KwaZulu-Natal Bookmakers’ Society and Another v Phumelela Gaming and Leisure Ltd and Others (889/2018) [2019] ZASCA 116; [2019] 4 All SA 652 (SCA) (19 September 2019)

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[2019] ZASCA 116
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KwaZulu-Natal Bookmakers’ Society and Another v Phumelela Gaming and Leisure Ltd and Others (889/2018) [2019] ZASCA 116; [2019] 4 All SA 652 (SCA) (19 September 2019)

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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 889/2018
In
the matter between:
KWAZULU-NATAL
BOOKMAKERS’ SOCIETY
FIRST
APPELLANT
GAUTENG
OFF-COURSE BOOKMAKERS’
ASSOCIATION

SECOND APPELLANT
and
PHUMELELA
GAMING AND LEISURE LTD

FIRST RESPONDENT
KENILWORTH RACING
(PTY) LTD

SECOND RESPONDENT
GOLD CIRCLE (PTY)
LTD

THIRD RESPONDENT
GAUTENG GAMBLING
BOARD

FOURTH RESPONDENT
KWAZULU-NATAL GAMING
AND BETTING BOARD

FIFTH RESPONDENT
EASTERN CAPE GAMBLING
AND BETTING BOARD

SIXTH RESPONDENT
LIMPOPO GAMBLING
BOARD

SEVENTH RESPONDENT
NORTH WEST GAMBLING
BOARD

EIGHTH RESPONDENT
MPUMALANGA GAMBLING
BOARD

NINTH RESPONDENT
WESTERN CAPE GAMBLING
BOARD

TENTH RESPONDENT
FREE STATE GAMBLING
AND LIQUOR BOARD

ELEVENTH RESPONDENT
NORTHERN CAPE GAMBLING
BOARD

TWELFTH RESPONDENT
THE
NATIONAL GAMBLING BOARD

THIRTEENTH RESPONDENT
THE
NATIONAL LOTTERIES BOARD

FOURTEENTH RESPONDENT
GIDANI
(PTY)
LTD

FIFTEENTH RESPONDENT
ITHUBA
HOLDINGS (PTY) LTD

SIXTEENTH RESPONDENT
THE
PREMIER, KWAZULU-NATAL

SEVENTEENTH RESPONDENT
Neutral
citation
:
KwaZulu-Natal
Bookmakers’ Society v Phumelela Gaming and Leisure Ltd
(889/2018)
[2019] ZASCA 116
(19 September 2019)
Coram
:
Navsa, Tshiqi, Swain, Van der Merwe and Molemela JJA
Heard
:
26 August 2019
Delivered:
19
September 2019
Summary:
National
Gambling Act 7 of 2004
– meaning of totalisator betting on
sports –
Lotteries Act 57 of 1997
– meaning of ‘sports
pool’ – does not include totalisator betting on horse
racing and other sports –
provinces entitled to regulate and
control totalisator betting on horse racing and other sports.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Molopa-Sethosa J):
The
appeal is dismissed with costs, such costs to include the costs of
two counsel where employed.
JUDGMENT
Swain JA (Navsa,
Tshiqi, Van der Merwe and Molemela JJA concurring):
[1]
The
issue to be decided in this appeal is whether bookmakers, in addition
to their right to take bets on horse racing, possess the
sole right
to take bets on other sports, to the exclusion of totalisator
operators, who are said to be confined to taking bets
on horse
racing.
[2]
The
claim by the bookmakers is based upon the argument that totalisator
betting on sports other than horse racing, falls within
the
definition of a ‘sports pool’ in s 1 of the Lotteries Act
57 of 1997 (the
Lotteries Act). The
first appellant, the
KwaZulu-Natal Bookmakers’ Society, together with the second
appellant, the Gauteng Off-Course Bookmakers’
Association,
being voluntary associations whose members hold bookmaker’s
licences (hereafter collectively referred to as
‘the
bookmakers’), contend that on a proper interpretation of the
Lotteries Act, the
legislature has prohibited totalisator betting on
sports other than horse racing in the absence of a sports pool
licence, issued
in terms of the
Lotteries Act.
[3
]
The
first respondent, Phumelela Gaming and Leisure Ltd (Phumelela), the
second respondent, Kenilworth Racing (Pty) Ltd (Kenilworth)
and the
third respondent Gold Circle (Pty) Ltd (Gold Circle), (hereafter
collectively referred to as the ‘tote respondents’),

