An order made by the Pietermaritzburg High Court declaring a section of the KwaZulu-Natal Regulation and Betting Ordinance (22(5)) unconstitutional has been overturned by the South African Constitutional Court on appeal. The case concerned Betting World (Pty) Ltd, a company that carries out the business of bookmaking in eight of the country’s nine provinces. Under KwaZulu-Natal gaming regulations only natural persons, not juristic persons as in companies, may hold bookmaking licences in the province.

When an agreement was made by a licensed bookmaker to sell his business to Betting World the KwaZulu-Natal authorities said it violated the relevant section of the Regulation and Betting Ordinance, but this ruling was challenged as being unconstitutional. The High Court in Pietermaritzburg agreed that differentiation contained in the section was arbitrary and irrational, and ruled that it breached the constitutional right to equal protection and benefit of the law. It also held that the section constituted unfair discrimination.

The Premier of KwaZulu-Natal appealed against the order, contending that the differentiation between natural and juristic persons reflects the fact that juristic persons, by virtue of their separate legal personality and the limited liability of those who operate them, are more difficult to regulate. The section of the Ordinance therefore represents a legitimate way to protect the public by ensuring that only natural persons, who are easier to hold accountable, can hold bookmaking licences.

The applicants contended that the differentiation was obsolete. They noted that the province had for some years been preparing new legislation to replace the Ordinance. The proposed legislation permits juristic persons to hold bookmaking licences. They argued that the exclusion of juristic persons was out of step with modern business realities. The differentiation in the section was therefore no longer rationally linked to the achievement of a legitimate government purpose.

The Constitutional Court, however, disagreed with the applicants. In a unanimous judgment the Court held that section 22(5) did not breach the right to equality before the law protected by the Constitution and that regulation of gambling represented a legitimate government purpose. Different practical considerations might indeed apply to the regulation of juristic persons and natural persons, and so it was not irrational to treat the two differently in the interests of regulation. The fact that reform was being considered, and that an allegedly better policy might exist, did not show that the current law was irrational. Furthermore, the section did not amount to unfair discrimination.

The Court also confirmed the importance of provincial legislation in South Africa, stating that the invalidation of a provincial ordinance must be confirmed by the Constitutional Court. In so doing, the Court has upheld the right of South African provinces to regulate gambling under their own terms. (E-11.21.08)

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