Question posted in the General Law category relating to Western Cape
Good day. I want to ask a question with regards to business law, more specifically starting a business.
Is it legal, in South Afirca, to operate a business online that raffels off physical items in order to make a profit? No money would be raffeled off and the raffel would not be completely random, but there would be some sense of taking a risk to get the prize. Multiple different prizes would be avaliable for the person to choose to raffle for but only one prize would be given away for a certain period, after which the raffels would be restarted with the remaining prizes.
there are 3 teddy bears up to raffel.
Teddy 1 costs R100 and thus ticketsaresold at R10.
Teddy 2 costs R200and thus tickets are sold at R20.
Teddy 3 costs R300 and thus tickets are sold for R30.
Over 1 week participants may buy tickets for any of the 3 teddy bears. At the end of the raffel ALL tickets are placed into one jar and a single ticket is pulled out as the winner. The next week the process starts again with new tickets bought and only the second two teddys remaining.
My question is: Is it legal to run this type of business? If it is not a simple yes or no answer then what are the rules that must be abided by to run sucha business?
Information Requested by Lawyer
Hi there and thank you for your question,
I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread.
Please keep in mind that our discussions is for general information purposes only. Our engagement on this website does not create an attorney-client relationship.
Do you mind if I take a moment to review your question? I will come back to you shortly!
Answer to the Question
There is a good chance that your business will need to comply with the NATIONAL GAMBLING ACT 7 OF 2004, since it is a lottery.
Private lotteries with a limited pool of participants, such as "office sweepstakes," raffles at a school fete and lucky ticket draws at fundraising dinners are "self-regulatory" and the organisers are expected to self-regulate their activities and ensure compliance with the law under the Lotteries Amendments Act.
If you are running a fund-raising venture in which your organization will be selling tickets to the general public on a larger scale, the activity will come under the heading of a "Society Lottery" and will be subject to the regulations of the National Lotteries Commission (NLC).
But one of those requirements is that only non-profits may run society lotteries, and the society lotteries must register in advance with the NLC.
What you want to do is to do more than this. You want to run a for-profit business online. This is considered gambling, and you'll need to register and apply for a gambling licence with the Gambling Board. It's not impossible, but there are a lot of hoops that you'll need to jump through!
My advice is to contact the Gambling Board and ask for an application form.
Information provided by client
Thank you for your reply, it helps me a lot. I would just like to clarify my understanding with you. You think it would be possible for me to run an online gambling business if I apply for, and get, permission from the Gambling Board? From some of my readings I thought that gambling online was not allowed in South Africa but got more and more confused the further I read specifically into online gambling in South Africa.
Answer to the Question
You think it would be possible for me to run an online gambling business if I apply for, and get, permission from the Gambling Board? --> Yes, because there is online gambling in South Africa, why can't there by your online business?
From some of my readings I thought that gambling online was not allowed in South Africa but got more and more confused the further I read specifically into online gambling in South Africa. --> A South African CAN gamble online with a South African registered company that has a South African licence. A South African CAN'T gamble online with a foreign company that does not have a South African licence.