11 November 2012

Uganda: Poverty Looms As Gambling Booms

Riding on lack of regulation, gambling industry enriching a few and impoverishing the majority:

Gambling is currently one of the biggest businesses across the country. According to data from Uganda Revenue Authority (URA), the number of gambling companies registered to offer gambling services has shot up to 52 plus 13 individuals in the last two years. October 2012 revenue from gambling amounted to Shs 520 million up from Shs 410 million in July. The projected revenue for 2012/2013 amounts to Shs 7.4 billion - not little money from an industry with just 65 players.

But the lack of regulation, experts fear, could make gambling a ticking time bomb as the population is totally unprotected from its harmful effects. At the moment, sports betting, which is spreading like wildfire, has overtaken casinos, lotteries and poker in popularity. On any match day especially weekends, hundreds of sports betting outlets are filled to the brim with gamblers, most of them without any regular income. Inside a betting hall managed by Sports Betting Africa (SBA) at Mukwano Arcade, more than 300 people, mostly unemployed youth, jostle and crane their necks to look at the notice board where various matches are posted. But some are paying a very heavy price.

Take for instance, Mark, a third year student at Makerere University, who counts himself lucky to be completing his studies soon. In the second semester of his first year at campus, Mark was introduced to sports betting by some friends. Consequently, he started betting leisurely with a few thousand shillings on the weekends. A few times he would bet with just Shs 2,000 and win Shs 50,000. Once he won Shs 130,000 on one weekend. By the end of the semester, Mark says he had become almost addicted. He would rather bet than spend the money on food or on photocoping his study handouts. One fateful weekend, he heard that somebody in Entebbe had won Shs 14 million after betting on a couple of matches. The temptation to bet with some of his tuition, which he had just received from home, became almost unbearable. In the course of the month, he won a few bets but somehow, his tuition kept reducing. However, the outlet agent kept encouraging him, saying luck would eventually smile on him one day and he would hit a fortune. His friends urged him not to give up before he recovered his money. He would frantically skim the football fixtures for games that would help to recover his tuition. He called up "expert football analysts" who advised him on the best matches to bet on. Unfortunately, he lost the balance of his tuition on his very last bet. "I almost went mad," he recalls. "For the next two days I did not leave my bed, thinking of what I would tell my mother, who I knew always struggled to raise my tuition." Cornered, he borrowed money from a friend to travel to Lugazi to tell his mother that the tuition had been "stolen" from his room. "I had never seen my mother weep so bitterly," he says, as his eyes get watery. Luckily for Mark, several of his relatives were able to contribute the money and after a week he returned to campus. "The tears that my mother cried still haunt me up to this day," he says. "And because of that I vowed never to gamble again."

Mark is one of the millions of young people who have been lured into sports betting - the activity of predicting sports results and placing a wager on the outcome.

Betting companies are obviously excited about the booming business. According to Mahad Ssali, the assistant PRO, SBA is "operating legally" and they have established themselves in Kampala, Jinja and Mbarara with over 200 outlets, which offer employment close to 2,500 people. SBA, along with its rivals, has been offering sports betting services in Uganda since the government legalized the industry several years ago. On the African continent, Uganda is only the second country after South Africa to legalize sports betting. In most of African countries, sports betting is still considered illegal.

Regulation vacuum:

But in South Africa, the industry is rigorously regulated by the National Gambling Act of 1996, which also created the National Gambling Board - the institution responsible for the supervision and regulation of the gambling activities. In 2008, the National Gambling Amendment Act was introduced in response to the emerging trends in the industry and society. Internet-based gambling offered through servers located outside the country is banned in South Africa. Mass media channels (TV and radio, newspapers and magazines, outdoor advertising agencies) are also heavily regulated as far as gambling is concerned.

In the US, it is illegal to operate a betting scheme, except in a few states. In India, sports betting is confined to horse racing and casinos are only allowed in a few states.

In the United Kingdom, gambling is regulated by the Gambling Commission under the Gambling Act of 2005, which introduced a new structure of protecting children and vulnerable adults, as well as bringing Internet gambling within British regulatory jurisdiction. For instance, gambling companies are required by law to tell a client to stop if he has exceeded acceptable limits. Those stringent regulatory frameworks were put in place after countless studies showed the long-term effects of gambling not only on individuals and household incomes but to the economy as well. Also, unlike Uganda, many of those countries have public institutions and non-governmental organizations that support addicted gamblers and their families with counseling.

