Thursday, June 20, 2024

How gaming operators are fleecing gamblers 

Must read

For many, gambling is an exhilarating experience. Slot machines, also known as coin machines in particular, have gained popularity as a kind of gambling because they’re so accessible and simple to use.

Slot machines can be found all over the place in the Kampala suburbs of Bwaise, Kisenyi, Kabalagala, or Kawempe and deep in the villages- they can be found in betting businesses, shops, and improvised pubs.

A man reviews a receipt after sports betting. Gamers are losing money due to illicit gaming machines that come into the country. PHOTO/Michael Kakumirizi  

For gamblers, the possibility of winning a jackpot or a substantial payout can be a strong motivator to play slot machines. However,  with these illegal machines, winning is next to none. 
This is because unscrupulous are also trying to attract people to bet but one obstacle is that most slot machines installed in ungazetted areas are also substandard.

For instance, National Gaming and Lotteries Board (NGLB), say they have confiscated over 3,000 slot machines and other gaming equipment across the country that translates to closure of roughly 1,000 outlets.

Officials also say, this results in proliferation of rogue gaming businesses across the country and sometimes it makes it hard to regulate especially upcountry.

Currently, it is hard to quantify; Mr Denis Ngabirano, the chief executive officer, NLGRB, says the number of confiscated items and their total worth varies depending on the specific enforcement operation. 

“On average, we confiscate hundreds of illegal gambling machines and equipment each year; these machines are reprogrammed to make a gambler’s odds of winning, next to nothing,” he says.

He adds: “In FY21/22 we confiscated 1,124 machines; FY 22/23 we seized 1,289 machines and FY 2023/24 we have impounded 703 machines so far.”
In total, 3,116 coin machines and six trucks of 3 to 7 tonnes of gaming equipment have so far been confiscated, waiting to be destroyed.

People at a casino. Photo/ Michael Kakumirizi

One would ask what could be the implication of confiscated materials on the gambler; Mr Ngabirano says for the gambler, it means the cessation of access to potentially harmful and addictive gambling activities.

Adding; “From a broader perspective, confiscation helps to uphold our regulatory standards, protect vulnerable individuals from exploitation, and prevent the proliferation of illegal gambling operations.”

Illegal gambling materials often enter the country through various channels, including smuggling, illicit importation, and clandestine manufacturing within the country.
“Most of them are declared to be computer spare parts so when they come in the parts are taken to warehouses where they assemble them into slot machines,” he says.

From a national perspective, illegal gaming undermines regulatory efforts, erodes public trust in the industry, and deprives the government of much-needed revenue according to the regulator.
“There is no control, no regulation, and no protection for underage or problem gamblers when using illegal machines, which are not calibrated,” he says.

In villages 
Mr Ngabirano further explains that these machines are spread across villages, yet they are not supposed to be there by law.
“The machines are supposed to be up to Town Council level, but these illegal business people spread coin machines into the deepest villages and these are machines we are destroying,” he says.
The gaming board is now working with the Uganda National Bureau of Standards (UNBS) on gaming standards; according to Mr Ngabirano, which will be presented to the minister to sign off and gazette.

Furthermore, illicit slot machines are not found in managed gaming establishments where minors are not allowed, are not subject to NLGRB oversight, and are not subject to earnings taxes, in contrast to licensed and authorised operators.

Online 
Illegal gambling is not only limited to slot machines, with advancement of technology, gambling has taken on the internet platforms.
“To weed out illegal gambling sites, we conduct regular audits and inspections of licensed operators to ensure compliance with regulatory standards and promptly investigate any reports of illegal gambling activities,” Mr Ngabirano says. 

Furthermore, Mr Ngabirano adds:“To locate and prevent access to unapproved gambling websites, we collaborate closely with internet service providers, technology firms, and the Uganda Communications Commission (UCC).”

From FY 2022/23 to date, the regulator has so far closed 21 gambling sites with support from UCC. 
On revenue, Mr Ngabirano says revenue collected this financial year alone is Shs130b and estimates show that by June, it would have risen to 160b.

Mr Ngabirano says they destroy the machines because they are illegally imported, never declared; the gaming board has an arrangement with Uganda Revenue Authority (URA) that whenever a company is importing gaming machines, it is a requirement by URA to get a ‘no objection’ letter from the board. 

“The law requires a company to manufacture, supply, adapt and repair gaming equipment and if one does not have that licence they are not allowed to import these machines,”  he adds.
For one to qualify to run a coin machine, they are supposed to be a licensed company, then the company submits where they intend to set up shop, and a team checks it out.

“The premise should not be near a school, hospital, or government premises; they should be 100 metres,” he says.
Adding: “The challenge is we have only five enforcement officers, but the Finance Ministry has approved for recruitment of more staff effective July and setting out regional offices to ensure effective regulation.

Figures  
The ratio of stake payouts versus stakes is a critical metric that reflects the overall financial health of the industry. 
In recent years, there has been a trend towards greater return for players, currently at 94 percent; players have staked Shs3.3 trillion from July to date. 
Payouts have risen from 73 percent in FY 2022/23 to now 94 percent and this can be attributed to the tax amendments that were made in the Income Tax Act.  

Stakes FY 23/24 
Shs3.3 trillion 

Payouts FY 23/24
Shs3 trillion

Stakes FY22/23
Shs2.4 trillion 

Payouts FY 22/23 
Shs2.1 trillion

Latest article