[2025] ZACC 18
Gambling — Western Cape Gambling and Racing Act 4 of 1996 — Eastern Cape Gambling Act 5 of 1997 — proper interpretation of gambling tax provisions — freeplay credits — whether part of adjusted gross revenue Section 167(3)(b)(ii) — general jurisdiction — nature of matters falling within scope — arguable point of law of general public importance which ought to be considered — arguable point of law not transcending the interests of the parties Section 167(3)(b)(i) — constitutional matters — nature of matters falling within scope
The court's own headnote.
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.
Published by the court for the media; it does not form part of the judgment.
CONSTITUTIONAL COURT OF SOUTH AFRICA Case CCT: 261/2023 In the matter between: SUNWEST INTERNATIONAL (PTY) LTD t/a GRANDWEST CASINO & ENTERTAINMENT WORLD First Applicant WORCESTER CASINO (PTY) LTD t/a GOLDEN VALLEY CASINO & LODGE Second Applicant and WESTERN CAPE GAMBLING AND RACING BOARD First Respondent PROVINCIAL MINISTER OF FINANCE, WESTERN CAPE Second Respondent Case CCT:285/2023 In the matter between: EMFULENI RESORTS (PTY) LTD T/A THE BOARDWALK CASINO AND ENTERTAINMENT WORLD First Applicant TRANSKEI SUN INTERNATIONAL LIMITED T/A WILD COAST SUN Second Applicant and EASTERN CAPE GAMBLING BOARD First Respondent PROVINCIAL MINISTER OF FINANCE, EASTERN CAPE Second Respondent APPLICANTS’ HEADS OF ARGUMENT : CONSOLIDATED TABLE OF CONTENTS INTRODUCTION ........................................................................................................ 1 THE CRISP ISSUE FOR DETERMINATION ............................................................. 4 FREEPLAY ................................................................................................................ 5 INTERPRETING THE LEGISLATIVE SCHEME ........................................................ 9 Principles of interpretation ...................................................................................... 9 The provisions of the WC Gambling Act and the EC Gambling Act ...................... 11 Slot machines................................................................................................ 17 Text and context ................................................................................................... 21 Purpose ................................................................................................................ 26 Constitutional considerations ................................................................................ 27 Conclusion: taxable revenue ................................................................................ 31 THE JUDGMENTS AND ORDERS A QUO ............................................................. 32 The SCA Order ..................................................................................................... 32 The EC Order ....................................................................................................... 41 CONSEQUENTIAL REPAYMENT RELIEF ............................................................. 42 JURISDICTION AND LEAVE TO APPEAL ............................................................. 47 Jurisdiction ......................................................................................................... 47 Leave to appeal ................................................................................................... 49 Other procedural issues ........................................................................................ 50 Condonation: EC application ......................................................................... 50 Replying affidavit: EC application .................................................................. 51 CONCLUSION ......................................................................................................... 52 1 INTRODUCTION 1 There are two applications for leave to appeal pending before this Court, which have been set down for hearing together: 1.1 In CCT 261/2023, the applicants hold casino operator licences in the Western Cape in terms of the Western Cape Gambling and Racing Act, 1996 ("the WC Gambling Act"), and are subject to the oversight of the Western Cape Gambling Board ("the WC Board"). The WC Board and the MEC for Finance in the Western Cape are the respondents in that matter. The Eastern Cape Gambling Board ("the EC Board") intervened as an amicus curiae in that matter, both before the High Court and in the Supreme Court of Appeal ("SCA"). 1.2 In CCT 285/2023, the applicants hold casino operator licences in the Eastern Cape, in terms of the Eastern Cape Gambling and Betting Act, 1997 ("the EC Gambling Act"), and are subject to the oversight of the EC Board. The EC Board and the MEC for Finance in the Eastern Cape are the respondents to that application. 2 Both cases raise the same legal issue: whether non-cashable, non-transferable credits that casino operators gift to members of their loyalty programmes for use on the casino’s cashless slot machines – called Freeplay – form part of the casino operator’s taxable revenue. That question must be answered through interpreting virtually identical provisions in the WC Gambling Act and the EC Gambling Act. 3 In each case, the relevant Board has required the applicant casino operators to 2 pay tax on the value of Freeplay, despite their objections that Freeplay is not part of their taxable revenue. That gave rise to the two separate applications. 4 In the WC application: 4.1 On 9 February 2018, the WC applicants applied to the Western Cape High Court for (a) declaratory relief to the effect that Freeplay should not be taken into account in calculating the applicants’ "adjusted gross revenue", and (b) an order directing the MEC to refund the amount of tax paid on Freeplay by Grandwest Casino and Golden Valley, respectively, or to set it off against the applicants’ respective future liability for gambling tax under section 64 read with schedule III of the WC Gambling Act. 1 4.2 On 29 April 2020, a Full Court of the Western Cape High Court granted the declaratory relief sought, and ordered the WC Board to off-set the applicants’ future liability for gambling tax, against past payments on Freeplay (with the set-off amounts to be agreed between the parties or proved by the applicants) ("the WC Order"). 2 4.3 The WC respondents appealed the WC Order, with the High Court’s leave, 3 to the SCA. The SCA upheld the appeal on 4 September 2023 (“the SCA Order”), finding that the term "adjusted gross revenue" did not distinguish between Freeplay from plays that are paid for by the punter, and consequently that both formed part of the casino operator’s taxable revenue. 1 NOM paras 1-3 (WC record pp 1-2). 2 WC Order para 38 (WC record pp 478-479). 3 WC record pp 289-298. 3 4.4 The WC applicants seek leave to appeal to this Court against the whole of the SCA Order. The proposed appeal raises both constitutional issues concerning the Board’s taxing powers and arguable points of law of public importance. For reasons set out below, we submit that it is in the interests of justice that leave to appeal be granted. 5 In the EC application: 5.1 The EC applicants applied, on 28 March 2022, for similar declaratory and directory relief, 4 in respect of gambling tax paid on Freeplay by Boardwalk Casino and the Wild Coast Sun. The Eastern Cape High Court dismissed that application on 23 January 2023 ("the EC Order"). 5 5.2 By the time that the EC applicants had lodged their application for leave to appeal against the High Court’s judgment and order, 6 the WC application had been heard by the SCA and its judgment was pending. The EC parties agreed that the EC application for leave to appeal would be stayed pending the outcome of the SCA appeal. 5.3 After the SCA Order was delivered, the WC applicants sought leave to appeal it to this Court. The EC applicants then applied for leave to appeal the EC Order directly to this Court. Given that the EC application raises the same legal issues, it is submitted that it is appropriate that the matters are heard together. The EC Board shares that view. 7 4 NOM paras 1-3 (EC record pp 1-2) 5 EC Order: EC record pp 315-339. 6 Application for leave to appeal: EC record pp 244-255. 7 See annexure "FA10" to Emfuleni FA: EC record pp 390-391. 4 6 Because the subject matter, the legislative schemes and the arguments of the parties are substantively the same in both applications, the applicants have filed consolidated heads addressing both matters. We deal first with the issues that are common to both, and then address the differing grounds on which they seek leave to appeal to this Court. THE CRISP ISSUE FOR DETERMINATION 7 The crisp issue in dispute between the parties is whether Freeplay is included in a casino operator’s "adjusted gross revenue", and consequently whether it forms part of its "taxable revenue". The WC and EC Gambling Acts both define taxable revenue as "adjusted gross revenue less admissible deductions as determined under this Act". 8 "Adjusted gross revenue" is defined, in both Acts, with reference to the type of gambling activity involved. 9 8 In these applications, the relevant gambling activity is played on cashless slot machines, which means that adjusted gross revenue is calculated as "the drop, less fills to the machine and winnings paid out", 10 with the term "drop" defined, 8 Definition of "taxable revenue" in item 1 of part A of schedule III to the WC Gambling Act and item 1 of part A of schedule III to the EC Gambling Act. 9 The applicants accept that the use of Freeplay is a gambling activity within the meaning of the Acts. Section 1(2) of the WC Act, and section 18B of the EC Act, define gambling activities to include the making of a gambling game available for play. An activity constitutes a gambling game, under section 1(5) of the WC Gambling Act and section 18E of the EC Gambling Act, if: "(a) it meets the following criteria:- (i) it is played upon payment of any consideration, with the chance that the person playing the game might become entitled to, or receive a pay-out; and (ii) the result might be determined by the skill of the player, the element of chance, or both; or (b) it is a bet or wager in terms of [section 1(3) or 18C respectively], that is placed in a casino in relation to an activity that meets the criteria in paragraph (a)." 10 Paragraph (d) of the definition of adjusted gross revenue in item 1 of part A of schedule III to the WC Gambling Act, and paragraph (d) of the definition in item 1 of part A of schedule III to the EC Gambling Act. 5 insofar as cashless slot machines are concerned, as "the amount deducted from players' slot accounts as a result of" the play on the machine. 11 9 Therefore, the dispute between the parties is whether Freeplay is an "amount deducted from the players’ slot accounts", as contemplated in the definition of "drop" in the WC and EC Gambling Acts: 9.1 The applicants submit that it is not. That is primarily because the WC Gambling Act and EC Gambling Act impose gambling tax on revenue received by a casino operator – which Freeplay, by its nature, does not contribute towards. 