Hollywood Sportsbook Gauteng (PTY) LTD v North West Gambling Board (UM 45/2017) [2018] ZANWHC 59 (5 June 2018)

IN THE NORTH WEST HIGH COURT, MAFIKENG

CASE NO: UM 45/2017

In the matter between:

HOLLYWOOD SPORTSBOOK

GAUTENG (PTY) LTD

Applicant

and

NORTH WEST GAMBLING BOARD

Respondent

DATE OF HEARING

: 17 MAY 2018

DATE OF JUDGMENT

: 05 JULY 2018

FOR THE APPLICANT

: ADV. A.M ANNANDALE S.C

FOR THE RESPONDENT

: ADV. M MATHAPHUNA

JUDGMENT

HENDRICKS J

Introduction

[1] The applicant, Hollywood Sportsbook Gauteng (Pty) Ltd, launched an application in two parts, on an urgent basis, on 23rd October 2017 praying for interim interdictory relief against the North West Gambling Board (respondent) from taking any steps against

the applicant or any other entity involved in the sale and/or distribution of top-up vouchers in the North West Province and to lay any complaints against them (Part A), pending a declaratory order declaring that the top-up vouchers does not constitute betting,

wagering or gambling and does not contravene the North West Gambling Act No 2 of 2001. (Part B).

[2] The matter is opposed by the respondent firstly on the basis that the relief sought cannot be granted seeing that the respondent is by law authorized to regulate gambling in the North West Province. This constitute the counter-application by the respondent also in the form of interdictory relief. Secondly, that no case has been made out by the applicant for the granting of a declarator. Certain points in limine were also raised by the respondent, which relate to non-joinder and lack of locus standi. I will deal with these points in limine later on in this judgment. It became common cause, due to the passage of time, that the matter was no longer urgent and was consequently enrolled in the normal cause, as an opposed motion which was ultimately argued on 17th May 2018, when judgment was reserved.

Background

[3] The applicant is a company which forms part of the Hollywood Sportsbook Holdings group of companies. The outline component of applicant’s business is conducted by a branch in Boksburg, which is the holder of a valid bookmakers licence issued by the Gauteng Gambling Board. It’s principle place of business is in Alberton, Gauteng. It is common cause that the applicant is not registered as a bookmaker and therefore does not possess a bookmaker’s licence issued by the North West Gambling Board for the North West Province.

[4] Part of the business of the applicant involve the sale of top-up vouchers (TUV’s) for use by registered punters on their on-line betting accounts. The TUV constitute a betting credit or betting currency. With this TUV, a punter can top-up his or her betting account and then place bets using the funds available in the betting account. No bet is placed unless and until the punter loads the TUV and selects to use the credit to place a bet. No betting activity occurs at the outlets that sell the TUV’s. The outlets, some formal (i.e. Boxer Stores, Blue Label, Choppies, Kazang, Edgars) and

others informal, only sell the TUV’s. It was submitted on behalf of the applicant that these TUV’s are acute or similar

to the selling of airtime vouchers for cellular phone networks.

[5] The respondent contented that the sale of these TUV’s is illegal, as it constitute betting or gambling (or wagering). Action was taken against certain outlets that sell these TUV’s. This necessitated the launching of this application.

[6] The process of how TUV’s can be purchased and used need to be thoroughly explained. To purchase a TUV from an outlet in either sector, a person simply pays an amount of money equivalent to the face value of the TUV they want from a till point or informal trader. The TUV’s provided to and sold in the informal sector are sealed, but once opened by a customer they reveal a unique personal identity number ("PIN"). TUV’s sold in the formal sector are in the nature of a till slip that have a PIN printed on the face of them.

[7] The TUV has no record of a stake or wager, odds or any mention of an event or contingency on which a bet is placed. It also has no ticket number or betting transaction code. The TUV does not constitute the placing of a bet, it represents the acquisition of betting currency to be used later. A person wishing to utilise the TUV first has to access the applicant's online betting system via, for example, a cellular phone or the internet. It is necessary to have an account with Hollywood (applicant) in order to utilise the online gambling platform.

[8] Only once a punter has accessed his/her account on the online platform can he/she enter the TUV PIN. The punter's betting account with the applicant will then be credited with the value of the TUV. The TUV thus constitutes betting credit that needs to be activated by loading it onto the applicant's system. Once the credit is loaded, the punter is able to use it to place a specific stake or bet on a specific contingency.

[9] Once a valid bet is placed, the punter receives a unique betting ticket or transaction code which records:-

· the event or contingency on which the bet has been placed;

· the stake;

· the odds.

The placing and acceptance of a bet only occurs when a person actually places a specific stake on a specified contingency and receives a betting ticket with a transaction code.

