South African Constitutional Court Rules Casino Loyalty Rewards Must Be Included in Gambling Tax Calculations

The Constitutional Court of South Africa has ruled that non-cashable casino loyalty rewards, known as “freeplay” credits, must be included in the calculation of adjusted gross revenue (AGR) for gambling tax purposes under Western Cape and Eastern Cape provincial laws.

The decision came after major casino operators in South Africa challenged the inclusion of freeplay credits in taxable income. The casinos argued that these credits — used as promotional rewards for players — should not be treated as revenue since they have no direct cash value.

However, the Court dismissed the appeal, stating that the dispute was a matter of statutory interpretation, not a constitutional issue. Justice Jody Kollapen, writing on behalf of the unanimous bench, clarified that both the Western Cape Gambling and Racing Act and the Eastern Cape Gambling Act define “adjusted gross revenue” in a way that requires loyalty credits to be included.

According to the ruling, AGR encompasses “the total of wagers minus allowable deductions as defined under the Act.” The Court determined that loyalty credits and freeplay promotions are part of the taxable base and therefore must be factored into revenue calculations.

The judges also emphasized that the case did not raise a constitutional matter of general public importance but rather a narrow issue relevant to the involved casino groups — SunWest International, operator of GrandWest Casino in Cape Town, and Emfuleni Resorts, operator of Boardwalk Casino in Gqeberha (Port Elizabeth).

This decision means that casinos in both provinces will face higher tax liabilities, as loyalty rewards will now be treated as taxable value under gambling legislation. Financial analysts say the ruling may also set a precedent for similar tax interpretations in other South African jurisdictions.