The Western Cape Gambling and Racing Board and Another v Sunwest International (Pty) Ltd t/a GrandWest Casino & Entertainment World and Another

The respondents, Sunwest International (Pty) Ltd trading as GrandWest Casino & Entertainment World and Worcester Casino (Pty) Ltd trading as Golden Valley Casino & Lodge, are casino operator licence holders under the Western Cape Gambling and Racing Act 4 of 1996. They award ‘freeplay credits’—non-cashable credits loaded onto slot machine accounts of selected customers as a promotional reward. A dispute arose with the Western Cape Gambling and Racing Board as to whether these freeplay credits form part of taxable revenue for purposes of gambling tax under s 64 of the Act read with Schedule III. After the Board indicated that freeplay formed part of ‘adjusted gross revenue’, the respondents approached the High Court for declaratory relief. The Full Court held that freeplay did not constitute part of taxable revenue and ordered a set-off of tax already paid. The Board and the Provincial Minister of Finance appealed to the Supreme Court of Appeal.

The appeal was upheld. The Full Court’s order was set aside and replaced with an order dismissing the respondents’ application. The application to introduce further evidence by the amicus curiae was dismissed, with costs. No order as to costs was made in respect of the appeal itself.

The judgment provides authoritative clarification on the interpretation of s 64 of the Western Cape Gambling and Racing Act and confirms that gambling tax is levied on gambling activity rather than on net financial benefit to licence holders. It establishes that promotional instruments such as freeplay credits are taxable where they form part of the statutory definition of the ‘drop’. The case reinforces orthodox principles of statutory interpretation in South African tax and regulatory law and limits the use of constitutional property arguments to challenge fiscal legislation.