At the end of every month I enjoy going to one of the big casinos
in Windhoek and trying out my luck on the machines. Sometimes I win a little,
but most of the time I lose. While sitting there though, I have noticed quite a
few people who seem to lose every time that I am there. These gamblers are
quite vocal when they lose and loudly claim that the casino management is
purposefully preventing “their” machine from winning. They believe that after
all the money they have spent, they should be getting a return on their
investment.
The dictionary defines gambling as “takin a risky action in
the hope of a desired result”. In the case of a gambling house, the owners are
sure they will get their money as there is only a certain percentage that
actually gets paid out in winnings. This percentage of winnings and other legal
aspects are controlled by the Ministry of Environment and Tourism through the
Casino and Gambling Houses Act 32 of 1994.
Most consumers throughout the world are aware that giving a
businesses a “free-hand” will lead to them maximising their profits while giving
as little bit as possible back the client. Thus in the case of casino’s,
governments must put in place legislation to ensure that the gambler has a
least a certain percentage chance of winning. (Of interest in the Namibian law,
is that the law states “The Minister may designate any person in the employment
of the Public Service as an inspector for the purposes of this Act”. Thus,
technically any government employee could act as an inspector?)
Now back to the role of government regulation.
If we take the definition of gambling and we look at various
business models we will notice that very often a business idea is a “risky
action in the hope of a desired result”. Take life insurance: The life
insurance company is taking the risk that should you die, they must pay you a
certain amount of money even if the amount you have paid in does not yet equal
that amount. This means, the company is taking your money in the hope that you
actually live long enough to pay them more that the amount that they pay out on
your death. The insurance company is of course working with a profit motive to
make money for the owners so the company must do everything in their power to
reduce the risk to get their own desired result – namely you should stay alive
as long as possible. If the company finds it difficult to reduce your chances
of dying, they must find other methods of reducing their risk.
Insurance companies thus spend a lot of time in risk
management and putting in place agreements that will be of maximum benefit to
themselves without scaring away their customers. Therefore most insurance
companies have mechanisms in place to reduce the amount they have to pay out in
the case the “desired result” in not in their favour.
Here too governments have to play their role an regulate the
market to ensure the customer on the street is being benefitted in the manner
they expected – especially as that customer is now no longer among the living
to ensure the contract is upheld by the life insurance company. To this end the
Government has created the Namibian Financial Institutions Supervisory
Authority (NAMFISA). It operates under the auspices of the Ministry of Finance,
and it has no profit motive.
I believe that taking out life insurance is not a gamble but
a risk reduction factor in my planning of my financial matters. As a consumer,
I must hope that the government through NAMFISA will ensure that my interested
are looked after even when I am in my grave. Looking at the present capability
and track record of the regulator, I wonder if it will be there for me against
the insurance company?
Milton Louw is the IT Project Coordinator at
the Electoral Commission of Namibia. This column is written in his personal
capacity as a consumer activist and the views expressed in this column are his
own.