9.2 The respondents argue that it is, because the WC Gambling Act and EC Gambling Act impose gambling tax on the gambling activity as such, regardless of any contribution that this activity makes towards the casino operator’s revenue. FREEPLAY 12 10 To incentivise use of their casinos, the applicant casino operators gift Freeplay to their Most Valued Players. Freeplay confers on the player an entitlement to use the casino’s cashless slot machines, without the player having to wager any of their own money – i.e., the player is afforded a free right of use. 11 The name "Freeplay" accurately captures the essence of this use-right, namely, a liberty, in the form of a discretion, to use (play) particular slot machines without 11 Paragraph (b) of the definition of “drop” in item 1 of part A of schedule III to the WC Gambling Act, and paragraph (b) of the definition in item 1 of part A of schedule III to the EC Gambling Act. 12 Sunwest FA paras 19-22 (WC record pp 402-408) and Emfuleni FA paras 22-24 (EC record pp 266- 273). 6 having to wager any money or to pay the casino operator any fee for this right to play (free). 13 12 The technology to track Freeplay only arose after the promulgation of each of the Gambling Acts. 14 13 Players do not purchase Freeplay. Rather, it is an electronically generated and infinite resource, 15 which is unilaterally loaded onto a player’s card, in the casino applicants' discretion, and as a reward for the player's loyalty to an applicant’s business. An eligible player will receive a message informing them that they have been awarded Freeplay and inviting them to use it, often within a set time period, at a particular casino. Freeplay affords that player the right to play on the applicant’s cashless slot machines. 14 A player who has been awarded Freeplay will insert their personal casino card into a cashless slot machine, and will be presented with two options: 14.1 they can download Freeplay to that slot machine and play using the notional credit attributed to them; or 14.2 they can use actual credit which they have purchased from the applicants and which has been credited to the player’s slots account (which use the applicants refer to as "Cashplay"). 13 Sunwest FA para 12 (WC record pp 399-400) and Emfuleni FA para 14 (EC record p 263). 14 Sunwest FA annexure "KR4" paras 1 and 2 (WC record p 35) and Emfuleni annexure "KR6" para 1 (EC record p 41). 15 Apart from labour and/or material costs incurred in the creation of the underlying code and distributing its result, Freeplay, to players, the applicants can produce and then distribute Freeplay without expense and without limit: Sunwest FA para 19.1 (WC record p 402) and Emfuleni FA para 22.1 (EC record p 266) 7 15 Unlike Cashplay, Freeplay cannot be redeemed for cash or transferred to others. The only right embodied in Freeplay is a discretionary use-right i.e., a liberty to decide whether or not to use an applicant’s cashless slot machines within the requisite period. 16 Therefore, whilst both Freeplay and Cashplay are electronically represented in a Rand value, only Cashplay has real value, in the sense that: 16.1 it is paid for by the player; 16.2 it represents a receipt in the hands of the applicant casino operator; and 16.3 it is capable of being exchanged for money. 17 Freeplay is merely a notional credit. The player cannot purchase, cash in or transfer their Freeplay. Therefore, Freeplay has no value in an economic sense, and it certainly has none to the casino operator. If the player uses it, they have an opportunity to play; if they don’t, then the issue is academic, on any version. If the player wins using Freeplay, the casino pays out money; if the player uses Freeplay but does not win, the casino does not "receive" Freeplay: the Freeplay (generated by code) is simply extinguished. The casino is no better off; there is no finite pool of Freeplay which is replenished or which represents a return of value to the casino. Freeplay can thus never be a receipt in any of the applicants’ hands. 18 Freeplay and Cashplay are consequently wholly distinct from one another. They are defined by logically different origins and logically different rights: 18.1 Freeplay is constituted by the unilateral provision by a casino operator, to 8 a player, of an opportunity to play the operator’s slot machines. The player does not pay for this use-right, and the player cannot redeem it for money or transfer it to third parties. 18.2 Cashplay derives from a payment of valuable consideration by the player to the casino operator, in exchange for the opportunity to wager on the operator’s slot machines. The consideration paid by the player has real value, and can be exchanged with a casino or a third party for money. 16 19 No revenue ever flows to the casino operator from a player’s exercise of their Freeplay right. Only two possible outcomes can flow from the use of Freeplay. A player can win or they can lose: 19.1 If they win, a casino operator’s economic position is worse off, for it must pay out cashable winnings to the player. 19.2 If they lose, the casino operator’s economic position remains neutral, for it never receives anything from the player in exchange for Freeplay. 20 On the interpretation adopted by the Gambling Boards, the applicant casinos would be taxed even where – through the use of Freeplay – they incur a loss. If, hypothetically, a punter used R 100 of Freeplay to win R 70 of a casino's money, the casino would be worse off by R 70. That play, however, would also be taxed (with the monetary representation of Freeplay decreasing by R 30). As such, not only would the casino's economic position decrease by R 70, it would be taxed on this loss-resulting play. 16 Cashplay includes non-negotiable chips, because these chips possess the value-characteristics that Freeplay does not: Sunwest FA paras 21-22 (WC record pp 407-408) and Emfuleni FA para 24 (EC record pp 271-273) and RA paras 11-14 (EC record pp 473-475). 9 21 The EC and WC respondents obscure the distinctions between Freeplay and Cashplay, claiming that both carry "value" because both afford the player an opportunity to place bets and to win money on the slot machine in question. 17 The distinctions, however, are critical. Once they are grasped, it becomes clear that the outcome of the applications turns on whether the WC and EC Gambling Acts have as their function to tax only income that is actually received, or also to tax notional "value" that is contributed by the casino operator itself in the hope of incentivising gambling. 22 As we submit below, properly interpreted, both statutes tax only Cashplay. This is because their concern is activities that generate revenue for the holders of casino licences – something which Freeplay, logically, cannot do. INTERPRETING THE LEGISLATIVE SCHEME Principles of interpretation 23 When interpreting the WC Gambling Act and the EC Gambling Act, these well- established principles apply: 23.1 Statutory interpretation is a unitary exercise, i.e., interpretation must be approached holistically, by simultaneously considering the text, context and purpose of the legislation. 18 23.2 This objective unitary interpretation aims to give a "sensible" meaning to the words used. What must be avoided is an interpretation that leads to 17 WC Board AA para 9 (WC record p 491), WC MEC AA paras 23-37 (WC record pp 513-517), EC Board paras 21-22 (EC record p 404), and EC MEC AA para 4 (EC record p 457). 18 Chisuse v Director-General, Department of Home Affairs 2020 (6) SA 14 (CC) para 52. 10 any "insensible or unbusinesslike results or undermines the apparent purpose of the document". 19 23.3 Each of these principles apply with an especial force to the interpretation of economic-regulatory legislation. Therefore, formalistic interpretations that lead to insensible and unbusinesslike results, and which serve no conceivable reasons, and thwart the purpose of the legislation, are to be avoided. 20 23.4 Whilst interpretation is a unitary exercise, the point of departure is that the words used should be construed in accordance with their ordinary grammatical meaning, unless this would result in absurdity. 21 23.5 This starting point, however, is subject to three "riders", 22 namely, the provisions must be: 23.5.1 interpreted purposively, which includes taking into account the relevant background to these provisions; 23 23.5.2 contextualised, i.e., they must be situated within the scheme of the statute as a whole; 24 and 23.5.3 interpreted, whenever doing this is possible, consistently with 19 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18. 20 C:SARS v United Manganese of Kalahari (Pty) Ltd 2020 (4) SA 428 (SCA) para 15. 21 Minister of Police and Others v Fidelity Security Services (Pty) Ltd 2022 (2) SACR 519 (CC) para 34(a). 22 Cool Ideas 1186 CC v Hubbard and Another 2014 (4) SA 474 (CC) para 28. 23 Department of Land Affairs v Goedgelegen Tropical Fruits (Pty) Ltd 2007 (6) SA 199 (CC) para 53. 24 Mistry v Interim National Medical and Dental Council 1998 (4) SA 1127 (CC) para 17. 11 the Constitution, 25 and the interpretation that best does justice to the spirit of the Constitution must be preferred. 26 24 Against that background, we turn to the relevant provisions of the WC Gambling Act and EC Gambling Act. The provisions of the WC Gambling Act and the EC Gambling Act 25 Gambling tax is levied in terms of section 64(1) and (2) of the WC Gambling Act, which states: (1) From time to time and in the manner prescribed, there shall be paid to the Board gambling and on betting taxes and levies, by the holders of licences as provided for in Schedules III and IV." (2) Unless otherwise prescribed, the taxes and levies contemplated in subsection (1) shall be— (a) on the bases, at the rates or percentages or in the amounts, and (b) payable in the manner and at the times provided for in Schedules III and IV.” 26 Sections 57(4) and (5) of the EC Gambling are in materially the same (but not identical) terms. They provide: (4) There shall be paid from time to time and in the manner prescribed 25 Satawu and Another v Garvas and Others 2013 (1) SA 83 (CC) para 37. 26 Competition Commission of South Africa v Pickfords Removals SA (Pty) Ltd 2021 (3) SA 1 (CC) para 37. 12 into the Provincial Revenue Fund fees and betting taxes on the bases, at the rates, at the times, in the amounts (if applicable) and by the holders of licences provided for in Schedules III and IV. (5) The recovery of the taxes contemplated in subsection (4), the penalties and interest payable on such taxes, the calculation of such interest and penalties, the offences in regard to the evasion of such taxes, the schemes for obtaining undue tax benefits and the powers of the responsible Member to conclude tax agreements shall be as provided for in Part C of Schedule III, and in Schedule IV. 27 In both Acts, gambling tax is imposed in Part B of Schedule III. Both provide for gambling tax to be calculated, in respect of casino licences, on "taxable revenue" in the relevant tax period: 27.1 In the Western Cape, gambling tax is paid at a minimum rate of 8% of each R 1 of taxable revenue, where the taxable revenue does not exceed R 14.2 million. The tax rate steps up as taxable revenue increases, to a maximum rate that applies where taxable revenue exceeds R 71 million. In that instance, the rate is R 9.017 million plus 19% of the amount by which taxable revenue exceeds R 71 million. 