Africa Focus
REGULATING
THE
AFRICAN
GREY MARKET
Africa’s regulatory climate is evolving but, as Joanne Christie explains, it has a some
challenges to overcome before achieving the level of consistency experienced in Europe
When it comes to igaming regulation, it’s fair to say that Africa is
lagging behind many other parts of the world. According to H2
estimates, the percentage of igaming activity on the continent that
was ‘white market’ was just 47.1% last year, whereas in Europe the
percentage was 75.1%..
Unfortunately, H2 predictions for the coming years don’t suggest
a great deal of improvement in the balance between white and grey
markets is likely, at least not imminently, with the percentage only
expected to be just over 50% by 2023.
In some respects, recent Africa regulatory changes seem to be
taking the continent backwards instead of forwards when it comes to
moving the market to a more regulated position. Take South Africa,
for example, which is by far and away the most developed regulated
market in Africa.
Lawmakers in the country have recently tabled a Gambling
Amendment Bill that would seem certain to drive more online activity
in the country into the illegal market. In addition to the fact it does
nothing to open up the online gaming market, it also recommends
measures that are likely to have a huge impact on the highly lucrative
betting on lottery market that exists in the country.
And in Kenya, government officials caused chaos in the licensed
market when they raised the gambling tax to 35% of revenues, from
7.5%, in January this year. The move led a number of operators to pull
out of the market and saw SportPesa terminate its sponsorship of the
Kenyan Premier League and the other sporting teams it sponsored.
However, the re are some bright spots in Africa, says Yahaya Maikori,
senior partner at Nigerian law firm Law Allianz. “Botswana is way
“There still continues to be
a regulatory suspicion ,
particularly in developing countries
about gambling
even though gambling is prolific ”
ahead in terms of regulation; in the online space they are ahead of
even South Africa,” he says. “Botswana has already included online
gaming in their regulation, although Botswana has only two million
people, which is just a small portion of one of the states in Nigeria.”
Lack of understanding
Part of the problem in getting to a more regulated position across
the continent is that there has been a lack of understanding from
governments and regulators when it comes to gambling, particularly
online gambling. “As it stands right now we are not getting any
government support,” says Hammed Rashid Tunde Ali, former
chairman of the Ghana Gaming Commission and now a consultant
to igaming firms. “Until recently they didn’t really understand what
gaming was all about. Right now the industry players have to do more
to increase awareness.”
In many countries in Africa there are also negative perceptions
about the gambling industry, many of which are rooted in religious
or tribal perceptions about the morality of gambling. This has fed
through to regulators, says Garron Whitesman, partner at South
African law firm Whitesman Lurie Attorneys. “There still continues
to be a regulatory suspicion, particularly in developing countries – we
see this in India, we see it in China and we see it across Africa – about
gambling even though gambling is prolific. I think it is endogenous to
policymakers. I think there is a fundamental lack of understanding as
well, but having said that we do see it changing.”
But this change is often hamstrung by resourcing constraints,
says Maikori. “Most regulators are just getting used to the idea of the
gaming industry, especially sports betting, which is very popular in
Africa, and they are also just getting used to the idea that the whole
industry is technology driven. Then they find themselves not as
resourced as they need to be to know exactly what is happening.
“Most are at the point where they are wondering, ‘do we regulate
this industry or do we ban it?’ I think they realise they are better off
regulating it but do they have the resources to regulate this industry?
That is where most of the jurisdictions are right now.”
In Mozambique, another of the bright spots in terms of regulation
in Africa with four or five licensed sportsbooks already taking online
i GamingBusiness | Issue 112 | September/October 2018
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