The Cape Town International Convention Centre : a positive economic impact created through the legalisation of gambling

Voges, Pierre (2004-04)

Thesis (MComm)--University of Stellenbosch, 2004.

Thesis

ENGLISH ABSTRACT: The legalisation of gambling in South Africa was perceived by many as an unnecessary vice that would bring social decay in a country that is already battling to cope with a wide array of social woes, such as unemployment, crime, etc. Anti gambling protestors argued that South African society is not sufficiently developed to cope with an industry that diverts money from normal household budgetary expenditure patterns to the many forms of gambling that suddenly became legal. Protestors also argued that gambling tax is just another tax on an already overtaxed society. Many of these arguments were justified and the legalisation of gambling was clearly an issue, which had to be dealt with carefully. Politicians, the custodians of a well-managed political system through pro-active policies that will be to the benefit of a country and its people were in a particularly difficult position with the creation of a legalized gambling industry and had to weigh policy between the advantage of additional tax revenue and the disadvantage of adding to the social ills of South African society. In terms of the Constitution of South Africa gambling was a concurrent competence and the respective provinces had an opportunity to develop gambling policy that will be beneficial to the relevant province. Although the national Gambling Act provided the broad parameters in which provincial legislation had to be developed, provinces had ample opportunity to be innovative in respect of provincial gambling legislation. After the legalisation of gambling provinces moved quickly to ensure that casinos were developed, mainly to create a larger revenue base through gambling tax. Most provinces were cash-strapped, as their share of the national budget was not sufficient to deal with the long list of provincial development priorities. A way had to be found to supplement the national government contributions and gambling tax was an attractive option. The Western Cape Province moved somewhat slower in the promulgation of provincial gambling legislation. There was a clear realisation that gambling was going to have a massive social impact on the population of the Western Cape and therefore had a clear objective to find ways to develop casinos in such a way that it would offset the negative impact of gambling. This thesis did not place any emphasis on the quantification of the social impact (such as lack of productivity, loss of employment, bankruptcy, domestic violence, divorce, etc). The objective was to show that the allocation of a gambling licence could be used to create infrastructure that is not linked or related to a casino. Such infrastructure is normally in high demand in cities or regions, which are emerging as tourist destinations, but the infrastructure would not be developed by the government, as the capital cost is too high, nor by the private sectors as the profit margins are too low. The Western Cape used its allocation of five casino licences in terms of the National Gambling Act to create an impact on the whole of the region by dividing the province into five regions and allocating a casino licence to each of the regions. Since 1994 Cape Town and the Western Cape have gained prominence internationally as a tourist destination. It was soon clear that the city and region would not be able to cope with the influx of tourists due to a lack of hotel rooms and other tourism infrastructure. It was also clear that the tourism industry would not show the required growth without facilities, such as a convention centres. It is particularly a convention centre that became an urgent element in Cape Town as convention business has become a rapidly growing business with a potentially significant impact in terms of convention expenditure and the resulting economic impact on a city. The Western Cape developed gambling policy determinations made it clear that in the case of the five regions, casino bid companies were obliged to include tourism infrastructure that would add value to a particular region. It was made clear that such infrastructure should not necessarily be linked with a casino and could be off-site. The policy determinations were clear in its stipulations that stand-alone casinos would not be entertained in the adjudication process. The development of an international convention centre became an important criterion in the allocation of a casino licence in the Cape Metropole. Although casino bid companies included different kinds of infrastructure in their bids (mostly projects that would have a positive impact on tourism) the development of an international convention centre became a strong factor and the casino licence for the Cape Metropole was allocated to the company that included the development of an international convention centre in the their casino bid application. Although convention centers are rarely profitable they are known to change the face of cities and regions in terms of their economic impact, not only the impact in terms of urban renewal opportunity, but also attracting domestic and international convention center delegate expenditure and the expenditure on hotels, food and beverage, transport, and general tourism expenditure. The direct, indirect and induced economic impact of this expenditure in the Western Cape and Cape Town result in the off-setting of the negative social impact and ensure that the benefits of the legalisation of gambling is extended to projects that would be unlikely developments in the absence of a casino licence allocated. The study undertaken demonstrates the economic impact (direct, indirect and induced) of the Cape Town International Convention Centre. It also shows the impact of the center on the promotion of tourism, including convention center delegates returning to the Western Cape for leisure purposes in the future. It culminates in the conclusion that the allocation of a casino licence should not only be the development of a stand-alone casino, but also the creation of tourism infrastructure that offsets the negative impact of gambling.