27.2 In the Eastern Cape, gambling tax is paid at a minimum rate of 3% of each R 1 of taxable revenue, if taxable revenue does not exceed R 4 million. An intermediate rate applies where taxable revenue exceeds R 4 million but is less than R 8 million. The maximum rate applies where taxable revenue exceeds R 8 million. 13 28 As a starting point, then, the Acts prescribe gambling tax rates on an increasing marginal, or progressive, rate based on revenue. Internal to the logic of the taxation regime is the idea that the greater the revenue generated by the licensed activities, the higher the rate of tax that the licensee must pay. The volume of gambling activities undertaken at a particular casino is irrelevant to determining the applicable taxation rate (which is an indicator that it is not the act of gambling which is the subject of the tax, but the revenue it generates). 29 "Taxable revenue" is defined, in section 1 of Part A of Schedule III of both Acts, as "adjusted gross revenue less admissible deductions as determined under this Act". 27 30 In turn, "adjusted gross revenue" is defined, in the WC Gambling Act, to mean: "(a) except in regard to any game contemplated in subparagraphs (b), (c), (d), (e) and (f) below, the total amount of all bets accepted in the Province and received by or accruing to a licence holder, including the face value of any credit instrument accepted, and any payment received by or accruing to a betting operator as winnings in consequence of a take-back bet placed by such betting operator, less winnings paid out by a licence holder; provided that a bet shall be deemed to have been accepted by a licence holder at the licensed premises of such licence holder, if acceptance of the bet by the licence holder concludes the transaction; 28 27 Emphases added. 28 Sub-section (a) of the EC Gambling Act is framed as follows: “except in regard to any game contemplated in paragraphs (b), (c), (d), (e) and ( f ), the total amount of all bets accepted in the Province and received by or accruing to a licence holder, including the face value of any credit instrument accepted less winnings paid out by a licence holder, and a bet shall in this instance be deemed to have been accepted by a licence holder at the licensed premises of such licence holder, if acceptance of the bet by the licence holder concludes the transaction” 14 (b) in relation to any gambling game in which the licence holder is not a party to a bet, all amounts received by or accruing to the licence holder as compensation for conducting such a gambling game in the Province; (c) in relation to any table games, other than those contemplated in subparagraph (b) above, conducted by a licence holder in the Province, the closing bankroll plus credit slips for cash, chips or tokens returned to the casino cashier, plus drop, plus the face value of coupons, less the opening bankroll and fills to the table; (d) in relation to slot machines, other than those contemplated in subparagraphs (e) and (f) below operated by a licence holder in the Province, the drop, less fills to the machine and winnings paid out; provided that the initial hopper load shall not constitute a fill and shall not affect the calculation of adjusted gross revenue; 29 (e) in relation to slot machines operated by a licence holder in the Province which are linked via a wide-area progressive system, the drop, less fills to the machine, less any contributions made by the licence holder which are payable in consequence of such wide-area progressive system in respect of such slot machines during the tax period, and less any winnings paid out which are not recoverable from the central fund in terms of the wide-area progressive system; provided that the initial hopper load shall not constitute a fill and shall not affect the calculation 29 Sub-section (d) of the EC Gambling Act is framed as follows: “in relation to gambling machines including limited gambling machines, other than those contemplated in paragraph (e) below operated by a licence holder in the Province, the drop, less fills to the machine and winnings paid out: Provided that the initial hopper load shall not constitute a fill and shall not affect the calculation of adjusted gross revenue” 15 of adjusted gross revenue; provided further that where any surplus amount is distributed from the central fund to a licence holder or where any licence holder withdraws from a wide-area progressive system and in consequence of such distribution or withdrawal recovers or recoups during any tax period any contribution previously deducted under this subparagraph, such contribution so recovered or recouped shall be included in the licence holder’s adjusted gross revenue in the tax period in which the contribution is recovered or recouped; 30 and (f) in relation to limited gambling machines exposed for play in the Province by the holder of a limited gambling machine operator licence, the total value registered by the electronic monitoring system on the in-meter less the total value so registered on the out meter of each such machine". 31 31 The definition in the EC Gambling Act is in materially similar terms. 32 32 The adjusted gross revenue of the applicants’ cashless slot machines is governed by sub-sections (d) and (e) of the definition. We return to their wording 30 Sub-section (e) of the EC Gambling Act is framed as follows: “in relation to gambling machines operated by a licence holder in the Province which are linked via a wide area progressive system, the drop, less fills to the machine, less any contributions made by the licence holder which are payable in consequence of such wide area progressive system in respect of such gambling machines during the tax period, and less any winnings paid out which are not recoverable from the central fill and shall not affect the calculation of adjusted gross revenue: Provided that the initial hopper load shall not constitute a fill and shall not affect the calculation of adjusted gross revenue: Provided further that where any surplus amount is distributed from the central fund to a licence holder or where any licence holder withdraws from a wide area progressive system and in consequence of such distribution or withdrawal recovers or recoups during any tax period any contribution previously deducted under this paragraph, such contribution so recovered or recouped shall be included in the licence holder's adjusted gross revenue in the tax period in which the contribution is recovered or recouped”. 31 Sub-section (f) of the EC Gambling Act is framed as follows: “in relation to any bingo game the total amount of money staked by players on a bingo game, including participation fees, less the total amount returned to players by way of prizes.” 32 The minor differences in wording appear from the extracts above. 16 below. For present purposes, we submit that they follow the same pattern as the other sub-sections. In each instance, adjusted gross revenue is defined to identify the income (receipts or accruals) that the licensee receives, less the expenditure (float and/or winnings) that it pays out: 32.1 For a bookmaker (governed by (a)), the adjusted gross revenue is the total amount of all bets "received by or accruing to" and any payment "received by or accruing to" the betting operator as winnings pursuant to a take-back bet, less winnings paid out by a licence holder. 32.2 For table games (governed by (c)), the adjusted gross revenue is "the closing bankroll plus credit slips for cash, chips or tokens returned to the casino cashier, plus drop, plus the face value of coupons" (that is, all receipts), less "the opening bankroll and fills to the table" (that is, expenditure by the house, with the difference thus making an allowance for the winnings the house pays out). 32.3 For bingo machines and limited gambling machines (governed by (f)), the adjusted gross revenue is the total value registered on the "in-meter" less the total value registered on the "out meter" of each such machine (i.e. payments in less payments out, such that the difference represents the house's take). 32.4 For gambling games where the licensee is not a party to the bet (governed by (b)), the adjusted gross revenue is all the amounts received by or accruing to the licensee as compensation for conducting the game. Because the licensee is not a party to the bet, it does not pay out winnings and consequently has no relevant expenditure to deduct. 17 33 The formula indicates that, in each instance, gambling tax is levied on the economic benefits and gains garnered by a licence holder pursuant to the gambling activity – and not on the gambling activity per se. 34 "Admissible deductions" pertinently comprise bad debt that the licensee has been unable to recover due to insolvency. 33 A licensee is thus also permitted to strip out, from its calculation of taxable revenue, monies that it charged but did not in fact recover. Again, this indicates that taxable revenue is concerned with economic benefits actually obtained by casino licence holders. If it were the bare act of gambling that was being taxed, the fact that certain debts have become irrecoverable would be irrelevant to the calculation of taxable revenue. 35 Against that background, we turn to the particular terms that apply in respect of slot machines. Slot machines 36 In terms of sub-sections (d) and (e) of the definition, adjusted gross revenue, in relation to slot machines, comprises the "drop" minus machine "fills" (excluding 33 In the WC Gambling Act, “admissible deductions” are defined as: (a) the amount of any take-back bet proved to have been placed by a betting operator; provided that the said amount shall not exceed the betting operator’s commitment in respect of the bet or bets covered by such take-back bet; (b) the amount of any debts due to the licence holder which have during the tax period become bad in consequence of any form of insolvency referred to in the Insolvency Act, 1936 (Act 24 of 1936), as amended, on condition that such amount is included in the current tax period or was included in previous tax periods in the licence holder’s adjusted gross revenue”. In the EC Gambling Act, they are: (a) the amount of any debts due to the licence holder which have during the tax period become bad in consequence of any form of insolvency referred to in the Insolvency Act, 1936 (Act No. 24 of 1936), on condition that such amount is included in the current tax period or was included in previous tax periods in the licence holder's adjusted gross revenue; and (b) the aggregate amount of any loss or losses sustained in a previous tax period or periods which has not previously been deducted under this paragraph: Provided that no such loss may be deducted by any licence holder against other taxable revenue derived in consequence of any other licence held by the licence holder” 18 the initial "hopper" load, which cannot be treated as a "fill"), minus "winnings" – and, in the case of slots linked to a wide-area progressive payment system, also minus "any contributions made by the licence holder in consequence of such wide-area progressive system". 