‘Reining in sports betting could help halt a public health crisis’

Nearly one hour into my interview with Denis Ngabirano, a certified international data and tax analyst and the chief executive officer of National Lotteries and Gaming Regulatory Board (NLGRB), I hear myself apologise.

   We have taken on the myth of manipulation of the system, the plague of substandard machines, the exit of big betting companies, addiction control and the risks of gambling. I completely forgot to ask him a light question.

But that is because the fervour with which gamblers display themselves in gaming parlours occasionally, if not always, leads them to make poor choices that utterly ruin their lives.

It has been reported that approximately one thousand students at Makerere University are having difficulty balancing their lives since they left school after losing their tuition through gambling. But because it knows that things can go wrong, the practice’s regulatory body has notices like “gambling is for leisure, not money making” and “only bet what you can afford to lose” pinned to its walls.

About that light question, the man who sits at the helm of the entity of the organisation is an Arsenal fan. Recently, his team edged past FC Porto in a penalty shootout to secure its place in the quarterfinals. I bring that up. He gets thrilled and laughs.

He began cheering for the team during the peak of Nkwankwo Kanu’s career at the club, and witnessing that calibre of play in the Premier League endeared him to the game.

I prod him for other things he likes, and he blurts out, “I like playing the numbers game. It’s the most exciting” and then looks over the screen of his personal computer. I laugh. Mr Ngabirano’s industry in the country has a huge problem. Its biggest participants—the young and growing population—are an ideal target for global betting companies.

The companies’ bingo card is Uganda’s passion for football. The European leagues are hugely popular, and gambling companies use this to attract punters. Many big European clubs are sponsored by betting companies, which gives the impression that football and betting are part of the same product. 

“Some people stake out of excitement and others to earn some money, and here is where we come in to say that only bet what you can afford to lose because betting or gambling is not a money making venture but just entertainment,” he says calmly.

“It is a game of chance, so before you get into this, know what you are getting into. Please, invest, save, and only spend what you can afford to lose,” he adds.

Is the system rigged?

However, there are rumours circulating in a number of bookmakers’ and gamblers’ lounges that the system is somewhat rigged to benefit operators, particularly in the case of virtual and gaming. NLGRB is aware of this and is collaborating with the Uganda National Bureau of Standards (UNBS) to ensure that the claims are properly handled.

In accordance with legal requirements, the two organisations have created 14 technical standards for gaming hardware and software, which will be used to test and certify all machines and operators in the country.

“The standards are at the tail end of the process. They were published to the public for review last year, now they are before the UNBS council for final approval. UNBS has given us three months from March within which they can do the approval. So we hope that by June we should be in the process of having these systems tested against the standards,” Mr Ngabirano says.

Punters are right to complain. In the first half of the current financial year, they wagered Shs2.2 trillion in betting and gambling and were paid Shs2 trillion for it. To them, this is akin to a business. Given the current rate of growth in gambling and betting, it is anticipated that the amount wagered will exceed Shs2.4 trillion from the previous fiscal year.

Stringent rules

The reason for this is that many of the biggest companies in this industry, such as Sports Betting Africa, 1xBex, and Pulsebet, barely survive for five years, and by the time they close, they have amassed billions of shillings from bettors.

Mr Ngabirano ascribes this to the gaming and gambling industries’ stricter compliance, which mandates their liquidity because of the risk factor in their business module.

“So you are either compliant or not. About three months ago, many sports betting companies were hit. The punters won massively and you can imagine that if you get hit and you don’t have money to pay out, then you can go bankrupt. You can wake up and then you find that you have been hit by about Shs30 to Shs40 billion a day. Some companies paid out even Shs15 billion in one weekend,” he notes.

The Act specifies minimum capital requirements for lotteries and gaming for betting companies: Shs250 million for slot machines, Shs5 billion for the national lottery, Shs1 billion for operating a casino, and Shs250 million for bingo.

The same amount (Shs250 million) also applies to pool betting licenses, betting intermediaries, public lotteries, and the manufacturing, supply, or installation of gaming or getting machines. A company that falls short of the minimum capital requirement is requested to recapitalise; the NLGRB compliance team monitors and resolves minimum capital requirements on a quarterly basis.

Although there have been talks regarding the closures of 1xBet and Melbet, which occurred nearly simultaneously, nothing more has come to light except for notifications from NLGRB advising all bettors to remove their funds and cease staking with the aforementioned companies as of February 2021. Some actually thought the closures were due to liquidity shortfalls. NLGRB says that from the information it has received, for instance, the management team of 1xBet’s money systems were attacked by black hat hackers. Investigations are well under way to ascertain this claim.

“We shall be able to release a conclusive report if the investigations are done. It’s them that wrote to us, telling us they are ceasing their operations and will get back to us once they have sorted their issues in-house,” Mr Ngabirano divulges.

Loopholes

I interrupt to inquire if the regulator has received any complaints regarding the issue from the players.

“We have received some complaints from some of the punters and we are engaging with the owners of 1xBet, who have informed us that they will be solving these problems. According to their message, they have temporarily closed down,” he discloses.

The regulator faces a challenge because, at the time of the company’s closure, 1xBet had not yet established a system for monitoring the amount of money bettors have with it, pay-outs, and all transactions.

Rather, this system was developed recently and will even track the amount of money wagered, even when the decision to pay-out has not yet been made when the game is still ongoing.

The regulator now demands a bank guarantee of Shs500 million per license from each company in order to safeguard investor funds. I tell him that this money is small compared to the risk and the payouts.

He agrees and adds: “That is what is in the law and already discussions are ongoing on how we can amend that in the law.” But some companies have managed to circumvent and create illegal websites, which the gambling regulator has in conjunction with the Uganda Communication Commission red-flagged. So far, 17 such entities have been blocked. The infamous BLQ being one of them.

“We have mastered how they operate when they are trying to get these merchants. They alter their names when registering with MTN or Airtel, acquire these merchant codes and then use them for their businesses,” says Mr Ngabirano, concluding, “we have also engaged the Bank of Uganda, which regulates payment and provides for sensitising, to check with us to see if they are licensed.”

I’m tempted to ask Mr Ngabirano whether staking money on Arsenal winning the English title this season is a safe bet, but our time is far spent.