This is because research has shown that one in five 'pathological gamblers' has attempted suicide, a rate higher than for any other addictive disorder. Also, people who struggle with gambling problems may experience serious social, emotional, financial and health consequences. For many, coping with the negative emotions related to these issues, can become overwhelming. Feelings of shame, hopelessness and failure may seem too hard to bear. Also, persons experiencing problems related to gambling often experience conflict with family or friends, academic problems, financial problems, as well as legal or work-related problems. In the US, considerably higher rates of physical and sexual abuse were also reported in a study of persons experiencing problems with gambling, compared to national samples. "With the spread of gambling, the number of problem gamblers grows, accompanied by an increase of crimes related to the gambling," one such study done in the US, said.

"In the typical case, as losses mount and access to money is limited, many problem gamblers resort to crime in order to pay debts and/or obtain money to chase losses through more gambling." For instance, a survey by Gamblers Anonymous - an NGO that supports addictive gamblers in the US - found that 46% admitted to some illegal act, including writing bad cheques, stealing or embezzling from their employers.

In Uganda, all those institutions and legal frameworks are not yet in place. But legislators are starting to get concerned about the regulatory vacuum in Uganda, which they say could result into catastrophic consequences. Because of lack of laws, some companies refuse to pay up when somebody wins a bet. Frank Tumwebaze, the Kibale County MP, who chairs the Chairman Committee on Finance, Planning and Economic Development, bemoaned the fact that while the industry should be regulated by the government, there is no policy apart from taxation.

He said they advised the Finance minister to increase the taxes to discourage the vice from exploding. "The regulations are minimal and we need to create a bigger body that will regulate all the gambling, sports betting and telecom companies which gamble through SMS messages" he said. Indeed, Police spokesman for Kampala Metropolitan Idi bin Ssenkumbi said that sports betting is legal and they acquired a license to operate in Uganda but "it is regulated through understanding."

"It was legalized and acquired a license to operate, we only regulate their operation like not to involve young children and we agreed that they should not be open before midday so we are regulating them through understanding," he explained. However, a mini survey by the The Independent showed that the betting outlets are open all day and that there is no of ascertaining that those who bet are over 18 years of age.

Media influence:

Muzamir Kabuye, 26, who said he had quit betting, told The Independent that the industry is being fueled by the media particularly popular FM radio stations and sports presenters who are sponsored by the betting companies.

"I started betting in 2007 after the announcements about (Sports Betting Africa) by sports journalists on the radios, TV and bill boards all over the town. I knew of some youths who committed their school fees in it," he said.

Indeed, sports programmes and presenters on popular radio stations and televisions are sponsored by betting companies. The presenters break down the possible odds to the listeners or viewers. For example, Super FM's Super Sport live match commentary is sponsored by Gaming International and numerous adverts about betting are run on this station. They are not breaking any rules because there are no regulations against it. The immense popularity of European leagues such as the English Premier League, Spanish La Liga, Serie A and German Bundesliga among a host of other popular events has made betting spread like wild fire. Officials of betting companies are often openly invited on the programmes to be panelists or to talk about their people who have won big bets with the companies.

Kabuye says most of those who gamble have no jobs and go to betting "for survival." But studies have shown that only a tiny minority of gamblers do get rich through games of chance. The vast majority only become poorer, more depressed and heavily indebted. But with no regulation and given the wide variety of sports disciplines e.g. football, cricket, boxing, tennis, basketball (NBA), Formula 1, Goat races, Dog races, Horse races and Pool etc, the options for the betting companies are simply limitless. Indeed, Kabuye is exploring ways of opening up his own betting business to tap into this "lucrative" industry.

While reading the 2012/13 budget in June, Finance Minister Maria Kiwanuka, admitted that the URA had faced a challenge in collecting Value Added Tax (VAT) on the supply of betting, lotteries and gambling services. Consequently, gaming and betting tax was increased from 15% to 20%. But if this was intended to get people out of the gambling houses, Kiwanuka might have to think again. For instance, one betting agency said over 100,000 individuals flock its head office halls on weekends with an average 60,000 individuals during the week days.

Naturally, the betting companies will not disclose their revenues and incomes. But given that the minimum one pays for betting receipt is Shs 1,000, simple multiplication shows that on one weekend a betting company could collect a minimum of Shs 10 million before considering the other bets which go for Shs 5,000, Shs 50,000, Shs 100,000 and Shs 1 m. One official of a betting company said their firm remitted over Shs 2.4b in taxes to URA last year. As an indication that betting is no longer a Kampala affair, he said upcountry stations have begun overtaking his 12 city outlets - a clear sign that the market prospects are still very high. They are obviously happy but only research will tell the full extent of the harm their activities are inflicting on individuals, household incomes and consequently the country's development prospects.

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