37 Those terms are defined in item 1 of Part A to Schedule III of both Acts: 37.1 The "drop" means, in relation to slot (or gambling, in the parlance of the EC Gambling Act) machines, "the total amount of money and tokens removed from the drop box, or for cash-less slot machines, the amount deducted from players' slot accounts as a result of slot machine play". 37.2 The term "drop box" means: "(a) in relation to table games, a locked container permanently marked with the game, shift and number corresponding to a permanent number of the table, into which all currency exchanged for chips or tokens or credit instruments at the table and all other documents pertaining to transactions at the table must be placed; and (b) in relation to slot machines [or gaming machines], a container in a locked portion of the machine or its cabinet used to collect the money and tokens which are retained by the machine and are not used to make automatic payouts from the machine, which container is permanently marked with the number of the machine" (emphases added). 34 34 Emphases added. 19 37.3 "Fills" in relation to slot machines refers to the "the replenishment of coins or tokens in the hopper", with "hopper" referring to the "receptacle within a slot machine which receives until full, coins or tokens inserted into the machine and from which winnings are paid out if there are sufficient coins to do so". 35 37.4 "Winnings" are the "total amount of: (a) any cash; (b) the monetary value stated on every token, chip, voucher or stamp redeemable for money or value; (c) the value of any credits won as a result of obtaining a winning result on a gambling device and transferred onto any smart card in a cashless gaming system; (d) the cost to the licence holder of any asset, paid or granted by the licence holder to or for the benefit of any person as winnings in consequence of any stake accepted by the licence holder: Provided that where any winnings are paid out in the form of an annuity, only the amount of such annuity payment made by the licence holder or the cost of a purchased annuity, where such an annuity is purchased by the licence holder, may be excluded in the determination of adjusted gross revenue". 35 Emphases added. 20 38 In the context of a traditional slot machine, the import of these definitions is clear. Adjusted gross revenue is the total amount of money or tokens (comprising payments in by players) paid into a machine’s drop box, less the monies that constitute expenditure by the casino – namely, replenishment payments (fills) and pay-outs (winnings) that it funds. The formula is clearly intended to determine and tax the revenue that accrues to the casino through the operation of its slot machines. Like the deduction of winnings and the exclusion of bad debts, this indicates that gambling tax concerns monies received by the casino operator. 39 Cashless slot machines, though, do not have drop boxes. For this reason, paragraph (b) of the definition of "drop" substitutes for the term "drop box" the words "the amount deducted from players' slot accounts as a result of slot machine play". In doing so, the Acts seek to replicate the formula applicable to cash slot machines, in respect of cashless slot machines. The formula applicable to cashless slot machines must, for the sake of internal consistency, apply the same approach adopted in respect of all other gambling activities offered by licence holders. 40 On that approach, "the amount deducted from players' slot accounts as a result of slot machine play" can only be the amount of money (or the real economic value) credited to the player’s card pursuant to payments made or won by the player. It cannot sensibly be interpreted to include Freeplay which (i) has no real economic value, and (ii) derives from the casino, not the player. 41 Freeplay consequently is not "an amount deducted from the players’ slot accounts as a result of slot machine play", and consequently does not form part 21 of the cashless slot machine’s "drop" or a casino operator’s adjusted gross revenue for the purposes of calculating its taxable revenue. Text and context 42 We submit that, properly interpreted, the imposition of gambling tax under the WC and EC Gambling Acts is concerned with the taxation of revenue – being the economic benefits that casino licence holders glean from the operation of their casinos. It is not, as the respondents contend, the mere use of slot machines that is the object of the taxation regime, but rather the amount of economic exchange-value retained by casinos consequent upon this use. 43 This interpretation of the respective Acts is supported by the following textual and contextual markers. 44 First, gambling and gambling activities are broadly defined, with reference to the payment of "consideration" for the opportunity win a "pay-off" or "pay-out". 44.1 An activity constitutes a "gambling game" under both Acts if: (a) it meets the following criteria:- (i) it is played upon payment of any consideration, with the chance that the person playing the game might become entitled to, or receive a pay-out; and (ii) the result might be determined by the skill of the player, the element of chance, or both; or (b) it is a bet or wager in terms of subsection (3), that is placed in a 22 casino in relation to an activity that meets the criteria in paragraph (a)." 36 44.2 The payment of consideration is also constitutive of the definition of "slot machine", which requires payment of consideration to play or operate. 44.3 The term "consideration" is broadly defined as: "(a) money, merchandise, property, a cheque, a token, a ticket, electronic credit, credit, debit or an electronic chip, or similar object; or (b) any other thing, undertaking, promise, agreement or assurance, regardless of its apparent or intrinsic value, or whether it is transferred directly or indirectly". 37 44.4 Just as payment of consideration is constitutive of gambling activity, so is a player who "stakes money or anything of value" a constitutive element of the definitions of gambling activities in sections 1(3) and 1(4) of the WC Gambling Act, and sections 18C and 18D of the EC Gambling Act. 44.5 The correlative of the player’s payment of consideration to the applicants for the right to use their slot machines is the player’s right to a "pay-off" 38 or "pay-out" 39 if they win. Section 1(7) of the WC Gambling Act and section 36 Section 1(5) of the WC Gambling Act; section 18E of the EC Gambling Act. Emphases added. 37 Section 1 of WC and EC Gambling Act. 38 See the definition of "slot machine" in section 1 of the WC Gambling Act. 39 See the definition of "gambling machine" in section 1 of the WC Gambling Act and “gambling activity” defined in section 1(5) of the WC Gambling Act, and of “gambling game” in section 18E of the EC Gambling Act. 23 18F of the EC Gambling Act define a "pay-out" as "anything of value won by the player" (but excluding an opportunity to play a further game). 45 However, these taxing provisions – sections 64 and 57 and Schedules III of the WC and EC Gambling Acts respectively – make no mention of "consideration" or "pay-out" in stipulating the formula for calculating taxable revenue. Instead, they use entirely different, bespoke terms. If gambling tax were to be imposed on every gambling activity, then one would expect congruence in the terms used in these provisions. 46 Second, "social gambling", defined in both Acts as the playing of a gambling game offered by a person who receives no remuneration or compensation for doing so, or who does so for fund-raising purposes, is not liable to gambling tax. That is because: 46.1 "Gambling" and "gambling activity" are defined, in the WC Gambling Act, to exclude social gambling. 40 46.2 Under the EC Gambling Act, social gambling may be offered for play under the authority of a temporary licence. 41 Temporary licences are not subject to gambling tax under Schedule III. 47 The exclusion of social gambling from the gambling tax regime would make no sense if it were the bare act of gambling that was being taxed. In the absence of a value exchange with the casino, in terms of which it receives remuneration or compensation, no tax liability results. 40 See definition of “gambling activity” in section 1 of the WC Gambling Act. 41 Issued in terms of s 38(e). 24 48 Third, the opportunity to play a further game is not a "pay-out" (or a win) under section 1(7)(b) of the WC Gambling Act and section 18F(b) of the EC Gambling Act. Importantly, however, the result of a game does not qualify as an opportunity to play a further game if that opportunity "can in any manner, whether directly or indirectly", be: "(aa) distributed or transferred to the person who has won such an opportunity or to any other person; or (bb) converted into money, property, a cheque, credit or any other thing of value . . ." 42 49 If the opportunity to play a further game meets these qualifying characteristics, then it is treated as a pay-out (and is recognised as being "something of value won by a player"). Therefore, the Acts recognise a qualitative difference between a non-transferable, non-redeemable opportunity to play, and an opportunity to play that can be cashed in or distributed on to a third party. This is a distinction between use-value and exchange-value, which is the same distinction that exists between Freeplay and Cashplay. 50 Fourth (and as set out above), various aspects of the definition of adjusted gross revenue demonstrate an intent to tax the revenue generated by a licence holder – that is, the economic benefits obtained through offering gambling activities – and not to tax the gambling activity per se. They include: 50.1 The deduction of winnings in calculating the drop under paragraphs (d) and (e) of the definition of adjusted gross revenue – which serves to strip 42 Section 1(7)(c) of the WC Gambling Act and s 18F(c)(ii) of the EC Gambling Act. Emphases added. 25 out the casino spend. If it were the bare act of gambling that was being taxed, whether a casino received or lost money would be irrelevant in calculating taxable revenue. The deduction of winnings, therefore, indicates that what is being taxed is the economic benefit gained by the casino operator from providing the gambling activity. 50.2 The deduction of "fills to the machine" in the calculation of adjusted gross revenue. Like the deduction of winnings and the exclusion of bad debts (through the "admissible deductions"), this indicates that taxable revenue concerns economic benefits and gains by the casino operator. 50.3 Paragraphs (a), (b), (c) and (f) of the definition of adjusted gross revenue similarly contemplate receipt of economic value by a licence holder and the deduction of winnings – which again indicates that what is being taxed is the exchange-value that is retained by the licence holder, and not the bare activity of gambling. 