AFRIKAANSE OPSOMMING: Die wettiging van die dobbelindustrie was deur baie mense gesien as ‘n onnodige euwel wat net sou bydra tot sosiale verval in ‘n land wat reeds gebuk gaan onder ‘n wye verskeidenheid sosiale probleme, soos werkloosheid, misdaad, ens. Anti-dobbel stemme het argumenteer dat die Suid-Afrikaanse gemeenskap is nie genoegsaam ontwikkel om ‘n industrie te hanteer wat geld kanaliseer vanaf normale huishoudelike besteding na die vorme van dobbel wat gewettig is nie. Anti-dobbel stemme het verder genoem dat dobbel net ‘n verdere belasting is in ‘n gemeenskap wat reeds oorbelas is. Baie van hierdie argumente het gewig gedra en die wettiging van die dobbelindustrie was duidelik ‘n kwessie wat versigtig hanteer moes word. Politici, die beskermhere van ‘n gesonde politieke bestel deur pro-aktiewe beleidstappe wat tot voordeel van ‘n land en sy mense behoort te wees, was in ‘n besondere politieke dilemma met die wettiging van die dobbelindustrie en moes die voordele van verdere belastinginkomste in ag neem saam met die sosiale nadele wat die industrie sou skep. Volgens die Konstitusie van Suid-Afrika is dobbel ‘n konkurente verantwoordelikheid en die onderskeie provinsies kon provinsiale dobbelbeleid ontwikkel volgens provinsiale vereistes. Alhoewel die nasionale wetgewing die oorhoofse raamwerk skep vir provinsiale wetgewing, het provinsies die geleentheid gehad om innoverend te wees met die ontwikkeling van provinsiale wetgewing. Na die wettiging van die dobbelindustrie het provinsies vinnig opgetree om casinos te ontwikkel, hoofsaaklik om ‘n groter belastingbasis te ontwikkel deur die toepassing van wetgewing. Die meeste provinsies ondervind ‘n tekort aan inkomste, aangesien die inkomstetoedeling vanaf die nasionale regering nie genoegsaam is om aandag te gee aan ‘n lang lys van ontwikkelingsprioritiete nie. ‘n Weg moes gevind word om provinsiale inkomste aan te vul en dobbelbelasting was ‘n aantreklike opsie. Die Wes-Kaap Provinsie het ‘n meer geduldige pad geloop in die promulgering van dobbelwetgewing. Daar was ‘n duidelike besef dat dobbel ‘n massiewe negatiewe sosiale impak in die Wes-Kaap sou teweeg bring en was daarvan oortuig dat ‘n weg gevind moes word om die negatiewe sosiale impak minder te maak. Die tesis het nie die klem geplaas op die kwantifisering van die negatiewe impak (soos byvoorbeeld die gebrek aan produktiwiteit, verlies aan werkgeleenthede, bankrotskappe, huishoudlike geweld, egskeidings, ens) nie. Die doel was om te demonstreer dat die toekenning van ‘n casino dobbellisensie gebruik kan word om infrastruktuur te skep wat nie direk verwant is aan ‘n casino nie. Sodanige infrastruktuur is gewoonlik in aanvraag in stede en streke wat ontluik as toerismbestemmings, maar hierdie tipe toerisme-infrastruktuur sal nie deur die regering ontwikkel word nie weens ‘n tekort aan die nodige fondse, maar ook nie deur die privaatsektor nie weens die gebrek aan aantreklike winsmarges. Die Wes-Kaap Provinsie het die vyf casinolisensies wat aan die provinsie toegedeel is in terme van die Nationale Dobbelwet gebruik om ‘n impak in die hele Provinsie te maak deur die Provinsie in vyf streke te verdeel