Gambling companies Vukani Gaming Western Cape (V-Slots) and Grand Gaming Western Cape (Grand Slots) were recently defeated in their bid to operate unallocated gambling machines in the Western Cape by the Supreme Court of Appeal.

The court overturned a decision to allocate additional limited payment gambling machines (LPMs) to the two licensed operators. The Western Cape Gambling and Racing Board had initially granted licenses through a competitive bidding process, intending to allow 3,000 LPMs for three operators.

In 2017, the Board decided instead to allocate the remaining 1,000 LPM licenses to V-Slots and Grand Slots, a move challenged by Goldrush Group Management. The court upheld the Board's decision, emphasizing the compliance with statutory requirements and the absence of fraud or irregularity. Goldrush's challenge was deemed lacking in standing and unreasonably delayed.

Gambling taxes are one of the few independent sources of revenue for the Provincial sphere, which relies on national Treasury allocations for 97% of its budget. This restricted budget allows little autonomy for provinces, which stand in comparison with municipalities, which receive on average over 80% of their revenue from local rates, and do not require permission from the Treasure to approve their budgets in this regard.

Previously, the Western Cape Gambling Board succeeded in its appeal against a Western Cape High Court judgment concerning the assessment of gambling tax for Grandwest and Worcester casinos.

The Supreme Court of Appeal (SCA) ruled on whether 'freeplay credits' used in slot machines attract gambling taxes payable to the Western Cape Gambling and Racing Board.

The full court of the Western Cape high court had initially held that freeplay does not constitute taxable revenue under the act. The dispute arose when Sun International's management arm introduced a software system, "BALLY," allowing the exclusion of freeplay when calculating gambling taxes.

The case centered on the interpretation of the "drop," and the SCA upheld the board's interpretation, emphasizing that the absence of gain or benefit from freeplay is irrelevant to the assessment of liability for gambling tax. The appeal was successful.