MINISTER PLAYS AN ACE
When provincial boundaries were redrawn, a North West casino suddenly found itself in Gauteng, leading to a dispute over the lost revenue
No luck was involved last week when trade & industry minister Rob Davies won a case brought against him by casino owners — just hard work and diligence while weighing a particularly controversial decision.
The Casino Association of SA (Casa), representing the interests of casino owners, challenged the awarding of a fifth casino licence to West became part of Gauteng.
In 1996 a maximum national limit of 40 casinos was set, including six in Gauteng and five in the North West. But in 2004 the National Gambling Act gave the minister of trade & industry the power to decide the number.
When the boundary between Gauteng and the North West was redrawn in 2006, the Morula Sun “moved” from the North West to Gauteng — taking key revenue with it. The then minister of trade & industry responded by maintaining the number of national licences at 40, increasing the number allowed in Gauteng from six to seven and reducing the number in the North West from five to four.
The North West fought the decision, saying it needed another licence so it could still have five casinos generating funds for its coffers. The province commissioned a report that found R267m in potential gaming revenue was either being spent in other provinces or not being spent at all.
However, Casa argued that an extra casino would “simply cut the [national] gambling revenue into smaller slices, to the detriment of its members”.
For some years, meetings of the National Gambling Policy Council — a body chaired by the minister and including members of the executive councils of the provinces responsible for casinos and other forms of gambling — heard submissions from the two sides.
A special Gambling Review Commission was appointed by the minister of trade & industry.
Its 2011 report considered the negative socioeconomic aspects of gambling. It also noted that gambling is a “vital generator of revenue, job creation and infrastructure development”. In 2005, for example, the North West casinos generated R49m in gambling levies — the second-biggest source of provincial “own revenue”.
Casa’s view, however, was that granting any additional licence for the North West would open the floodgates for similar demands in other provinces.
“This would have an extremely negative effect on investor confidence and the stability of the casino industry,” it said.
When Davies ultimately awarded a fifth licence to the North West, the casino association went to court, claiming the minister had made the decision without adequate reflection.
Minister did the right thing
After a close examination of the process that led to the minister’s decision, the North Gauteng High Court concluded that the minister’s objective was “consistent with justice and in the public interest”.
The North West lost considerable revenue when the Morula Sun “moved”, and “it was only right that some means be found to compensate for its loss”, Tuchten said.
Opting for a fifth licence for the North West was a rational decision that followed several years of debate on the issue in the National Gambling Policy Council, and thorough and painstaking consultations conducted by the minister.
Though Casa lost its challenge, the court made no costs order, saying the association had not acted inappropriately in bringing the review or in the way it conducted its litigation.
Will Casa appeal? I wouldn’t put my house on it.