50.4 The definition of "drop", insofar as it concerns table games and cash slot machines, refers to money, chips and tokens, all of which have exchange-value and therefore contribute towards the casino’s revenue. 50.5 The term "drop box" is used in paragraphs (a) and (b) of the definition of "drop", regulating table games and cash slot machines. The definition of "drop box", in paragraphs (a) and (b), contemplates revenue generation. This is evident from the references in: 50.5.1 paragraph (a), to the "currency exchanged for chips or tokens or credit instruments . . . and all other documents pertaining to 26 transactions at the table"; and 50.5.2 paragraph (b), to the "money and tokens which are retained by the machine and are not used to make automatic payouts from the machine". 50.6 Because "drop", read with "drop box", contemplates revenue generation, the words "amount deducted from players' slot accounts as a result of slot machine play" – which relate to the "drop" of a cashless slot machine – must, for the sake of internal consistency, be read as contemplating the generation of revenue. 51 Fifth, the adoption of a progressive tax rate system in Schedule III of both Acts indicates that taxable revenue is tied to the economic benefits derived by the holders of licences, rather than the gambling activity itself. For it means that the greater the benefit to the licence-holder, the higher the tax that they must pay. 52 These provisions all support the view that the gambling tax regime is concerned with taxing revenue that a licence holder generates through the offer for play of gambling activities. But Freeplay generates no revenue for the casino operator. Thus, it follows that when a casino operator benefits from Cashplay, it must pay gambling tax; but merely incentivising players to engage in Cashplay, by giving Freeplay unilaterally to players, is not taxed. Purpose 53 The interpretation advanced by the applicants is also consistent with the purpose underpinning the gambling tax regime: 27 53.1 Its purpose is to tax the income received from a gambling activity, e.g., monies generated where, in exchange for the payment of valuable consideration by a player to a casino, the player receives the right to use the slot machines belonging to the casino operator. 53.2 Where a casino does not receive valuable consideration in exchange for the use of its slot machines, it necessarily does not receive economic value. This is the case with Freeplay, for the right constitutive of Freeplay is given to players unilaterally by the casino operator, rather than received by them in in exchange for their payment of valuable consideration. There is no concomitant receipt by the casino operator where Freeplay is used by the player to play a cashless slot machine. 53.3 Absent the receipt of something of value in exchange for the grant of the Freeplay right, the applicants necessarily make no profit from the use of their machines by way of the exercise by a player of their Freeplay right. And where a player uses their Freeplay right, this right is not transferred to a casino; rather, it is extinguished. The casino does not receive the representation of Freeplay, the right it represents or anything of value. In fact, nothing is transferred to the casino at all: code simply extinguishes a gifted right to use a slot machine without first paying for it. 54 Therefore, the purpose of the taxation provisions in both Gambling Acts is to tax Cashplay, but not Freeplay. Constitutional considerations 55 Whenever reasonably possible, Courts must interpret legislation in a way that: 28 55.1 will avoid the legislation being declared unconstitutional, 43 and 55.2 better promotes the spirit, purport and objects of the Constitution or better gives effect to constitutional rights. 44 56 In this case, the applicants’ interpretation must be preferred because the alternative interpretation proffered by the respondents would be unconstitutional or would not best promote the rights in, and the spirit, purport and objects of, the Constitution. 57 On its face, a tax on "revenue" assumes that the tax will only apply if there is in fact revenue received. Levying tax on Freeplay seems anomalous and arbitrary on this basis alone. It taxes casino operators on monies that they have not in fact received. 58 To avoid this apparent mismatch between the wording of the Acts and their purported operation, the respondents claim that the Acts levy gambling tax on all gambling activity, regardless of whether it generates revenue in the hands of a casino operator. The purpose underpinning that levy, they say, is to deter gambling, in the same way that taxes on alcohol and tobacco do. 45 59 However, the imposition of a gambling tax on a casino operator cannot rationally deter players in the way that taxes on alcohol or tobacco deters consumers. Alcohol and tobacco tax is funded by consumers, not the suppliers/producers. Because the price increases that they impose are borne by the consumer, they 43 Investigating Directorate: Serious Economic Offences v Hyundai Motor Distributors (Pty) Ltd: In Re Hyundai Motor Distributors (Pty) Ltd v Smit N.O. 2001 (1) SA 545 (CC) paras 22-23. 44 Wary Holdings (Pty) Ltd v Stalwo (Pty) Ltd and Another 2009 (1) SA 337 (CC) paras 46, 49 and 84. 45 This is from EC Board AA para 45.2 fn 25 (EC record p 417), but we presume that the WC Board and WC MEC align themselves with this proposition. 29 have a chilling effect on consumption. Gambling tax, by contrast, is payable by casinos, i.e., the supplier of the service. 60 If the purpose of imposing gambling tax were to deter players, as alleged, then the legislation would not be rational, for there is a disconnect between this end and the means chosen by the legislature: 60.1 A sin tax by its nature deters consumers because it is the consumers who are required to absorb the costs of the tax. 60.2 Under the WC and EC Gambling Acts, players do not absorb the cost of the gambling tax; it is levied on the casinos. Such a tax cannot rationally deter players from gambling. On the contrary, Freeplay is designed to incentivise and stimulate players to gamble more. It is fundamentally distinguishable from a sin tax: in the case of a sin tax, a consumer pays more to undertake an activity, so as to deter them from partaking in such activity; in the case of Freeplay, a consumer pays nothing, so as to encourage them to undertake the activity. 60.3 The interpretation argued for by the respondents (and affirmed by the Supreme Court of Appeal 46 ) would therefore render the Acts irrational, because the means chosen (tax) is necessarily unable to realise the ends towards which it is put (deterrence). 61 This irrationality would render the WC and EC Gambling Acts unconstitutional, because it violates: 46 SCA Order para 19 (WC record pp 455-456). 30 61.1 the principle of legality; 47 61.2 section 9(1) of the Constitution, for it entails an exercise of public power that cannot serve a legitimate government purpose; 48 and 61.3 section 25(1) of the Constitution, because there can never be "sufficient reason" 49 to deprive someone of property for purposes that are incapable of being realised. 50 62 Even if the legislation, despite this disconnect between means and end, could be characterised as rational: 62.1 Any interpretation that imposes a legal burden on one person (a casino), whilst leaving unaffected the person whose activity it is the concern of the law to deter (a player), fails best to promote the spirit, purport and objects of sections 9(1) and 25(1) of the Constitution. 62.2 It fails to promote section 9(1) of the Constitution, since: 47 Democratic Alliance v President of South Africa and Others 2013 (1) SA 248 (CC) paras 29-31. 48 Prinsloo v Van der Linde 1997 (3) SA 1012 (CC) para 25, Harksen v Lane NO 1998 (1) SA 300 (CC) paras 42 and 45, and East Zulu Motors (Pty) Limited v Empangeni/Ngwelezane Transitional Local Council 1998 (2) SA 61 (CC) paras 22-24. 49 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) para 100. 50 In Chevron SA (Pty) Limited v Wilson t/a Wilson's Transport and Others 2015 (10) BCLR 1158 (CC) para 16, this Court held that money is property for the purpose of section 25 of the Constitution, and in South African Reserve Bank and Another v Shuttleworth and Another 2015 (5) SA 146 (CC) para 26, it recognised that tax disputes implicate the right not arbitrarily to be deprived of property. Whilst the High Court has held that taxation itself does not constitute deprivation for the purposes of section 25(1) of the Constitution (Pienaar Brothers Pty (Ltd) v Commissioner for the South African Revenue Service and Another 2017 (6) SA 435 (GP) para 110 and Pricewaterhousecoopers Inc and Another v Minister of Finance and Another 2021 (3) SA 213 (GP) paras 56-63), where the imposition of tax is arbitrary, plainly this infringes upon the section 25(1) right. The proposition otherwise would mean that the state is free to act arbitrarily when it imposes taxes, which is a proposition that need only be stated for it to be rejected. 31 62.2.1 it obliges casinos to pay tax differently in respect of cashless slot machines versus any other gambling activity; and 62.2.2 it entails not only treating casinos as means to the ends of players, but as mere means, for it burdens casinos in circumstances where this treatment of casinos as a means to the ends of players is necessarily ineffective. 62.3 And it fails to promote section 25(1) of the Constitution, since depriving a person (casino) of their own property for the sake of an end that the law is unable to achieve, fails to promote the right not arbitrarily to be deprived of property. 63 Therefore, an interpretation of the Gambling Acts that imposes a gambling tax on revenue received, rather than on every gambling activity offered, must be preferred. Such interpretation necessarily excludes Freeplay from the calculation of taxable revenue. Conclusion: taxable revenue 64 The term "taxable revenue", read contextually and purposively, does not include Freeplay. This is because a player’s use of Freeplay gifted to them does not constitute the deduction of "an amount . . . from the players’ slot accounts as a result of slot machine play", for the purpose of establishing the "drop" of a cashless slot machine, and therefore for calculating a casino operator’s adjusted gross revenue. 65 It means, we submit, that the SCA Order should be set aside on appeal, and replaced with an order declaring that: 32 65.1 Freeplay credits used to bet on gambling machines at the applicants' casinos do not constitute part of the "drop" for the purposes of computing adjusted gross revenue in terms of Part A of Schedule Ill to the WC or the EC Gambling Act; and 65.2 Freeplay credits accordingly do not form part of taxable revenue for the purposes of item 1(a) of Part B of Schedule Ill to either Act. 51 THE JUDGMENTS AND ORDERS A QUO The SCA Order 66 In upholding the appeal in the WC application and refusing the declaratory relief sought, the SCA found as follows: 66.1 On an ordinary reading of the definition of "drop", no distinction is drawn between own resource credits (i.e., Cashplay), and the Freeplay credit that is deducted from the player’s card account. Thus, there is no ambiguity in the language used. 52 66.2 This interpretation is consistent with the definition of drop in relation to cashless slot machines, which includes chips and tokens, 53 and it fits with the purpose of section 64 of the WC Gambling Act, i.e., to tax gambling activities as such. 54 66.3 The definition of "consideration", which is incorporated in the definition of 51 NOM paras 1.1 and 1.2 (WC record pp 1-2; EC record pp 1-2). 