTHER LOTTERIES

1

2

5

4

3

Recommendation 6: Single Regulator

Operates the National Lottery and National Sports Poolsunder Licence

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%

45% 22%

5%0%

Weekly transfer

CentralApplications

Office

NGOsCBOsApplications

Payments

GIDANI

REGULATION DISTRIBUTION

OTHER LOTTERIES

1

2

5

4

3

6

1. Lottery Operational Model

• NLB agrees that the current revenue maximization model should remain for at least one more licence term

• The Act needs to be changed to address– Political office bearer ambiguity – Approval of games ( should lie with the Board and not the Minister)– Interim Licensing arrangements in the event of Revocation or legal

action

2. Enforcement of Other Lotteries

• NLB agrees that the lack of enforcement provisions in the Act prevents effective policing of illegal lotteries

• Locus standi and search and seizure powers needs to be included in amendment

• The concurrent existence of National Sports pools and provincial Sports Pools because of “any other law” in the Lotteries Act should be corrected

• Definitions of lotteries in the Act should include SMS competitions

3. Governance of Distributing Agencies

• NLB agrees that the lack of accountability and responsibility in the appointment of Agencies is untenable

• The current approach of the NLB through the approved procedure manual needs to be enforceable by law

• NLB agrees that if Agencies are to be separate from the trustees of the NLDTF, they should become schedule 3A entities

4. Problem Gambling and the NRGP

• We agree that the current “Play Responsibly” program is purely preventive and does not include counselling and remedial treatment

• The Lottery conducts its own research and the latest (2010) survey by Unisa BMR indicates problem gambling in the Lottery to be “insignificant”

• The NLDTF funds many remedial and rehabilitations programs of NGOs such as NICRO and National Council on Problem Gambling

• The NRGP is a monopoly, there is not enough competition for the provision of similar services

5. Separating NLB from NLDTF

• We agree that the current governance structure is untenable• We agree that the Distributing Agencies should be

accountable • We challenge the assumption that “capacity problems” will

be fixed on separation• The problems with the effective distribution is not the

location of the grant-making process but in the funding model.

• Separating the NLDTF from the NLB without changing the funding model merely moves the problem to a different location

Capacity Issues

Challenges with current (application based) funding Model

• Low Impact• Inflexible• Absence of Targeted approach• High Risk• Reactive • Unresponsive to National Priorities• Inequitable

6. Combining the NGB & NLB into a single regulator

• In 1995 and 1996, The ad hoc Parliamentary portfolio committee broadly accepted the conclusions and recommendations of the Wiehahn Commission on the creation of two types of operations: a clear distinction between the casino’s and payout machines and ancillary activities on the one hand, and lotteries and sports pools on the other

• This meant that in respect of casinos, racing, gambling and wagering, both national and provincial legislatures could enact legislation to regulate those activities but only Parliament could make legislation (and have oversight over) lotteries and sports pools.

• We believe that the different approach in regulating and policing these two sectors, as well as the constitutional distinction between them, makes an amalgamation of the relevant authorities undesirable and that the intricate knowledge required in each sector (built up in the past 14 or 15 years) is bound to become obfuscated by a lack of specialisation.

ConsultationsThe NLB held consultative workshops in all provinces as well as a National Indaba

•Attended by 18000 beneficiary organizations in provinces•Attended by 1500 beneficiary organizations at National Indaba•Robust Discussion on Current Model•Consensus on proposed flexible model•Consensus on funding Policy•Consensus on simplification of process and requirements•Consensus on elimination of dependency•Consensus on elimination of Fraud and Misrepresentation •The FPA “research” supports proposed interventions

Questions…?