Johannesburg - The Casino Association of SA (Casa) intended to take Trade and Industry Minister Rob Davies to court over his decision to increase the number of casino licences that might be granted in the country from 40 to 41, chief executive Themba Ngobese said yesterday.
Casa, which represents 95 percent of the legal casinos in South Africa, said granting a new licence “without any reasonable justification” set a worrying precedent, created instability and damaged investor confidence”.
Ngobese said: “We have extensively engaged the Minister of Trade and Industry on this matter both through meetings and correspondence but without success. Thus, we are taking legal advice with the intention to take the decision of the minister on review in the high court.”
Wiehahn Report
Ngobese said: “We have already commenced with legal consultations and we will file our papers as soon as possible within the prescribed periods.”
When gambling was legalised in South Africa in 1995, the Wiehahn report on gambling in South Africa recommended that the maximum number of casino licences available in the country be capped at 40 – a recommendation that was subsequently adopted by the government, Casa said.
The number of casino licences per province was also laid down based on empirical considerations, such as the propensity to gamble, economic activity, the population of each province, and other relevant factors, it said.
The North West, according to the Wiehahn report, should only have two casino licences. However, after the incorporation of the former Bophuthatswana, North West had at least seven established casinos.
A programme to reduce the number of casinos in the province, as well as the re-demarcation of the North West and Gauteng provincial borders, meant the number of casinos had since contracted to four, which was still double what the Wiehahn report had recommended, it said.
Casa said the demarcation of provincial boundaries should not affect the overall number of casino licences allocated in the country in the absence of empirical data in support of a deviation from the cap contained in the Wiehahn report and the Gambling Review Commission.
Bongani Lukhele, a spokesman for the Trade and Industry Department, said the licence issued was a replacement or substitute for the licence the North West province previously had, and “there was no additional licence issued”.
Lukhele said the recommendations from research reports only served to advise and recommend policy positions to the department and it was up to the department to fully accept, or not accept, the recommendation.
He said the capping of licences at 40 did not prevent any future consideration to increase the cap as the National Gambling Act did allow consideration to increase the limit.
However, Lukhele said the awarding of the licence was a special consideration for the North West province and a once-off resolution adopted by the National Gambling Policy Council to provide redress to the North West province after it lost its licence to Gauteng.
“The decision does not constitute a guarantee to respond in a similar way in future,” he said.
Exclusivity
Lukhele added that the department remained committed to the principles adopted by the Wiehahn Commission to prevent the overstimulation of the demand to gamble, which was manifest in the National Gambling Policy Document recently adopted by the cabinet.
De Wet Schutte, an analyst at Avior Research, said yesterday that Casa’s displeasure was understandable.
“This industry is premised on the exclusivity of licences. So if it seems that licences can be given willy-nilly, that is a problem. Investors come into the industry on the understanding that there will be so many maximum licences.
“They also assume that they will be able to continue to do business in a way that is not disruptive. And here we are talking billions of rand. These companies are accountable to shareholders. This is something that government should not take lightly,” Schutte said.
Michael Farr, the group general manager of corporate brand and communications at Sun International, said the legal challenge was to ensure there were no further exceptions to the principle established that there should be only 40 casino licences.
He stressed that any industry wanted certainty because this was the basis for decisions it made on how much it invested in its properties and refurbishments.
“That reliability and confidence is also important for shareholders. The legal challenge is to ensure that is not eroded,” Farr said.
Legal challenge
An analyst, who did not want to be named, said the increase in the number of casinos had resulted from the quest for revenue by the provinces.
However, an increase in the number of casinos would not necessarily result in an increase in revenue for the provinces because gambling taxes were based on a sliding scale and the more revenue a gambling operator achieved, the more tax they paid.
If there was a proliferation in casinos, it would result in cannibalisation and less tax revenue.
The analyst added that there was currently only nominal growth in casino revenue because “all discretionary spending is under pressure because the economy is under pressure”.
BUSINESS REPORT