Case  CCT 261/23 & CCT 285/23
[2025] ZACC 18

Hearing Date: 04 February 2025

Judgement Date: 29 August 2025

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 29 August 2025, the Constitutional Court handed down judgment in two applications for leave to appeal which were heard together as they raised a common issue – whether a loyalty credit named “freeplay”, awarded by casino operators to selected gambling customers at cashless slot machines, is included in the taxable revenue of casino operators who issue freeplay. The answer laid in the proper interpretation of various interrelated provisions of the Western Cape Gambling and Racing Act (the WC Act) and the Eastern Cape Gambling Act (the EC Act), together referred to as the Acts.

The applicants in both matters were subsidiaries of Sun International (South Africa) Limited (Sun International) which owns casinos across the country. In the first matter, the applicants were casino operators in the Western Cape (the WC applicants). And in the second matter, the applicants were casino operators in the Eastern Cape (the EC applicants). In both matters, the first respondents were the Gambling Boards for their respective provinces – the Western Cape Gambling and Racing Board; and the Eastern Cape Gambling Board. The second respondents were the members of the provincial executive responsible for finance – for the Western Cape, the Minister of Finance, and for the Eastern Cape, the Member of the Executive Council for Finance.

The applicants were all holders of casino operator licences granted in terms of the respective Acts which regulate gambling and betting taxes paid by casino operators, to the Boards. To incentivise gambling play, the applicants offered members of their loyalty programmes, their “Most Valued Guests”, non-cashable and non-transferable credits, called “freeplay” credits, which took the form of a right to use the applicants’ slot machines without these players having to pay. A dispute between the Boards and the applicants about whether freeplay should be included in taxable revenue arose.

The relevant taxing provisions in the Acts provide for gambling and betting taxes to be payable on “taxable revenue”, which is defined to mean adjusted gross revenue (“AGR”) less admissible deductions as determined under the Acts. The relevant part of the definition for AGR related to what is termed “the drop”, which is defined in the Acts as “the amount deducted from players’ slot accounts as a result of . . . play”. The present dispute centred on whether freeplay, when utilised by a player, formed part of the “drop” and consequently AGR, for the purpose of calculating the casino operators’ taxable revenue.

In this Court, the WC applicants sought leave to appeal against the order of the Supreme Court of Appeal (SCA), which had upheld an appeal against an order of the High Court of South Africa, Western Cape Division, Cape Town (WCHC). The WCHC found in favour of the WC applicants and held that, on a proper interpretation of the provisions, freeplay was not included in the drop. Consequently, it did not form part of the AGR and thus was not part of taxable revenue. The SCA upheld the Western Cape Gambling and Racing Board’s appeal and held that on a proper interpretation of the provisions, freeplay was included in the AGR for purposes of calculating gambling taxes. This was because the target of the tax was not the income (or revenue) generated by the applicants, but the gambling activity itself.

The Eastern Cape applicants applied for leave to appeal directly to this Court against the order of the High Court of South Africa, Eastern Cape Division, Makhanda (ECHC). That Court dismissed a similar application for tax relief on substantially the same grounds as those subsequently expounded by the SCA.

This Court distilled two primary issues for determination. First, whether the Court had jurisdiction to hear the matter and, if so, whether leave to appeal should be granted. Second, whether freeplay was included in the definition of AGR in both Acts, and thus whether the casino operators were liable to pay gambling tax on the use of freeplay credits.

In a unanimous judgment written by Kollapen J (with Madlanga ADCJ, Majiedt J, Mhlantla J, Opperman AJ, Rogers J, Theron J and Tshiqi J concurring), the Court found that its jurisdiction was not engaged.

The applicants submitted that this matter engaged both this Court’s constitutional and general jurisdiction. Regarding constitutional jurisdiction, the applicants contended that this was a constitutional matter because the SCA and ECHC had failed in their section 39(2) duty to interpret the legislation in accordance with the spirit, purport and objects of the Bill of Rights. They submitted that the lower courts had preferred an interpretation which rendered the Acts unconstitutional despite there being a reasonable alternative interpretation which avoided that finding. This was so, said the applicants, because the manner in which the SCA and ECHC had interpreted the Acts failed to promote the right to equality and the right not to be arbitrarily deprived of property.

The failure of a court to adhere to its section 39(2) obligation risks reversal by this Court; however, the Court held that it cannot be the case that any allegation of a lower court’s failure to interpret legislation in line with the Bill of Rights, without more, raises a constitutional matter. The Court considered its jurisdiction over the decisions of lower courts in interpreting legislation against the backdrop of its function. This Court, in considering the question of whether its jurisdiction is engaged on the basis of an invocation of section 39(2), will refrain from finding that it has jurisdiction to interfere with the decision of a lower court where the allegation is in substance no more than that the court reached an incorrect decision.

The Court held that the threshold question to be answered in every matter where this Court’s jurisdiction is sought to be invoked under section 167(3)(b)(i) through section 39(2) is whether there is a plausible case for supposing that a proper consideration of constitutional factors or the weight attached to them, could lead to a different outcome. If there is, the allegation of the section 39(2) failure raises a constitutional matter. This question is not concerned with the merits of the interpretation contended for but with the subject-matter of the claim.

In this matter, what was evident from both the SCA and ECHC judgments was that neither had ignored constitutional considerations in their interpretations of the Acts and were alive to the normative framework of the Constitution. They nonetheless found against the applicants.

The Court found that it was not plausible to suppose that proper consideration of constitutional factors could lead to a different outcome on whether or not freeplay is included in the definition of AGR in the Acts. The Court found that the applicants’ case boiled down to a contention that the ECHC and the SCA reached an incorrect decision on the interpretation of the Acts. The interpretation issue did not raise a constitutional matter and the Court’s constitutional jurisdiction could not be located there.

The applicants also said that the matter engaged this Court’s constitutional jurisdiction because the proper interpretation and scope of a taxing provision was a constitutional matter since a provincial legislature’s power to impose tax and levies derives from section 228(1) of the Constitution. The Court found that the matter did not concern the power of a provincial government to collect tax in any sense that triggers constitutional concerns.

The Court found that the sole issue that arose and which was dispositive of the dispute was whether freeplay is included in the definition of taxable revenue in the Acts. That was not a matter that engaged this Court’s constitutional jurisdiction.

Regarding the applicants’ contention in relation to general jurisdiction, the Court found that an arguable point of law was raised. However, the Court found that the arguable point of law was not one of general public importance, the disposition of which would transcend the narrow interests of the litigants and implicate the interests of a significant part of the public.

Based on the pleadings, the Court found that the interpretation of the Acts and the resultant impact on casino operators or gambling boards was confined to the impact on the parties before it. Nothing before the Court indicated that this issue was of relevance to other casino operators outside of the Sun International stable. What was more was that nothing before the Court suggested that other Sun International casinos, aside from those before it, would have been affected by a decision of the Court on this issue.

The Court found that the applicants’ appeal to the public impact of gambling taxes on the provincial fiscus did not, in itself, elevate the arguable point of law to one of general public importance. Although the outcome of the matter may have had consequences for provincial revenue raising in the Eastern Cape and Western Cape, these knock-on effects did not change the nature and importance of the question at hand – a question of interpretation of two provincial gambling statutes which affected only the interests of these litigants.

The Court found that the pleadings fell short of demonstrating the public importance that the point of law triggered. As the matter failed to meet this threshold requirement, the matter did not engage the Court’s general jurisdiction.

Because of the above, this matter did not engage the Court’s constitutional or general jurisdiction and leave to appeal was thus refused.

The Full judgment  here