The Casino Association of SA (Casa) – supported by Sun International and Peermont – is challenging the North West Government’s decision to increase gambling levies paid by licensed casino operators, in a case a Business Day report says is set to test MECs’ powers in determining gambling levies.

The three parties have approached the Constitutional Court to confirm a High Court ruling that the provincial MEC for Economic Development, Environment, Conservation & Tourism overreached and is not legally empowered to determine levies.

An affidavit deposed by Casa, Sun International and Peermont argues that the executive branch of government should not itself be entitled to raise revenue for its operation, but should be dependent on the taxing power of a democratically accountable Parliament.

The challenge follows the 2020 promulgation of an amendment to regulation 73(1) of the North West Gambling Regulations of 2002, which introduced substantial increases to provincial gambling levies. The parties have now asked the apex court to rule that the amendment was unconstitutional as the MEC did not enjoy such powers.

They are also challenging the lawfulness and fairness of the process followed in promulgating the amendment.

Arguments will be heard today.

Sun International, Casa and Peermont drew first blood at the High Court, which declared the empowering provisions relied on by the MEC for Economic Development to be unconstitutional and invalid, and set aside the amendment.

The High Court also ordered the MEC and her provincial Treasury counterpart to pay Sun International and Peermont, together with interest the difference between the gaming levies that the companies have paid and will have paid in terms of the ‘impugned’ amendment, from the date of the amendment to the date of the court’s judgment.

The Business Day report says the companies will argue the High Court was correct when it said the MEC overreached in determining gambling levies.

‘Even if this court were to find that the North West Gambling Act does not unconstitutionally delegate taxing powers to the MEC, we submit that its provisions nevertheless constitute an impermissible and unconstitutional delegation,’ the parties state in an affidavit.

‘That is because it is unconstitutional, and contrary to the separation of powers, for a provincial legislature to assign the discretionary, plenary legislative power to make levy-raising regulations in such wide terms (in relation to “any matter pertaining to gambling levies or fees”), without any guidelines to shape the exercise of that discretionary power, and in circumstances where the casino applicants’ right to property is affected by the imposition of gambling levies. In short, gambling levies are not aimed at regulating conduct. They are not even aimed at funding the operations of the (North West gambling) board. They are aimed, more generally, at raising revenue for the provincial fiscus. They are thus taxes or levies.’ The parties will also argue that inflation can provide no basis to adjust the rates of the levies. Moreover, the applicants have demonstrated – with expert evidence – that in the period 2009 to 2017 the levies collected by the board exceeded inflation, and increased by approximately 20% in real terms. Therefore, even if inflation could, in principle, justify an increase in levies (which we deny), it provides no such justification on the facts.’

Full Business Day report