52 SCA Order para 17 (WC record pp 454-455). 53 SCA Order para 18 (WC record p 455). 54 SCA Order para 19 (WC record pp 455-456). 33 a "gambling game", makes clear that the fact that a licence holder makes no gain or derives no benefit from a game of play is irrelevant in assessing liability for gambling tax. 55 66.4 The WC applicants’ interpretation of section 64 is inverted, in that it tries to impose a pre-determined purpose on the ordinary language used in the section. There is also no linguistic support for interpreting the purpose of gambling tax as being to raise public funds in proportion to the financial benefit that is derived by the licence holder. 56 66.5 The applicants’ interpretation requires reading the word "revenue" into the definition of "drop", which is not justified by the text. 57 67 We respectfully submit that the SCA’s reasoning, advanced and espoused by the respondents, 58 rests on a semantic confusion. In the first instance, Freeplay is excluded from the "drop" of a cashless slot machine primarily because it is not "deducted from players' slot accounts", being the account that a player has paid into, to receive the credit to play. Instead, Freeplay is a notional credit derived from the casino operator. That the Freeplay credit is registered against the player’s name and on their card does not mean it forms part of the player’s "slot account". 68 But in any event, that an abstract term, "amount", does not expressly draw a particular distinction between Cashplay and Freeplay on cashless slot machines, 55 SCA Order para 20 (WC record p 456). 56 SCA Order para 21 (WC record p 457). 57 SCA Order para 22 (WC record p 457). 58 WC Board AA paras 21-22 (WC record pp 495-496), WC MEC AA para 56 (WC record p 524), and EC Board AA paras 30 (EC record p 408) and 39-41 (EC record pp 410-412). 34 does not compel an interpretation of that abstract term that elides or denies particular distinctions at all. That a distinction is not spelled out formally in a statute, in other words, does not mean that the distinction cannot, and should not, be drawn by a court tasked with interpreting it. Indeed, it is in the nature of every abstract term that, to give it concrete meaning, it must be interpreted. To do this, regard must be had to the context in which the term is used, and the purpose for which it is used. 69 All the above is true as a general principle, but it is particularly salient to the term "amount". This is so for the following reasons: 69.1 The term "amount" is a highly abstract concept. Its only essential quality is that it refers to a quantity of some kind. Used in the abstract, this term provides no concrete guidance as to its referent. 69.2 To give this term meaning, therefore, regard must be had to context, for the sake of determining its referent. And as we have explained, read contextually, "amount" refers to the exchange-value deducted from a player’s card, i.e., Cashplay but not Freeplay, since it is only deductions of these kinds that can generate revenue. 70 In support of its interpretation, the SCA cited various contextual factors. In doing so, it makes a series of errors: 70.1 First, the SCA pointed to the definition of “drop”, which it said provides, in relation to cashless slot machines, for “the total amount of money and tokens removed from the drop box”, and the definition in relation to table games, which contemplates “the total amount of money, chips and tokens 35 contained in the drop boxes”. 59 There are two related errors in this part of its reasoning: 70.1.1 The definition of “drop” in relation to cashless slot machines does not refer to money and tokens being removed from the drop box. Rather, it refers to “amount deducted from players' slot accounts as a result of slot machine play”. 70.1.2 Moreover, and in any event, the reference to tokens and chips in the definition of “drop” does not support its interpretation, for chips and tokens are not conceptually like Freeplay. A defining feature of chips and tokens is that the rights that they embody can be exchanged for money, and both are treated as being equivalent to money. 60 Freeplay rights, contrarily, cannot be exchanged and they do not have value like money. 70.1.3 Because Freeplay cannot be exchanged and does not have value like money, it is logically different from chips and tokens, which means that the existence of gambling activities that include chips and tokens, does not support the interpretation that is adopted by the Supreme Court of Appeal. 70.2 Second, and for the same reasons, the SCA was incorrect to find that Freeplay is a "cash equivalent". 61 This is for the following reasons: 59 SCA Order paras 18 (WC record p 455) and 22 (WC record p 457). 60 In particular, paragraph (b) of the definition of “winnings”, which refers to “the monetary value stated on every token, chip, voucher or stamp redeemable for money or value”. See also the definitions of “drop”, "drop box", “fills”, and “hopper”. 61 SCA Order para 5 (WC record p 449). 36 70.2.1 A principle of economics is that the capacity to mediate exchange of essentially different objects is a defining feature of money/cash. This function of money/cash is why economists refer to it as the "universal equivalent" or "general purpose means". 70.2.2 Freeplay, however, is not redeemable for money/cash and it may not be transferred to third parties. It is constitutively limited to one form of use, i.e., a liberty to push a button or pull a lever on a slot machine (and then only at a particular casino / chain of casinos). Limited to this use, it is definitionally opposite to cash, which is a general-purpose means / universal equivalent. 70.3 Third, after quoting section 1(5) of the WC Act, which lists the criteria for activity to be a gambling game, and the definition of consideration, the SCA concluded: "Clearly, the fact that a licence holder makes no gain or derives no benefit from a game of play is irrelevant in the assessment of liability for gambling tax." 62 The conclusion is mistaken: 70.3.1 Whilst the unitary method of interpretation requires having regard to other legislative provisions, the point of departure is the words in the provision being interpreted, which exert a "gravitational pull" in the interpretative exercise. 63 70.3.2 The provision that the SCA was called on to interpret is the term "taxable revenue", which is defined as "adjusted gross revenue 62 SCA Order para 20 (WC record p 456). 63 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others 2022 (1) SA 100 (SCA) para 51. 37 less admissible deductions", with adjusted gross revenue having its own definition, which includes the reference to "drop". None of the definitions, which are the starting point for interpreting the WC Gambling Act, refer to "gambling game" or "consideration". 70.3.3 In fact, whilst the term "drop" refers to money, chips and tokens, "consideration" includes other categories, including merchandise, property, cheques, tickets, etc. 70.3.4 Because the defined term "drop" includes fewer listed items than "consideration" it is impermissible to import the meaning of the latter into the former. 70.4 Fourth: 70.4.1 The SCA held that the dictionary meaning of the word "revenue" is irrelevant to the meaning of "drop", because "‘taxable revenue’ is specifically defined in the Act". 64 70.4.2 As submitted above, however, the SCA impermissibly imported the definitions of "consideration" and "gambling activity" into the definition of "taxable revenue", and thereby mistakenly attributed to this term a purpose that it does not have, i.e., taxing gambling activity as such. 70.4.3 When "taxable revenue" is read in context, the significance of the ordinary meaning of "revenue" is clear because it identifies the 64 SCA Order para 20 (WC record p 456). 38 object of taxation, i.e., gambling activity that generates revenue, not the bare activity of gambling. 70.5 Fifth, the SCA held that the word "amount" in the definition of "drop" is inclusive of Freeplay. 65 In arriving at this conclusion, the SCA relied on the flawed reasoning that we have addressed above. It is also flawed for another reason: 70.5.1 The word "amount" in the definition of "drop" denotes something that has exchange-value i.e., valuable consideration that is paid in exchange for the right to use slot machines. 70.5.2 That this is so emerges from the joint reading of paragraphs (a) and (b) in the definition of "drop box". Paragraph (a) prescribes its meaning in relation to table games, and paragraph (b) does so in relation to slot machines. The definition draws this distinction because the technology enabling table games and slot machines differ. Because these technologies differ, some slot machines are cashless and therefore do not have drop boxes. 70.5.3 The definition of "drop box", though, makes no material distinction between the nature of the objects that are included in it: (a) Paragraph (a) refers to money, chips and tokens. Paragraph (b) refers to money and tokens but not to chips, because chips are not used on slot machines. 65 SCA Order para 23 (WC record p 458). 39 (b) This is significant because a defining quality of money is that it has exchange-value. Chips and tokens also have exchange- value, and tokens are treated as equivalent to money. (c) Because money, chips and tokens are defined by exchange- value, anything that does not have exchange-value falls to be excluded from paragraphs (a) and (b). 70.5.4 As noted, cashless slot machines do not have drop boxes. For this reason, the definition of "drop" insofar as it regulates cashless slot machines refers to "the amount deducted from players' slot accounts as a result of slot machine play". The term "amount", used therein, therefore, must be read consistently with "drop box". Since that term is defined to exclude anything that does not have exchange-value, "amount" must also be interpreted as excluding anything that lacks exchange-value. 70.5.5 Consequently, the words "the amount deducted from players’ slot accounts", should be read to mean the amount of exchange-value that is deducted, not the extinction of mere use-value. And since Freeplay lacks exchange-value, the term "amount" indicates that Freeplay is not included in the definition of adjusted gross revenue and therefore it cannot form part of taxable revenue. 