operate totalisator betting in relation to horse racing and other
sports events. Phumelela and Kenilworth maintain that they do
so in
accordance with licences to conduct and operate totalisators, issued
to them by the relevant provincial Gambling Boards.
It is not
disputed that Gold Circle lawfully does so in KwaZulu-Natal, in terms
of a totalisator licence, issued by the KwaZulu-Natal
Gaming and
Betting Board in accordance with the KwaZulu-Natal Gaming and Betting
Act 8 of 2010 (the KwaZulu Act).
[4]
The
bookmakers by way of application proceedings launched in the Gauteng
Division of the High Court, Pretoria, challenged the validity
of the
licences held by Phumelela and Kenilworth, on the basis that the
relevant provincial statutes did not authorise the holder
of a
totalisator licence to take bets on sporting events, other than horse
racing. As regards Gold Circle, the appellants accepted
that the
KwaZulu Act did provide for such express authorisation, but submitted
that the KwaZulu Act purported to deal with an area
over which a
provincial legislature did not enjoy legislative competence. Joined
as further respondents were the various provincial
gambling boards,
the National Gambling Board and the National Lotteries Board.
Gidani (Pty) Ltd and Ithuba Holdings (Pty)
Ltd were also joined as
the first and second operators of the National Lottery, as was the
Member of the Executive Council for
Finance in KwaZulu-Natal (the
MEC), who was responsible at the time the proceedings were
instituted, for the administration of
gaming and betting in
KwaZulu-Natal. The Premier of KwaZulu-Natal (the Premier), was
subsequently substituted as the seventeenth
respondent, when he
assumed responsibility for the portfolio.
[5]
The
relief sought by the bookmakers in the court a quo was the following:
(a)
An order declaring that Phumelela and Kenilworth were unlawfully
operating a totalisator sports betting operation in contravention
of
their totalisator licences and/or the
Lotteries Act.
(b
)
An interdict restraining Phumelela and Kenilworth from unlawfully
operating a totalisator sports betting operation in contravention
of
the Lotteries Act.
(c)
An order directing the fourth to twelfth respondents, being the
various provincial gambling boards, to the extent necessary,
to take
all appropriate steps to withdraw any permissions that may have been
granted to Phumelela and Kenilworth and which unlawfully
purported to
authorise the operation of totalisator sports betting operations.
(d)
An order directing the tote respondents and the MEC (now the Premier)
to pay the costs, jointly and severally, including the
costs of two
counsel.
[6]
Before
the court a quo (Molopa-Sethosa J), the application was successfully
opposed by the tote respondents and the Premier. The
application was
dismissed on the ground that tote betting on horse racing and other
sports, fell within the exclusionary clause
in the definition of a
‘sports pool’, contained in the
Lotteries Act.  The
court a quo rejected the bookmakers’ argument that in the
absence of a sports pool licence issued in terms of the
Lotteries
Act, on
a proper interpretation of the definition, the
Lotteries Act
had
prohibited tote betting on sports other than horse racing.
Central to this finding by the court a quo, was the fact that when

the
Lotteries Act was
passed, Phumelela was ‘already offering
totalisator betting in respect of sports such as soccer and rugby in
terms of provincial
legislation’.  The court a quo
therefore decided that the purpose of the
Lotteries Act in
this
regard, was not only to preserve the totalisator system of betting in
respect of horse racing, but also in respect of all
sports.
[7]
However,
the court a quo did not decide the central argument of the tote
respondents, which is also advanced on appeal, that the
Lotteries Act
does
not apply to tote betting on sports, which is governed by the
National Gambling Act 7 of 2004 (the National Gambling Act). The tote

