Illegal gambling battle will define global regulatory success, says Mpumalanga regulator

The fight against illegal gambling will be essential to the future of the global industry, according to the head of the Mpumalanga regulator, Vusi Mtsweni.

While many focus on the lost tax revenue and unfair competition caused by illegal operators, for Mtsweni, the CEO of the Mpumalanga Economic Regulator (MER), it is primarily a consumer protection issue.

It is a challenge he believes will “define the future of gambling regulation”, both in South Africa and across the world.

“When consumers gamble with licensed operators in Mpumalanga or elsewhere in South Africa, they benefit from an established regulatory framework designed to protect them,” Mtsweni tells iGB. “There are responsible gambling obligations, dispute resolution mechanisms, compliance monitoring processes and regulators who can intervene when things go wrong.

“The moment a consumer moves into the illegal or offshore market, many of those protections disappear.”

In Mtsweni’s view, educating bettors on the consumer protection differences between onshore and offshore operators will prove increasingly important in the years to come.

“Unfortunately, many consumers do not fully appreciate this distinction,” he continues. “Sophisticated websites, aggressive marketing and seamless digital experiences often create the impression that all gambling platforms operate under similar standards.

“In reality, there can be a world of difference between a licensed South African operator and an offshore operator operating beyond the reach of local regulators. The unfortunate reality is that consumers often only discover this difference when something goes wrong.”

Technology the problem, but also the solution

When it does go wrong for players, Mtsweni says it is often already too late, with regulators unable to assist because illegal operators fall outside South African jurisdiction.

Further complicating the issue are the advancements in technology, with innovation often moving faster than regulatory frameworks.

But while Mtsweni points to this as an issue, largely stemming from rising access to gambling from smartphones, it also provides measures to tackle the problem.

“Advanced analytics, improved monitoring systems, stronger information-sharing arrangements and emerging technological tools offer regulators new ways of identifying and responding to illegal activity,” he explains.

“The challenge is ensuring that regulators continue to evolve at the same pace as the industry itself.”

The regulator believes future success will depend on cooperation between stakeholders such as banks and other regulators.

“In my view, future enforcement efforts will increasingly involve collaboration with financial institutions, payment providers, internet service providers, telecommunications companies and national regulatory authorities,” he adds.

“Issues such as payment restrictions, website blocking, intelligence-sharing and technological monitoring are likely to become increasingly important components of the enforcement toolkit.

“The illegal gambling landscape is evolving rapidly, and regulatory responses must evolve just as quickly.”

MER’s enforcement successes

Despite the challenges, Mtsweni says the regulator has made progress through investigations conducted alongside law enforcement agencies.

MER inspectors work with the South African Police Service to gather evidence, obtain warrants and support criminal prosecutions against illegal operators.

Mtsweni is “encouraged” by the progress made, saying: “We have secured important enforcement successes and are beginning to build meaningful legal precedents that reinforce the seriousness of illegal gambling offences.

“This is important because illegal gambling should not be viewed as a minor regulatory infringement. In many instances, it displays characteristics commonly associated with organised criminal activity, including tax evasion, unlawful financial flows and deliberate avoidance of regulatory oversight.”