70.6 Sixth, the SCA held that the WC applicants’ interpretation impermissibly "inverts the established interpretative process by first devising a purpose for s 64, and then imposing the devised purpose on the wording of the section", since it starts by assuming that "gambling tax is aimed at raising 40 public funds in proportion to the financial benefit derived by the licence holder", which purpose "finds no support in the language of s 64" of the WC Gambling Act. 66 The applicants dispute that is so: 70.6.1 The applicants’ starting point is an analysis of the text and context of the WC Gambling Act, 67 i.e., a unitary interpretation of the WC Gambling Act. Then it is explained that this textual and contextual analysis reveals that the purpose of the law is to tax only gambling activities that in fact generate revenue for casino operator licence holders. 68 70.6.2 Respectfully, it is the SCA and the respondents who have inverted the proper interpretation process, 69 by presuming that the taxation regime concerns gambling activity of whatever kind, even when it cannot generate revenue, and then imposing this purpose on the taxation regime that is set up by the WC Gambling Act. Nowhere is inversion of the interpretative process more apparent than in the EC Board’s reference to "sin taxes", 70 and reliance that the EC MEC puts on "policy considerations", 71 when interpreting the EC Gambling Act. 70.6.3 It might well be open to the legislature to tax casinos in this way, 66 SCA Order para 21 (WC record p 457). 67 Paragraphs 42-52. 68 Paragraph 53. 69 WC Board paras 24-26 (WC record pp 498-499), WC MEC AA paras 49-52 and 63 (WC record pp 522-523 and 526-529), and EC Board AA para 44 (EC record pp 415-416). 70 EC Board AA para 45 (EC record p 417). 71 EC MEC AA paras 20-24 (EC record pp 461-462). 41 and this may be desirable, but the possibility and desirability of a law does not mean that the legislature has in fact made it. 72 70.7 Seventh, for the same reasons, the SCA, 73 as well as the respondents, 74 are mistaken that the source of the use-right that entitles a player to play on the applicants’ slot machines is irrelevant. Freeplay is sourced in the unilateral provision of use-rights. Therefore, its origin is not in exchange but in gift. Because the purpose of the taxation regime set up by the WC Gambling Act is to tax revenue-generating gambling activity, the source of Freeplay in gift is essential, for the fact that it is unilaterally provided to players means that it can never generate revenue. 71 We therefore respectfully submit the applicants’ appeal of the SCA Order must, in the circumstances, be upheld. The EC Order 72 For the same reasons, 75 we respectfully submit, the appeal of the EC Order must also be upheld. 73 The Eastern Cape High Court, like the SCA, misapplied the accepted method of interpretation. It neglected the unitary method in favour of an unduly formalistic 72 As noted in City of Tshwane Metropolitan Municipality v Glofurn (Pty) Ltd [2024] ZASCA 101 para 27, policy is not enforceable as law until it is enacted as such. 73 SCA Order para 17 (WC record pp 454-455). 74 WC Board para 23 (WC record pp 496-498), WC MEC AA para 60.2 (WC record p 526), and EC Board AA paras 39.2 and 43.6 (EC record pp 411 and 413). 75 Like the SCA Order, the EC Order wrongly finds that since there is no express distinction in the definition of “drop” between Cashplay and Freeplay, the latter is included (EC Order paras 40-41: EC record p 331). It also It wrongly relies on: (a) the existence of cash-based gambling machines, which include chips and tokens (EC Order paras 43-44: EC record p 332); (b) the definition of "consideration" (EC Order para 45: EC record p 333); and (c) the words "amount deducted" (EC Order para 40: EC record p 331). 42 regard for text at the expense of the context and purpose of the provisions of the EC Gambling Act. 74 Further, it identifies the financial and socio-economic interest that the Eastern Cape (in 2021) has to receive tax, and impermissibly interprets the EC Gambling Act through this lens, as a means now to maximise tax collection. 76 75 It also neglects technological developments that post-date the EC Gambling Act: it irrationally found that the failure in 1997 to deal with technology developed in 2013 was a conscious decision by the legislature to include Freeplay as part of taxable revenue. 77 76 Properly interpreted, for all the reasons set out above, Freeplay does not fall to be taxed under the EC Gambling Act. CONSEQUENTIAL REPAYMENT RELIEF 77 Both the WC and the EC applicants have continued to pay gambling tax on Freeplay credits whilst their applications were underway. They have, in other words, included Freeplay credits in the calculation of the "drop" of cashless slot machines, and consequently as part of their taxable revenue. 78 78 The applicants had no real alternative but to do so because of the Boards’ insistence that Freeplay credits formed part of the drop. Had they not, they would have been liable to substantial penalties and other consequences: 78.1 In respect of the WC Gambling Act, schedule III part C provides: 76 EC Order par 50: EC record p 335 77 EC Order par 41: EC record p 331 78 WC FA para 74 (WC record pp 28-29) and EC FA para 94 (EC record pp 32-33). 43 78.1.1 for penalties that are equal to 10% of outstanding tax, accruing to a penalty of 100% of the outstanding tax; 79 78.1.2 that the WC Board is empowered to suspend or revoke licenses of non-paying entities; 80 and 78.1.3 that the duty to pay tax pending any appeal or court challenge is not suspended. 81 78.2 In respect of the EC Gambling Act, schedule III part C provides: 78.2.1 for penalties of 1% per day of the outstanding tax amount, capped at 100% of the outstanding amount; 82 78.2.2 that the EC Board is empowered to suspend or revoke licenses of the non-paying entities; 83 and 78.2.3 that the duty to pay tax pending any appeal or court challenge is not suspended. 84 79 The applicants were placed between Scylla and Charybdis: either pay tax they did not believe was owed (knowing that a challenge to pay tax is not suspended pending its determination), or not pay tax, which the Boards had indicated would in their view be unlawful, with a tax payment remaining undeclared and unpaid, leading to penalties and potentially suspension or revocation of their license. 79 Item 1(a)(i) of Part C of Schedule III to the WC Gambling Act. 80 Item 1(a)(ii) of Part C of Schedule III to the WC Gambling Act. 81 Item 4(1) of Part C of Schedule III to the WC Gambling Act. 82 Item 1(a)(i) of Part C of Schedule III to the EC Gambling Act. 83 Item 1(2) of Part C of Schedule III to the EC Gambling Act. 84 Item 6(1) of Part C of Schedule III to the EC Gambling Act. 44 80 If their interpretation of the Gambling Acts is upheld, then the applicants seek to be refunded or credited with the portion of gambling tax paid over in respect of Freeplay, for each taxable period running from three years before the respective applications were launched to the date of judgment by this Court. 85 81 This relief logically and legally follows from the declaratory relief sought by the applicants. It flows from an application of: 81.1 item 4(2) of part C to schedule III of the WC Gambling Act and item 6(2) of part C to schedule III of the EC Gambling Act; and/or 81.2 the common law, for the EC and WC Boards have been unjustly enriched at the applicants’ expense. 82 If the declarations sought by the applicants are made, then the common law requirements for an enrichment claim 86 are satisfied: 82.1 The applicants’ payment of that portion of taxable revenue that includes Freeplay was sine causa, i.e., not underpinned by any obligation to pay, since, properly construed, the WC and EC Gambling Acts do not oblige the inclusion of Freeplay credits in the calculation of taxable revenue. 87 82.2 The respondents were enriched, and the applicants were concomitantly impoverished, 88 since the former received payment of money belonging 85 The applicants accept that claims to portions of tax paid more than three years prior to the institution of the High Court applications have prescribed: see WC RA para 26 (WC record p 172). The total amounts claimed in the notices of motion were calculated at the time that proceedings were instituted and require to be updated: see WC FA para 73 (WC record p 28). 86 The requirements were affirmed in PRASA Corporate Real Estate Solutions v Community Property Company Ltd and Another (384/2023) [2024] ZASCA 35 (28 March 2024) para 27. 87 WC FA para 74.2 (WC record p 28) and EC FA para 94.2 (EC record p 32). 88 WC FA para 74.1 (WC record p 28) and EC FA para 94.1 (EC record p 32). 45 to the latter to which they were not entitled. This is common cause on the facts. 89 In any event, once payment is established, the onus is on the respondents to prove that they have not been enriched, 90 which they have not done. 82.3 The payments were made: 82.3.1 as a result of a bona fide error of law, 91 the reasonableness 92 of which the respondents cannot seriously deny (since it is their position that the Acts require the payments). That is sufficient for the purposes of the condictio indebiti. 93 82.3.2 alternatively, on the instructions of the Board and against a risk of substantial penalties and adverse consequences for non- compliance, and under protest 94 (as the correspondence between the parties makes plain). 95 These factors are sufficient to found 89 In the courts a quo, the respondents do not deny receipt of the monies. 90 Absa Bank Ltd v Standard Bank of SA Ltd 1998 (1) SA 242 (SCA) 252G. 91 WC FA para 74.3 (WC record pp 28-29). 92 Affirmative Portfolios CC v Transnet Ltd. t/a Metrorail 2009 (1) SA 196 (SCA) paras 24-33. 93 Daniel Visser, Unjustified Enrichment (2008) 380-381. For example, see CIR v First National Bank Ltd 1990 (3) SA 641 (A) 646B-647D and Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue 1992 (4) SA 202 (A) 223G-I. 94 WC FA para 74.3 (WC record pp 28-29) and EC FA para 94.3 (EC record p 32). 95 WC FA paras 60 and 67 (WC record pp 23 and 26) and EC FA paras 16-23 (EC record pp 9-11). See also, by analogy, Transnet SOC Limited v Total South Africa (Pty) Limited and another 2023 (3) BCLR 333 (CC) para 46, where this Court acknowledged that an enrichment claim under the condictio indebiti could potentially arise in such circumstances: “An argument may be made that any loss which Total and Sasol suffered by paying the increased amounts was caused not by the fact that the increased amounts were wrongly charged, but by their decision to pay the increased amounts. A possible counter is that they did not have much choice. As they say, they paid the extra amounts under protest. That is understandable. It does not seem that they had the luxury of an option to litigate and seek specific performance in accordance with the variation agreement. Had they not paid, they faced the prospect of Transnet halting the conveyance of crude oil with disastrous consequences for refining operations at Natref. It is so that there are judgments that have held that the making of payment under protest can be a precursor to a condictio indebiti." [emphasis added] 46 an enrichment claim, even in the absence of proving that payment was made in error. 96 83 Indeed, this Court has previously directed the repayment of gambling levies that had been paid under protest, whilst the provisions under which they were charged were subject to challenge. 