Technology / Internet
Is Zimbabwe ready for online casinos?
08 Feb 2019 at 13:23hrs | Views
Online gambling is a worldwide phenomenon. It's already hugely popular among many Western nations, including across Europe and - increasingly - in the US. The market is set to be worth around $60 billion by 2020, as the rest of the globe catches up, including Zimbabwe.
Zimbabwe has one of the largest concentrations of casinos on the African continent. It also has a popular state lottery. Gambling is regulated in the country under Lotteries and Gambling Act by the Zimbabwe Lotteries and Gambling Board. All winnings from gambling are taxable in the country - profits derived from pool betting and horse racing are levied at a rate of 10 per cent, while profits from Casino gambling are subject to a withholding tax of 15 per cent.
Gambling tourism is a significant source of income for Zimbabwe, which has led to a significant presence for the industry. While authorities have attempted to regulate the gambling sector, however, many feel the laws aren't water-tight enough - most notably with reference to online gambling and betting.
The Gambling Board's remit is "to regulate and control the development and operation of all lotteries and gaming activities" and it does make reference to "electronic gaming devices". It can, therefore, be interpreted to include online gambling, casinos and sports betting under its authority, but specific legislation for internet gambling is thin on the ground.
Internet usage on the rise
With internet usage spiking in Zimbabwe in recent years, and much higher than it is in neighbouring Botswana and Mozambique, many are questioning whether it is in fact ready for opening the online gambling market up at this particular time.
Until relatively recently, online gambling hasn't been treated as much of an issue thanks to low internet penetration, but providers are making some headway and in 2017 there was an increase to 50.8 per cent, driven in no small part by WhatsApp and Facebook bundles.
There have been signs that the Zimbabwean government is moving to improve its legislation around online gambling, but as things stand it remains a grey area.
There are currently no Zimbabwean operators of online casinos or betting companies, but businesses based elsewhere seem to be free to conduct their business in Zimbabwe. As a result, online gambling is on the rise alongside the growth in internet penetration, with little to no oversight to match it.
The lack of national regulation leaves no taxation on online gambling winnings, however. Similarly, there's no protection for citizens accessing external gambling sites and little to stop those under 18 - the age for legal gambling in Zimbabwe - from accessing the services.
What regulation does Zimbabwe need?
The UK makes an interesting case for comparison. Its gambling industry has been regulated for many years, and the British Government was among the first establish an independent regulatory body, the Gambling Commission.
As part of its remit, the Gambling Commission regulates all casinos in the same way. In order to obtain and retain a gambling licence in the UK, operators must be able to prove they can:
- Verify and identify every customer and their sources of funds, as part of anti-money laundering regulations
- Uphold various technical standards on websites and machines, to ensure reliability, quality and security
- Promote responsible gambling practices relating to underage and problem gambling
By implementing these regulations effectively, the UK gambling industry has flourished. Since 2009 the online gambling sector has grown 146 per cent, with more than 5.5 million people regularly logging in to sports betting, gaming and casinos through online portals.
The popularity of online operators is due to the convenience they offer - as well as the hugely impressive selection of games. Virtual casinos provide gamblers with the option of playing their favourite games - including the likes of roulette, poker and blackjack - anytime, anywhere. The games themselves have advanced a lot in recent years as operators have enhanced their offerings, as you'll see by visiting one of the best online casinos in the UK.
It has proved a solid source of tax revenue. Because the UK government has regulation in place it is able to capture significant funds from companies that it enables to operate within a legal framework. It has even been able to use that revenue to compensate for funds lost elsewhere. Next year will see taxation of remote gaming increase from 15 per cent to 21 per cent to cover lost revenue from fixed odds betting terminals, keeping cash flow from the gambling industry relatively stable.
Can Zimbabwe modernise its legislation?
Economically speaking, the UK is a world away from Zimbabwe. While introducing a regulatory framework will no doubt benefit government coffers, it's an open question as to whether making gambling easier to access for citizens already in precarious and problematic economic circumstances will benefit the country's citizens.
The most recent figures put 72.3 per cent of the population below the poverty line. GDP is just $2,283 per capita. Unemployment figures vary wildly - some figures from 2014 placed it at 11.3 per cent, but Prosper Chitambara, an economist with the Labour Economic and Development Institute Research of Zimbabwe, said in 2015 that 90 per cent of the 14 million population were "either openly unemployed or under employed".
Once the bread basket of its region, Zimbabwe has increasingly struggled to feed its own population after a series of droughts and a land reform programme that saw farms redistributed to landless Zimbabweans at the expense of productivity. The fall of Robert Mugabe in 2017 freed up the media and politics of the nation, but it remains cash-strapped, largely dependent on primary industries and with an impoverished population.
Against this backdrop many people are using gambling as a way to attempt to generate income. "We have different kinds of clients — some do it for fun and some for economic reasons," Emily Kabaya, a manager with VegasBet Ltd. in Harare, said in a 2015 interview.
Anecdotal evidence suggests that some citizens are attempting to survive off betting earnings, and the previous administration attempted to curb such problem gambling by halting the awarding of betting licenses.
While the politics of Zimbabwe has changed since then, the economic situation hasn't drastically altered. Legitimising online gambling might add a new revenue stream for the government, but the benefits for the users likely to participate in it are far more questionable.
It's also questionable whether the government has the resources it needs to successfully tax and regulate online gambling firms within its borders. It might be successfully taxing traditional bricks and mortar outlets, but whether it has the infrastructure in place to extend that success to mercurial internet businesses remains an open question.