met ‘n lisensie toegedeel aan elk van hierdie streke. Kaapstad en die Wes-Kaap het sedert 1994 internasionale prominensie verkry as ‘n internasional toerismebestemming. Dit was egter gou duidelik dat die stad en die streek nie die verwagte stroom van toeriste sal kan hanteer met die gebrek aan hotelkamers en ander toerismeinfrastruktuur nie. Die toerismesektor sal ook in gebreke bly om te groei sonder ander fasilitiete soos ‘n internasionale konferensiesentrum. Die gebrek aan ‘n internasionale konferensiesentrum het gelei daartoe dat Kaapstad konferensies begin verloor het weens die gebrek aan voldoende fasiliteite. Die internasionale konferensie-industrie toon uitstekende geleenthede vir ekonomiese groei deur die konferensieganger besteding en die impak op die ekonomie van Kaapstad en die Wes-Kaap. Die Wes-Kaap het dobbelkriteria ontwikkel wat dit duidelik gemaak het dat casino lisensie-aansoekers daartoe verplig was om toerismeinfrastruktuur by hulle aansoek in te sluit wat sou bydra tot die waardetoevoeging in die onderskeie streke. Dit is ook duidelik gemaak dat sodanige infrastruktuur nie noodwendig fisies aan ‘n casino gekoppel hoef te wees nie en kon ook weg van die casino perseel ontwikkel word. Die beleidskriteria het dit verder ook duidelik gemaak dat alleenstaande casinos nie oorweeg sou word nie. Die ontwikkeling van ‘n internasionale konferensiesentrum het ‘n belangrike beleidsoorweging geword in die toekenning van ‘n casinolisensie in die Kaapse Metropool. Alhoewel casino maatskappye ‘n verskeidenheid infrastruktuurelemente in hul aansoeke ingesluit het (meesal projekte wat ‘n positiewe impak op toerisme sou teweeg bring) het die ontwikkeling van ‘n konferensiesentrum ‘n uiters belangrike oorweging geword in die toekenning van ‘n casino lisensie en die lisensie vir die Kaapse Metropool is derhalwe toegeken aan die maatskappy wat die ontwikkeling van ‘n konferensiesentrum in die suksesvolle aansoek ingesluit het. Alhoewel konferensiesentrums byna nooit winsgewend is nie, skep sodanige sentrums die moontlikheid van stedelike vernuwing en ‘n ekonomiese impak deur die besteding van konferensegangers op hotelle, voedsel, drank, vervoer en algemene toerismebesteding. Die direkte, indirekte en geleide ekonomies impak van hierdie besteding lei daartoe dat die negatiewe sosiale impak afgeskaal word en lei derhalwe daartoe dat die voordele van die wettiging van dobbel verder gevoer word deur projekte wat onwaarskynlik sou wees in die afwesigheid van die toekenning van ‘n casinolisensie. Hierdie studie demonstreer die ekonomiese impak (direk, indirek en geleide) van die Kaapse Internasionale Konferensiesentrum. Die studie demonstreer verder die impak van die studie op die bevordering van toerisme , insluitende konferensiegangers wat na Kaapstad terugkeer vir vakansiedoeleindes. Hierdie impak kulmineer in die gevolgtrekking dat die toekenning van ‘n casinolisensie behoort nie net te lei tot die ontwikkeling van ‘n alleenstaande casino nie, maar ook die ontwikkeling van toerismeinfrastruktuur wat daartoe lei dat die negatiewe sosiale impak afgeskaal word.

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