Constitutional Court Rules in Favor of Sun International and Peermont Global Against North West Gambling Levies

In a critical legal victory for casino operators Sun International and Peermont Global, the Constitutional Court of South Africa has backed a High Court judgment declaring certain gambling levies unconstitutional. These levies, imposed since January 2020, were found to be invalid, resulting in significant financial implications for the North West province's economic policy on gambling.

The unanimous ruling delivered by Judge Tati Makgoka, alongside a bench of esteemed Judges including Raymond Zondo and Mbuyiseli Madlanga among others, reinforces the sanctity of the constitution in governing the country's legislative framework.

Sun International, which operates the iconic Sun City Casino, and Peermont Global, which manages establishments such as the Palms Casino and Rio Casino in Mmabatho, were subjected to increased gambling levies due to an amendment in the North West Gambling Act. However, these levies were contested on the grounds of constitutional validity.

In the granular detail of legal proceedings, it's found that the North West Province Member of the Executive Council (MEC) for Economic Development, Environment, Conservation, and Tourism overstepped authority by imposing gambling levies as a tax—a constitutional charge. The levies enforced were a deviation from those prescribed in the North West Gambling Regulations 2002, leading to an inflated financial burden on the operators.

The ripple effect of this judgment extends to the reimbursement of the difference between the initial and hiked levies from January 2020 until the date of the Constitutional Court's verdict. Moreover, interest on these amounts is to be compensated, alongside the court costs incurred during the legal challenge led by the Casino Association of South Africa, Peermont Global, and Sun International.

This imbroglio began with a proposed amendment by the North West Gambling Board in November 2018 intended to increase gambling levies. Despite opposition and exhaustive representations by the Casino Association of South Africa, the MEC promulgated the amendments in January 2020.

Judge Makgoka remarked on the significant revenue generated by gambling levies, underscoring their role in contributing to the general revenue for the province's service obligations. Nonetheless, he noted an insufficient connection between these levies and the regulatory mechanisms of the North West Gambling Act, ultimately leading to the declaration of their invalidity.

Importantly, the Constitutional Court's mandate extends beyond the levies' repayment. This encompasses a reversion of the legal and financial scenario to its original state as if the amendments had never been implemented. This is seen as part of "just and equitable relief" aimed at correcting the consequences of the unconstitutional action.

Peermont Global and Sun International had remitted the levies "under protest" signaling their disagreement with the legality of the hikes. Their reserved rights, including the repayment claim, have now been vindicated by the apex court of the land.

While the MECs have been ordered to make the necessary repayments, further responses from Sun International and Peermont Global regarding the judgment are still awaited.

As legal and economic ramifications unfurl, this ruling is a stern reminder of the importance of constitutional adherence by legislative bodies, a victory for the rule of law, and a pivotal moment for the casino industry in South Africa.