Summary
Online gambling is on the rise in Zimbabwe, but its government needs to pay close attention to whether it can and should create a permissive regulatory framework for the sector. As evidenced in the UK, regulation doesn't suppress the gambling market. Rather, it allows it to grow in a responsible way that protects citizens and gamblers alike - so regulation should be firmly on the agenda of Zimbabwe considering the economic hardship faced by much of its population.
Zimbabwe has one of the largest concentrations of casinos on the African continent. It also has a popular state lottery. Gambling is regulated in the country under Lotteries and Gambling Act by the Zimbabwe Lotteries and Gambling Board. All winnings from gambling are taxable in the country - profits derived from pool betting and horse racing are levied at a rate of 10 per cent, while profits from Casino gambling are subject to a withholding tax of 15 per cent.
Gambling tourism is a significant source of income for Zimbabwe, which has led to a significant presence for the industry. While authorities have attempted to regulate the gambling sector, however, many feel the laws aren't water-tight enough - most notably with reference to online gambling and betting.
The Gambling Board's remit is "to regulate and control the development and operation of all lotteries and gaming activities" and it does make reference to "electronic gaming devices". It can, therefore, be interpreted to include online gambling, casinos and sports betting under its authority, but specific legislation for internet gambling is thin on the ground.
Internet usage on the rise
With internet usage spiking in Zimbabwe in recent years, and much higher than it is in neighbouring Botswana and Mozambique, many are questioning whether it is in fact ready for opening the online gambling market up at this particular time.
Until relatively recently, online gambling hasn't been treated as much of an issue thanks to low internet penetration, but providers are making some headway and in 2017 there was an increase to 50.8 per cent, driven in no small part by WhatsApp and Facebook bundles.
There have been signs that the Zimbabwean government is moving to improve its legislation around online gambling, but as things stand it remains a grey area.
There are currently no Zimbabwean operators of online casinos or betting companies, but businesses based elsewhere seem to be free to conduct their business in Zimbabwe. As a result, online gambling is on the rise alongside the growth in internet penetration, with little to no oversight to match it.
The lack of national regulation leaves no taxation on online gambling winnings, however. Similarly, there's no protection for citizens accessing external gambling sites and little to stop those under 18 - the age for legal gambling in Zimbabwe - from accessing the services.
What regulation does Zimbabwe need?
The UK makes an interesting case for comparison. Its gambling industry has been regulated for many years, and the British Government was among the first establish an independent regulatory body, the Gambling Commission.
As part of its remit, the Gambling Commission regulates all casinos in the same way. In order to obtain and retain a gambling licence in the UK, operators must be able to prove they can:
- Verify and identify every customer and their sources of funds, as part of anti-money laundering regulations
- Uphold various technical standards on websites and machines, to ensure reliability, quality and security
- Promote responsible gambling practices relating to underage and problem gambling
The popularity of online operators is due to the convenience they offer - as well as the hugely impressive selection of games. Virtual casinos provide gamblers with the option of playing their favourite games - including the likes of roulette, poker and blackjack - anytime, anywhere. The games themselves have advanced a lot in recent years as operators have enhanced their offerings, as you'll see by visiting one of the best online casinos in the UK.
It has proved a solid source of tax revenue. Because the UK government has regulation in place it is able to capture significant funds from companies that it enables to operate within a legal framework. It has even been able to use that revenue to compensate for funds lost elsewhere. Next year will see taxation of remote gaming increase from 15 per cent to 21 per cent to cover lost revenue from fixed odds betting terminals, keeping cash flow from the gambling industry relatively stable.
Can Zimbabwe modernise its legislation?
Economically speaking, the UK is a world away from Zimbabwe. While introducing a regulatory framework will no doubt benefit government coffers, it's an open question as to whether making gambling easier to access for citizens already in precarious and problematic economic circumstances will benefit the country's citizens.
The most recent figures put 72.3 per cent of the population below the poverty line. GDP is just $2,283 per capita. Unemployment figures vary wildly - some figures from 2014 placed it at 11.3 per cent, but Prosper Chitambara, an economist with the Labour Economic and Development Institute Research of Zimbabwe, said in 2015 that 90 per cent of the 14 million population were "either openly unemployed or under employed".
Once the bread basket of its region, Zimbabwe has increasingly struggled to feed its own population after a series of droughts and a land reform programme that saw farms redistributed to landless Zimbabweans at the expense of productivity. The fall of Robert Mugabe in 2017 freed up the media and politics of the nation, but it remains cash-strapped, largely dependent on primary industries and with an impoverished population.
Against this backdrop many people are using gambling as a way to attempt to generate income. "We have different kinds of clients — some do it for fun and some for economic reasons," Emily Kabaya, a manager with VegasBet Ltd. in Harare, said in a 2015 interview.
Anecdotal evidence suggests that some citizens are attempting to survive off betting earnings, and the previous administration attempted to curb such problem gambling by halting the awarding of betting licenses.
While the politics of Zimbabwe has changed since then, the economic situation hasn't drastically altered. Legitimising online gambling might add a new revenue stream for the government, but the benefits for the users likely to participate in it are far more questionable.
It's also questionable whether the government has the resources it needs to successfully tax and regulate online gambling firms within its borders. It might be successfully taxing traditional bricks and mortar outlets, but whether it has the infrastructure in place to extend that success to mercurial internet businesses remains an open question.
Summary
Online gambling is on the rise in Zimbabwe, but its government needs to pay close attention to whether it can and should create a permissive regulatory framework for the sector. As evidenced in the UK, regulation doesn't suppress the gambling market. Rather, it allows it to grow in a responsible way that protects citizens and gamblers alike - so regulation should be firmly on the agenda of Zimbabwe considering the economic hardship faced by much of its population.
Source - Byo24News
