GrandWest Casino, the leading Cape Town land-based entertainment resort, is one of two casinos in South Africa that has petitioned the government regarding the payment of tax on free play offers. Both GrandWest Casino and Entertainment World and another Sun International property, Golden Valley Casino in Worcester, asked the Western Cape Gambling Board and the province’s Minister of Finance to consider tax deductions on R126 million of free play that the casinos regularly give to their loyal customers. The casinos argue that this free play shouldn’t be calculated as revenue.
According to papers filed with the High Court, the two casino properties believe that the local gambling authorities should deduct the R127 million from the R2.2 billion made on slot machines. Sun International, operators of the casinos believe that freeplay offers are not any different to marketing campaigns towards the investment in their businesses, and they should therefore be deducted before tax is determined.
Sun International wrote in its filing to the High Court: “Free play is not offered to all the players frequenting their gambling establishments. It is offered only to their qualifying loyalty program customers. It constitutes a reward for a player’s loyalty.”
“Free play is denominated in rand value but cannot be redeemed for cash,” it said.
In a counter argument, the Cape provincial government said that the non-cashable credit is loaded onto the player’s card. Once the credits are played, they constitute the amount deducted from the player’s slot account. These credits are therefore subject to tax under South Africa’s gambling tax laws.
The two casinos argue that free play offers cannot be considered cash since the customer does not make any financial outlay in order to receive them. They should therefore be considered marketing tools used to attract customers to the casinos.
The casinos further argue that the amount that they invest in free play offers sees a R17 return on investment for every rand of free play credit used.
The case continues between the two parties.