Bookmakers turn up heat on North West betting licences

• The South African Bookmakers’ Association (SABA) is challenging the North West Gambling Board (NWGB) over its authority to license betting exchanges as bookmakers.
• SABA argues betting exchanges, which match punters for a commission, do not fit the National Gambling Act's definition of a bookmaker, who directly takes betting risk.
• SABA contends the NWGB acted beyond its legal powers by issuing "Bookmaker (Bet Exchange)" licences without explicit legislative authority.
• Previous court cases, like Peermont Global in 2022, have shown the NWGB's licensing invitations can exceed its statutory powers.
• Under South African law, administrative decisions, even if unlawful, remain valid until successfully challenged and set aside by a court.

Lawyers advising gambling operators, especially those involved in betting exchanges, should closely monitor this challenge to the North West Gambling Board's licensing authority.

The South African Bookmakers’ Association (SABA) has initiated a significant legal challenge against the North West Gambling Board (NWGB), questioning its authority to issue licences for betting exchanges under the classification of "bookmaker." At the heart of the dispute is the fundamental difference in how traditional bookmakers and betting exchanges operate, and whether the latter fits the legal definition established by the National Gambling Act.

SABA contends that a conventional bookmaker directly assumes the risk of a wager, laying fixed-odds or open bets with the public or other bookmakers. In contrast, a betting exchange functions as an intermediary, matching opposing punters – one backing an outcome, the other laying it – and earning a commission for facilitating the transaction. The association argues that this distinction is crucial, as the National Gambling Act defines a bookmaker as "a person who directly or indirectly lays fixed-odds bets or open bets with members of the public or other bookmakers, or takes such bets with other bookmakers," notably omitting any mention of bet exchanges.

According to SABA, the mere fact that betting activity occurs on an exchange does not legally qualify the exchange operator as conducting bookmaking. Sean Coleman, CEO of SABA, highlighted that betting exchanges effectively provide a platform for unlicensed members of the public to engage in what amounts to unlawful bookmaking activities. This forms the basis of SABA's argument that if an operator of a peer-to-peer exchange is not legally a bookmaker, then the NWGB lacked the power to issue them a bookmaker licence in the first place.

The challenge extends beyond definitional nuances to the very scope of the North West Gambling Board's licensing authority. SABA asserts that the NWGB's power to issue any specific licence must be explicitly derived from legislation. As Coleman articulated, the existence of a licence does not automatically validate the regulator's legal authority to issue it.

In South African law, bodies established by the legislature are strictly limited to exercising only those powers expressly granted to them by that legislature. SABA's position is that the North West Gambling Board cannot unilaterally create powers for itself through its internal rules, licence conditions, or administrative decisions if such powers are not provided for within the governing statutes. This principle underpins the association's contention that the NWGB acted ultra vires – beyond its legal powers – by issuing "Bookmaker (Bet Exchange)" licences.

This is not the first instance where the North West Gambling Board's licensing powers have faced judicial scrutiny. In 2022, the Supreme Court of Appeal (SCA) heard a case involving Peermont Global against the North West Gambling Tribunal, concerning bingo licences. The SCA determined that certain provisions within the board's notice, which invited applications for bingo businesses at specific sites, appeared to exceed the powers conferred upon it by the North West Gambling Act. However, because Peermont Global did not directly challenge the legality of the request itself, the notice remained in force and had to be applied.

The Peermont case also clarified that any application for a gambling licence is contingent upon the board first publishing a notice in a Provincial Gazette, inviting applications for a specific type of licence. The SCA emphasized that such an invitation would only be extended after the board had assessed and confirmed the need for that particular gambling licence within the province. This underscores the procedural requirements and limitations on the board's discretion.

Furthermore, the legal landscape surrounding administrative decisions is shaped by established precedents like Oudekraal Estates v City of Cape Town, affirmed by the Constitutional Court in MEC for Health, Eastern Cape v Kirland Investments. These rulings stipulate that an administrative decision, even if potentially unlawful, cannot simply be disregarded. It retains legal effect and consequences unless it is successfully challenged and formally set aside by a competent court. This principle highlights the procedural hurdles SABA must navigate to invalidate the existing betting exchange licences.

The SABA challenge to North West betting exchange licences carries significant implications for the broader South African gambling industry, particularly concerning the interpretation of the National Gambling Act's bookmaker definition. With 402 bookmaker licences issued across all nine provincial gambling bodies in the 2024/25 period, the outcome of this case could redefine the regulatory framework for betting exchanges nationwide.

Lawyers advising gambling operators, especially those involved in betting exchanges, should closely monitor this challenge to the North West Gambling Board's licensing authority. A successful challenge could invalidate existing "bookmaker" licences held by betting exchanges, necessitating a re-evaluation of compliance requirements under the National Gambling Act across South Africa. The dispute highlights a critical need for clarity on the legal status of betting exchange operations and the extent of provincial gambling boards' powers in a rapidly evolving digital betting landscape.

Lawyers advising gambling operators, particularly betting exchanges, should monitor this challenge to the North West Gambling Board's licensing authority, as its outcome could impact the validity of existing 'bookmaker' licenses and redefine compliance requirements under the National Gambling Act across South Africa.

Source: Original reporting via industry analysis