[10] It was submitted on behalf of the applicant that from the process described above, the outlets selling the TUV’s play no role in the later placing of the bet on the applicant's online gambling platform. There is no certainty that the punter will use the TUV to top-up his or her account with the applicant. Many different events could intervene after the purchase of the TUV. The punter who purchased the TUV might give it as a gift to someone else or, conceivably, lose the TUV. Similarly, once the punter's account is credited with the voucher value, the punter could place a bet immediately or leave the loaded credit to be used on a different occasion. The mere acquisition of the voucher does not constitute a bet as the TUV merely reflects the monetary credit which may be loaded onto an existing Hollywood account. As alluded to earlier, there is no ticket number or transaction code to validate a bet, no provision for a stake, odds, payout or mention of an event or contingency which would constitute a bet.

[11] The purchase of TUV’s are not the only mechanism available to top up a Hollywood account. There are, in addition, three different options whereby a person can deposit funds into the Hollywood account. Credit cards and PAYFAST both offer quick and easy methods whilst the third is a simple electronic funds transfer ("EFT") into the applicant's bank account at one of the four major South African banks - Standard Bank, FNB, Nedbank and ABSA. Utilising any one of the methods mentioned above results in a corresponding increase in the balance of the customers personal Hollywood account. As correctly submitted by Ms. Annandale SC, a simple transfer of funds in the manner contemplated can never be said to be the placing of a bet or wager and by necessary implication the respective bank cannot be said to be operating as an agent or intermediary for the purposes of gambling or betting. Yet that process is no difference in substance or effect to the purchase of a TUV. I will revert to this later on in this judgment. At first I need to deal with the applicable legislation.

[12] The North West Gambling Act 2 of 2001 define that ‘bet’ or ‘betting’ means to stake any money or thing of value or to stake on behalf of any person, or expressly or impliedly, to undertake, promise or agree to stake on behalf of any person, any money or thing of value on any event or contingency other than the contingency involved in a gambling game.

‘gamble’ means the wagering of a stake of money or anything of value on the unknown result of a future event at the risk of losing all or a portion thereof for the sake of a return, irrespective of whether any measure of skill is involved or not and encompasses all forms of gambling but, excludes the operation of an amusement machine and, the word gambling shall have a corresponding meaning.

‘gambling game’ means any game, whether or not the result thereof is determined by chance, played with or by means of playing cards, dice, gambling machines, gambling devices, or any mechanical, electro-mechanical or electronic device, component, machine, any computer hardware, or software, which upon payment of money, property, cheques, a token, electronic credit, credit, debit or electronic chip or similar object or upon payment, whether directly or indirectly by a player of any consideration whatsoever, whether by reason of the skill of the player or operator or the element of chance or both, may entitle or deliver to the person playing the game money, merchandise, property, cheques, credit, electronic credit, debts, tokens, tickets or anything of value other than an opportunity to play a further game, whether the pay off is made automatically or in any other manner whatsoever and including, without derogating from the generality of the aforegoing, roulettes, bingo, keno, twenty-one, blackjack, poker, chemin de fer, punto banco and bacarrat, excluding any amusement game insofar as it is regulated or provided for in terms of this legislation.

‘sporting event’ means any ball-game, race (including a race involving vehicles or animals) or other athletic or sporting contest, competition or game, including a beauty contest, usually attended by the public.

[13] It was furthermore contended by Ms. Annandale SC on behalf of the applicant, that the placing and acceptance of the bet only occurs when the punter actually places a specific stake on a specified contingency. The sale of the TUV’s does not constitute gambling or on-line betting services on various sporting activities, as it has no record of a stake or wager, odds, pay-outs or any mention of an event or contingency which would constitute a bet in terms of the North West Gambling Act. From the voucher it cannot be determined on which event a bet is placed or any detail of the event or what the odds are or what the extent of the wager/bet is or what the details of the transaction/sporting activity is. The TUV’s simply does not represents a bet, nor is the sale thereof a placing of a stake on any contingency.

[14] Mr. Mathaphuna on behalf of the respondent, submitted that the sale of these TUV’s is a sine quo non for the placing of a bet. I agree. That the sale of the TUV enable a punter to load credit onto his/her account is indeed correct. This however begs the question whether it does equate to the placing of a bet. To argue that it does, would be in my view to stretch it too far. The process of how a bet is placed is explained hereinabove.