97 84 This Court has itself acknowledged "the widely accepted principle relating to the recovery of fiscal claims of “pay now, argue later”". 98 85 This well-established principle – which operates to the benefit of the tax authority – can hardly be mobilised against the taxpayer, with an argument that the act of payment is somehow destructive of a right to recover an amount paid which, ultimately, was not due and was the subject of a legal challenge. 86 Yet this is what the respondents contend, well-knowing that they themselves had directed the payment of tax on Freeplay whilst the legal challenge ran, and well- aware of the penalties which the applicants faced under statute should they not pay the tax deemed to be owed. 87 The respondents have, during this legal challenge, which has spanned years, unlawfully benefitted by receiving tax payments not due to them and which could 96 CIR v First National Bank Ltd 1990 (3) SA 641 (A) 646B-647D. See also Dali and Others v Government of Republic of South Africa and Another [2000] 3 All SA 206 (A) para 13 and Casino Association of South Africa and others v Member of the Executive Council for Economic Development, Environment, Conservation and Tourism and others 2024 (5) BCLR 611 (CC) para 67. 97 Casino Association of South Africa and others v Member of the Executive Council for Economic Development, Environment, Conservation and Tourism and others 2024 (5) BCLR 611 (CC) paras 66-68. 98 First National Bank of SA Limited t/a Wesbank v Commissioner for the South African Revenue Services and Another; First National Bank of SA Limited t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) para 17. 47 not lawfully be levied or received. Repayment relief is the natural, just and equitable remedy in such instance. 88 We submit that it is also appropriate to grant the applicants consequential repayment relief, if they succeed in their interpretation of the Acts. JURISDICTION AND LEAVE TO APPEAL 89 The arguments in these submissions, we submit, demonstrate that this Court has jurisdiction and that the interests of justice favour the grant of leave to appeal. Jurisdiction 90 The WC and EC applicants approach this Court under sections 167(3)(b)(i) and (ii) of the Constitution, on the grounds that the applications raise constitutional issues and arguable points of law of public importance. 99 91 As regards this Court’s jurisdiction over constitutional matters: 91.1 The provincial legislature’s power to impose tax and levies derives from section 228 of the Constitution. The proper interpretation and scope of a taxing provision enacted under its rubric is a constitutional issue. 91.2 In addition, courts are constitutionally obliged to interpret legislation (including taxing provisions) in a manner that is constitutionally compliant and which best promotes the Constitution’s spirit, purport and objects. As we have submitted above, the SCA Order and EC Order breach these duties because their interpretation of the WC and EC Gambling Acts: 99 Sunwest paras 38-40 (WC record pp 418-421) and Emfuleni paras 44-46 (EC record pp 282-285). 48 91.2.1 renders them unconstitutional, despite there being a reasonable alternative interpretation that avoids this finding; and 91.2.2 fails to promote the spirit, purport and objects of sections 9(1) and 25(1) of the Constitution. 91.3 Axiomatically, these are constitutional issues that warrant the attention of this Court. 92 As regards section 167(3)(b)(ii) of the Constitution, each of the requirements for relying on this section, 100 we submit, are satisfied: 92.1 Both of these applications raise issues of law which are not based purely on factual matters. 92.2 They have prospects of success, in the sense that there is (at the very least) substance to the interpretation advanced by the applicants. 92.3 The determination of the points of law plainly transcend the narrow interests of the litigants and implicate the interests of all casino operators, all gambling boards and, in addition, a significant part of the general public. The Eastern Cape High Court's focus on the socio-economic impact of gambling taxes on the provincial fiscus (although misplaced as part of the interpretive regime) demonstrates that this matter implicates far more than simply the litigants' interests. 92.4 For these reasons, we submit, it is in the interests of justice to entertain the appeals. 100 Paulsen and Another v Slip Knot Investments 777 (Pty) Limited 2015 (3) SA 479 (CC) paras 20-30. 49 93 For either of the above reasons, therefore, we respectfully submit that this Court has jurisdiction. Leave to appeal 94 Whether leave to appeal should be granted depends on whether the interests of justice require it. Relevant factors include the importance of the issues raised by the matter, the prospects of success and the public interest. 101 95 We submit that the arguments canvassed above demonstrate that each of these factors support the granting of leave to appeal, both in respect of the SCA Order and directly to this Court in respect of the EC Order: 95.1 As explained above, the applications raise matters that are of ongoing importance to the applicants and the respondents, other casino operator licensees, and the general public. 95.2 Apart from the substantial sums of money involved for the parties and the public fiscus, these matters raise significant issues of principle, including the relationship between the power of the state to impose taxes and the principle of legality. For if the Boards have adopted an overly-expansive interpretation of the Acts, then they have appropriated, and will continue to appropriate in the future, money from the applicants and other casinos without an underlying power to do so. 95.3 In Shuttleworth, 102 this Court held that issues of this kind, even if they are 101 Dengetenge Holdings (Pty) Limited v Southern Sphere Mining and Development Company Ltd 2014 (5) SA 138 (CC) para 52. 102 Shuttleworth paras 26-28. 50 moot, are such that it can be in the interests of justice to hear an appeal. The reason why, this Court held, is that these issues self-evidently pertain to matters that are in the public interest. Moreover, it held that because the merits of that appeal carried reasonable prospects of success, it was in fact in the interests of justice to hear the appeal. 95.4 Neither of the applications before this Court are moot and there are plainly reasonable prospects of success. That this is so is evident not only from the arguments made in these submissions, but also from the fact that the Western Cape High Court held in favour of the WC applicants. 96 Moreover, in bypassing the SCA, the EC applicants have not denuded this Court of the benefit of the views of the SCA, given the SCA judgment against the WC applicants pertaining to materially identical legislative provisions. It is submitted that there are special circumstances that warrant deviation from the set practice of first obtaining the SCA’s views. The circumstances have been set out herein and include the applicants' prospects of success; the need for industry certainty regarding the relevant taxation regime; and the fact that the EC application raises arguable points of law of general public importance. Other procedural issues Condonation: EC application 97 The EC applicants seek condonation for their delay in filing their application for leave to appeal directly to this Court. In their founding affidavit: 97.1 the reasons for delay are outlined (primarily being the need to wait for the 51 SCA Order to launch the direct appeal to this Court); 103 and 97.2 the considerations which support the exercise of this Court’s discretion condoning delay are detailed. 104 98 The EC respondents do not oppose condonation. 105 99 For these reasons, we submit that it is in the interests of justice that this Court exercise its discretion to grant condonation. Replying affidavit: EC application 100 The EC applicants also seek leave to file a replying affidavit. The need for this affidavit arose from two factual propositions by the EC Board in its answering affidavit, which were not made in the high court litigation and thus did not form part of the record. In the EC Board’s answering affidavit, it contends that: 100.1 it is not in the interests of justice for this Court to hear the matter because there is pending litigation in other provinces and those parties are not before this Court; 106 and 100.2 Freeplay has the same defining characteristics as non-negotiable chips, in the sense that cards on which Freeplay are loaded can be transferred for value. 107 101 In the EC applicants’ replying affidavit, it is explained why: 103 Emfuleni FA paras 77-82 (EC record pp 310-312). 104 Emfuleni FA paras 83-86 (EC record pp 312-313). 105 EC Board AA para 4 (EC record p 394). 106 EC Board AA paras 4-7 (EC record pp 394-398). 107 EC Board AA para 43.7 fn 23 (EC record pp. 414 - 415). 52 101.1 these factual propositions are unsustainable; 108 and 101.2 it is in the interests of justice to grant leave to file the affidavit, i.e., whilst the EC applicants will be prejudiced if leave to file the replying affidavit is not granted, the EC respondents will not be prejudiced if leave to file this affidavit is granted. 109 102 In light of the above, we respectfully submit that it is in the interests of justice to grant the EC applicants leave to file the replying affidavit, and for it to have served before the Court. CONCLUSION 103 The applicants consequently ask for orders: 103.1 granting them leave to appeal to this Court against the judgments and orders of the SCA and the EC High Court respectively; 103.2 upholding their appeals, with costs (including the costs of two counsel); and 103.3 substituting the SCA and EC Orders each with an order: 103.3.1 declaring that Freeplay credits used to bet on gambling machines at the applicants' casinos do not constitute part of the "drop" for purposes of computing adjusted gross revenue in terms of Part A of Schedule III; 108 Emfuleni RA paras 7-10: interests of justice (EC record pp 470-473) and 11-14: non-negotiable chips (EC record pp 473-475). 109 Emfuleni RA paras 15-17 (EC record p 475). 53 103.3.2 declaring that Freeplay credits accordingly do not form part of the applicants’ taxable revenue for the purposes of item 1(a) of Part B of Schedule Ill; 103.3.3 directing the Board to refund from the Provincial Revenue Fund, alternatively to offset against the applicants’ future liability to pay gambling tax, such amounts paid by each of the applicants in gambling tax on Freeplay credits, for the period running from 3 years prior to the date of institution of the relevant High Court proceedings to the date of order; and 103.3.4 ordering the respondents to pay the costs of suit, including the costs of two counsel. Isabel Goodman SC Matthew Kruger Counsel for the applicants Sandton Chambers 30 August 2024
Read from the court's own list. Judgments are official texts; verify against the court's file before you rely on this page. Firms on AttorneyOS get judgments like this one against the matters they touch, in the Monday edition.