Two South African casinos in the Western Cape want to be exempt from certain tax payments they don’t consider as revenue.
South Africa.- The gaming industry is one of the biggest sources of tax revenue for governments worldwide. However, two South African casinos have urged the authorities to release them from certain payments they consider excessive.
According to two of the biggest casinos in the Western Cape, certain money shouldn’t be considered as revenue. Specifically, Sun International’s GrandWest Casino and Entertainment World and Golden Valley Casino in Worcester refer to €7.89 million of free play they give to their most loyal patrons.
Both venues have filed papers in the high court to force the authorities to deduct such amount from their revenue. They urge the Western Cape Gambling Board and the provincial minister of finance to cut it from the €136.7 million they make on the slot machines.
“Free play is not offered to all the players frequenting their gambling establishments. It is offered only to their qualifying loyalty programme customers. It constitutes a reward for a player’s loyalty,” the South African casinos said.
“Free play is denominated in rand value but cannot be redeemed for cash.”
According to the local government, after the money is loaded onto the card with the additional cash, and once played, it constitutes the amount deducted from the player’s slot account. Therefore, slot machine play is regarded as “drop”, and therefore revenue.
“This is entirely irrelevant for the purposes of the computation of the gambling tax payable by the applicants.”
Still, operators say free play doesn’t represent cash. They argue that it’s used as a marketing tool to attract customers. That ultimately turns into an increase of the taxable revenue that can be collected by the government.
“The applicants are able to calculate the return ratio on Freeplay because the amount of free play used and the amount of the player’s own funds used are recorded on the applicant’s own personal MVG player cards into the gaming machines in order to play,” they say.