[15] This brings me to the issue of the place where the bet is placed. As alluded to earlier, and I think that it is common cause, the bet is not placed at the outlet where the TUV is sold. With regard to the licenced premises, Section 66 A (1) of the North West Gambling Act provides:-

"(1) A person shall not –

(a) conduct or permit the playing of any gambling game or conduct or permit any gambling in or on any premises under his or her control or in his or her charge; or

(b) be directly or indirectly involved in the operation of any gambling business;

without an appropriate licence..."

Because the sale of vouchers is not gambling as explained, the selling outlets conduct cannot amount to a contravention of section 66A (1).

[16] Section 1 of the North West Act stipulates that

“’gambling business’ means any business of which gambling forms part ".

Gambling as defined in the North West Act does not form any part of the business of the outlets selling TUV’s who do not either place or accept bets when they sell the TUV’s.

[17] Section 70 of the NW Act provides that:

"(1) No person shall gamble or make a bet at any place other than on licensed premises.

(2) A gambling debt may only be settled at –

(a) licenced premises;

(b) a place authorised by the Board, or

(c) a place where a debt is ordinarily paid in such circumstances where the debt is paid pursuant to a court order or the terms of settlement of legal proceedings instituted for its recovery."

As stated earlier, any gambling or betting which may occur after the sale of the TUV’s, occurs on Hollywood's online platform in Gauteng.

[18] In Casino Enterprises (Pty) Ltd vs Gauteng Gambling Board and Others 2011 (6) SA 614 (SCA) the following is stated:

“[33] Having determined that gambling takes place when a player places a stake upon an uncertain chance it becomes necessary to decide whether and, if so, at what point in the course of the operations described in para 20 that fulfilment is achieved. In my view the key facts are those contained in paras 2.19(a), 2.20 and 2.21 of the summary.

[34] According to these facts the stake is irrevocably placed on the

outcome of the player’s chosen gambling game (and the gamble is under way) at the moment that he or she activates the ‘Spin’

button (or its equivalent). The fact that any or all of the actions described by Prof Hazelhurst may occur in Swaziland after or as a consequence of that activation is, it seems to me, irrelevant to the central issue as none of those actions changes the reality that the player at his or her computer has in South Africa committed himself or herself to staking money on the chance. That takes place where the player is (in South Africa) and not in Swaziland.

[35] Such an interpretation satisfies the aims of the statute: the prospective player is ‘seduced’ in South Africa, he or she takes and activates the crucial decision to gamble here, he or she is impoverished here; the internet casino intrudes upon the field of licensed operators here and it does so without payment of dues to the State. The legislature is concerned with substance, not form, and if gambling takes place in South Africa it is of no consequence what means are employed to facilitate it and whether those means are employed outside the country.”

Therefore, bets placed on-line are placed where the bet is accepted by the bookmaker. In this instance it will be in Boksburg, Gauteng where the bet is accepted at the branch of the applicant.

[19] Section 72 of the North West Act provides that:

"(1) No person shall –

(a) act as agent for the holder of licence for the purpose of gambling on a sporting event, whether or not for gain; or

(b) whether or not for gain, act as an intermediary between the holder of any licence and any other person for the purpose of gambling on a sporting event. "

(emphasis added).

The question arises whether the outlets or vendors act as agents or, intermediaries for the applicant. In my view, the vendors of TUVs cannot be acting as an agent or intermediary for the purpose of gambling or betting. It seems to me, as correctly pointed out by Ms. Annandale SC, that the purpose of section 72 is to ensure privacy of dealings between the punter and the holder of a bookmaker's licence so as to protect both the punter and the industry by ensuring that the entity with whom the bet is placed is duly registered and accordingly properly regulated. As stated earlier, the manner in which funds are loaded onto the punters Hollywood account may differ. If it is done for example by means of a EFT, it cannot be said that the bank act as agent or intermediary of Hollywood (the applicant).

[20] Ms. Annandale SC submitted that the three key and operative words in section 72 are:

· agent;

· intermediary;

· gambling.

Of these terms, only gambling is defined in the North West Act as "the wagering of a stake of money or anything of value on the unknown result of a future event at the risk of losing all or a portion thereof for

the sake of a return.”

[21] The terms agent and intermediary must accordingly be given their ordinary meaning. An agent is one that acts or has the power or authority to act for or represent another. An intermediary is, inter alia, an intermediate person or thing or one that acts as an agent between persons or things. A bet is a bilateral contract

between the punter and the bookmaker. Section 72 is contravened where an entity acts as agent or intermediary for the bookmaker for the purpose of placing a bet. This means that the agent or intermediary must intervene in the betting contract between the punter and the bookmaker.

