Evening the odds: gambling tech makes sure the house doesn’t cash in
Let’s face it, the thought of popping R1 into a slot machine and taking home R50 or R500 is quite appealing. What’s there to lose, besides R1?
Gambling, for better or worse, is something that exists. Thankfully, there are laws to protect consumers, and support groups to assist those who take it a little too far. Then there are the gatekeepers that make sure everything remains fair.
Those same laws remain the same for large casinos, and their systems are governed by internal checks and measures. For smaller operations, though, there’s a different process to follow. Every limited-payout machine (LPM; slot machines that are limited to take bets of up to R5, and pay out a maximum of R500) in the country is connected to a central system that makes sure operators are playing fair, and that players get back their fair share.
Zonke Monitoring Systems is the government-appointed company that has the responsibility of, essentially, auditing all transactions from the country’s R30-million-a-week (gross revenue) LPM industry. Hosea Malope, CEO of Zonke, says that his firm was appointed by the gambling regulator as a single point of communications for all limited-payout slot machines – all 8 500 of them.
If that number sounds a bit low, that’s because it is. In fact, the maximum number of non-casino slot machines in South Africa at one point exceeded 120 000.
“In terms of the legislation, there can be up to 50 000 machines, nationally. Currently there’s just over 8 500 operating in eight provinces,” says Malope.
The ninth province – the Northern Cape – has yet to institute its gambling licenses for outlets that want to install LPMs.
“50 000 was basically based on what was on the ground in the early 90s. After 1994 when the new government decided to legalise gambling, there were a whole lot of operations – even operating in outlets that should not be operating gambling machines, like cafes.”
“There were an estimated 120 000 gambling machines. The regulators felt that we can get away with less than half that – that we should be able to accommodate about 50 000.”
50 000, though, has proven more than ample. Hosea points out that things like the socio-economic impact of gambling can have adverse effects, especially in poorer areas. Even casinos have limitations, and the government has a limit of 40 casinos, nationally. The limits are set for the good of the people – it’s about being a responsible regulator.
After the 90s, the government started with a clean slate. All operations were closed down, and under the new regulator operators were required to re-apply for the right to legally have slot machines on the floor. Given that most existing operators were illegal at the time, chances are they would not have been given new licenses. Gambling operators now have to seek out venues where it’ll be viable and lucrative to have a few machines. Once that’s done, the owner of the chosen site undergoes a stringent check to make sure they have a clean record – and owning an existing business is near essential. It’s not possible for somebody to open a venue just for gambling.
Once all that’s complied with, Zonke steps in.
Malope says that there are minimum standards for how much a slot machine can retain (in terms of takings) and how much it has to pay out. These are not only set in the law, but the limits that each machine are set to operate by get enforced. On top of all the legal red tape for humans, Zonke’s monitoring systems are the red tape for the electronics.
In an unregulated environment, slot machines can be set to pay out whatever ratio of takings the site operator determines. However, ours is a regulated and monitored. If a machine is tampered with or if any parameters are changed, Zonke’s centralised monitor system immediately disables the machine and makes it unplayable – along with that being recorded as an event.
Zonke Monitoring Systems’ central systems are hosted in Rosebank, with Internet Solutions. That’s where all data is stored – from information about the machines in operation around the country, to employees at certain sites, to those who work on the machines. When a new site is established – a diner, for instance – the entire movement of an LPM is recorded. That means it’s checked in at a warehouse, and when it gets shipped to a test facility that gets logged. When it’s moved from there to an installation site, it’s also logged. Finally, the database records another event for when the machine is set up and active at a site.
Fortunately, it’s all done digitally – and it’s in the name of having an audit trail. This way any unauthorised access to the machines can be flagged when the records show that procedure wasn’t followed.
Once set up and activated, all slot machines have to be connected to a site controller. These are networked boxes developed and supplied by Zonke. All LPMs are connected to Zonke’s site controllers, which then communicate with the central database. Everything is recorded in real time. Every single bet; how much money has been made; and when the door of the machine has been opened and closed. At the end of every day the site controllers upload the day’s data.
At the moment the uploaded data has to be audited manually, but Malope says that the newer software being implemented will have basic algorithms to assist with auditing. That way, data can be automatically highlighted for any anomalies – digital forensics that help humans. Along with this, the frequency of data logging will also be improved, with options for real time uploading or hourly check-ins.
Another future upgrade is the implementation of cashless machines. Rather than letting people walk around with pockets full of R1 coins, contactless payment cards are being rolled out. For this, too, Zonke will provide security and auditing. In fact, the only thing differentiating its software from that used by big casinos is the lack of support for handling jackpots – but that’s regulated by the industry, and LPMs cannot pay out rolling jackpots.
At the time the South African gambling regulator suggested a single, centralised system for limited-payout machines nothing else like it existed in the world. Since then, though, the concept that’s been thought up and implemented locally has seen some international recognition.
Mr. Malope, proud of Zonke’s achievements locally, points out that a few years ago New Zealand adopted a similar approach for its industry – and that says a lot about how sometimes we do get things right, here in South Africa.
The next time you pop R1 into a slot machine at a pub you stand as good a chance as anybody else of walking away with heavier pockets – most machines are set to pay out 80% of earnings and keep the other 20% – and Zonke’s watching to make sure it’s fair.
Update: A previous version of this article had incorrect facts about the turnover of the LPM gambling industry, as well as the provinces in which LPM regulations were instituted. These have been corrected.