[22] On the plain wording, and considering the manner in which TUV’s work, outlets selling TUV’s do not act as an agent or intermediary of Hollywood (the applicant) for the purpose of gambling on a sporting event. TUV vendors therefore do not represent Hollywood (the applicant) in the conclusion of a betting agreement or the placing of a bet. They do not intervene between the punter and the bookmaker in the sequence of events that constitute the placing and acceptance of a bet.

[23] It follows therefore that section 72 does not apply to the sale of TUV’s by any store in the distribution network and the applicant's conduct does not contravene section 72. The sale of TUV’s also does not run contrary to the propose of the section as the bets are placed directly with Hollywood (the branch in Boksburg for example), which is subject to regulation and control.

[24] As far as I am concerned, the respondent failed to convince that the selling of TUV’s, either formal or informal constitute illegal gambling in the North West Province. The vendors/outlets selling these TUV’s does not act as agents or intermediaries for the applicant. No betting take place at the place where the TUV’s are sold. It was contended that because of the actions and threats of action by the respondent against these outlets, a declarator is sought in order to protect these outlets and the vested interest of the applicant in the sale of the TUV’s.

[25] Mr. Mathaphuna on behalf of the respondent, raised as a point in limine the non-joinder of the outlets that sells these TUV’s and other parties that may have an interest in this matter. So too, was it contended that the applicant lacks the requisite locus standi in order to bring this application. Reliance was placed on the provisions of Section 21 (1) (c) of the Superior Court’s Act 3 of 2010 in that the applicant is required to show that it has an interest in an existing, future or contingent right which is the subject of the inquiry in the main proceedings and that it is suitable to grant the declarator.

[26] Because the declarator has a potential to affect the rights and related obligations, all interested parties should have been joined in the proceedings, so it was contended. Boxer, Edgars Connect and Choppies retailers are alleged to have been disrupted and are now refusing to sell TUV’s. The contention is that these outlets should have been joined as interested parties. These outlets decline to sell TUV’s and does therefore no longer have any interest in these proceedings. It was therefore not necessary to join them in these proceedings. The Gauteng Gambling Board likewise have no interest to intervene or interfere in the realm of the North West Gambling Board in the North West Province. Their non-joinder are not material to these proceedings. It is difficult to imagine the interest the Gauteng Gambling Board would have in the selling of TUV’s in the North West Province over which the North West Gambling Board exercise authority.

[27] The contention was furthermore that the applicant has no direct interest in any right impugned in the North West. It has no trading licence as bookmaker in the North West Province and merely has an indirect financial interest because it depends on vendors to sell TUV’s and to make money for it, whilst the applicant is itself removed from the point of sale. In my view, the applicant does have a vested interest in the sale of the TUV’s. It also has a right that is adversely affected by the conduct and threat of further action by the respondent. That right need to be protected. I do not agree with the submission on behalf of the respondent that “the declaratory order is not desirable as it has not been shown to be removed from the betting on the Applicant’s Gauteng platform from the North West by persons in the North West;” and furthermore “the TUV’s are a sine quo non of the betting and thus are constructively, potentially and possibly actually unlawful in the North West where the Applicant has no licence.”

[28] As far as the betting on the applicant’s Gauteng platform from the North West by persons in the North West are concerned, it matters not that the TUV’s are sold in the North West. What is of importance is where the actual bets take place. The bets takes place in Gauteng and it stands to reason therefore that the applicant requires a bookmakers licence in Gauteng. If the applicant want to open a branch in the North West Province where bets can be placed, it will need to apply for a bookmaker’s licence in terms of the provisions of Section 57. I am unconvinced that because the TUV’s are a sine quo non for betting it is “thus constructively, potentially and possibly actually unlawful in the North West.”

[29] As far as costs are concerned, the applicant prays that costs be awarded on a punitive scale because of the manner in which the respondent, as an organ of State, conducted its case. I do not agree. However, that this case, because of the statutory issues involved and its importance to both parties, warranted the employment of senior counsel (or even two counsel where applicable), is beyond question.

[30] Part A of this application which relates to interim interdictory relief as well as the counter-application were overtaken by the events. The main application in the form of a declarator (Part B) is now before this Court for adjudication. There is no need to pronounce on either Part A or on the counter-application. This Court will therefore only pronounce on Part B of the application (the declarator).

Order

[31] Consequently the following order is made:

(i) It is declared that the sale of top-up vouchers for Hollywood online betting accounts does not constitute betting, wagering or gambling and does not contravene the North West Gambling Act 2 of 2001.

(ii) The respondent is ordered to pay the costs of this application, on a party-and-party basis.

(iii) Such costs to include the costs consequent upon the employment of senior counsel and two counsel (junior and senior), where applicable.

R D HENDRICKS

JUDGE OF THE HIGH COURT,

NORTH WEST DIVISION, MAHIKENG