respondents submitted that the
National Gambling Act expressly
refers
to tote betting and empowers provincial authorities to license tote
betting on any event, or combination of events. The
tote respondents
submitted that the provincial legislation does not limit tote betting
to horse racing and consequently these statutes
and the licences
issued to the tote respondents, by the provincial gambling boards,
permit totalisator betting on all sports. The
appeal is with the
leave of the court a quo.
[8]
Consequently, the first issue to be decided is the meaning of a
‘sports pool’ as defined in the
Lotteries Act and
the
meaning of ‘totalisator betting’, in the
National
Gambling Act. Thereafter
it must be decided whether totalisator
betting on sports, other than horse racing, falls within the
definition of a ‘sports
pool’. In doing so, the correct
approach to statutory interpretation as set out in
Cool Ideas 1186
CC v Hubbard
2014 (4) SA 474
(CC) para 28, must be followed;
‘
[a]
fundamental tenet of statutory interpretation is that the words in a
statute must be given their ordinary grammatical meaning,
unless to
do so would result in an absurdity. There are three important
interrelated riders to this general principle, namely:
(a)
that statutory provisions should always be interpreted purposively;
(b)
the relevant statutory provision must be properly contextualised; and
(c)
all statutes must be construed consistently with the Constitution
that is, where reasonably possible, legislative provisions
ought to
be interpreted to preserve their constitutional validity.’
(Footnotes omitted.)
[9]
Gold Circle and the Premier submitted that the context in which the
Lotteries Act and
the
National Gambling Act were
passed must include
a consideration of the legislation which had previously regulated
gambling and wagering, as well as the constitutional
setting. A
consideration of this legislation is said to be of importance in
determining the purpose of the
Lotteries Act and
the
National
Gambling Act, as
well as the meaning of a sports pool in the
Lotteries Act and
totalisator betting in the
National Gambling Act.
They
maintained that such an exercise makes it clear that totalisator
betting has always been recognised as differing from sports pools.
[10]
Gold Circle submitted that the legalised forms of gambling are
divided into two sections in terms of
s 104(1)
(b)
(i), read
with Schedule 4 of the Constitution. First, lotteries and sport pools
that are regulated nationally in terms of the
Lotteries Act by
the
National Lotteries Board and second, gambling, casinos and wagering
(including all wagering on horse racing and sporting events)
that are
regulated concurrently at both the national and provincial level.
This distinction is said to be reflected in the fact
that
totalisators of all kinds were regulated by the provinces and that
the rights of the provinces and the totalisator operators,
in
relation to tote betting on sports, other than horse racing, existed
before the passing of the
Lotteries Act.
[11
]
In marked contrast, the approach of the bookmakers to the
interpretation of what constitutes a ‘sports pool’ in the
Lotteries Act is
linguistic, without regard being had to prior
legislation regulating gambling and wagering. With regard to the
significance of
the Constitution, the bookmakers submitted that in
terms of s 104(1)
(b)
(i), read with Schedule 4 of the
Constitution, the power of provincial legislatures to pass
legislation dealing with lotteries and
sports pools, is precluded.
The bookmakers therefore contended that it is incumbent on the court
to interpret the legislation to
conform to the Constitution, unless
that interpretation was not reasonably open to the court.
Accordingly, where a provincial statute
might be read so as to allow
tote betting on sporting events other than horse racing, this should
be read restrictively, so as
to exclude it.
[12]
In my view, a consideration of the prior national and provincial
legislation, regulating gambling and wagering, is essential
to a
proper interpretation of the definition of a ‘sports pool’,
in the
Lotteries Act.  The
legislative history of a statute may
be used as an aid in its interpretation. As stated in
Joosub Ltd v
Ismail
1953 (2) SA 461
(A) at 466 D, ‘The history of the
sub-section may throw light on the proper construction of the words.’
The first act
to be considered is the Gambling Act 51 of 1965 (the
1965 Gambling Act) which came into force on 1 July 1969, in terms of
which
lotteries and sports pools were prohibited. A ‘lottery’
was defined as a scheme where a prize could be won by lot, dice
or
other method of chance and a ‘sports pool’ was defined
as:
‘
any
scheme under which –
(a)
any
person is invited or undertakes to forecast the result of any
sporting event or series or combination of sporting events (whether

or not in conjunction with any event other than a sporting event or
series or combination of events other than sporting events)
in
competition with other participants; and
(b)
a
prize is to be awarded to the competitor who forecast the said result
correctly or whose forecast is more nearly correct than
the forecasts
of other competitors, or a number of prizes are to be awarded on the
basis of aforesaid,
and
for the purposes of this definition the forecast of a result includes
not only the forecast of the person or team that is to
be victorious
or otherwise, but also any forecast relating to the system of scoring
employed in the sporting event concerned, or
to any person
responsible for the score.’
[13]
Gold Circle submitted that the key feature of a ‘sports pool’
as defined in the 1965 Gambling Act, was that it
involved the
awarding of prizes to competitors who were invited to make
predictions about sports events in contrast to betting,
whether
totalisator betting or bookmaker betting, which required the staking
of money and the receipt of the dividend based on
the amount staked,
or pay-out based on the odds fixed. According to the Premier, of
significance is that a sports pool did not
involve the pooling of
money and the award of a dividend but instead a prize, which did not
bear any relation to amounts paid by
the competitors to participate.
These distinguishing features between a sports pool and totalisator
betting, were central to the
argument of the tote respondents and the
Premier, that the
Lotteries Act does
not apply to totalisator betting
on sports, as this form of betting does not fall within the
definition of a sports pool.
[14]
Of significance in relation to the legislative competence of the
provinces to control and regulate betting and wagering, was
a savings
provision in s 10
(a)
of the 1965 Gambling Act, which provided
that nothing in that Act restricted the powers conferred under
paragraph 8 of the First
Schedule, or paragraph 12 of the Second
Schedule, to the Financial Relations Act 65 of 1976 (the Financial
Relations Act). These
schedules dealt with ‘[s]ources through
which a provincial council could raise revenue and in respect of
which it had power
to legislate either directly, or because such
power had been transferred to the provinces by the President’.
[15]
Paragraph 8 of the First Schedule to the Financial Relations Act gave
power to provinces in respect of ‘[l]icensing of
totalisators
and the imposition on the licensees of a duty in respect of the
takings thereof; and licences, taxes and fees in connection
with
horse and other racing, betting and wagering, and the dissemination
of information as to betting and wagering’. The
Second Schedule
dealt with ‘[m]atters the control of which and the power to
legislate in respect of which may be transferred
by the State
President to a province’.
[16]
Paragraph 12 of the Second Schedule to the Financial Relations Act
permitted the devolution of control to provinces in respect
of:
‘
The
restriction, regulation and control of horse racing, the prohibition,
restriction, regulation and control of other racing and
the
restriction, regulation and control of betting and wagering (whether
as to circumstances, locality or premises)
,
the prevention, control and regulation of the dissemination of
information as to betting within the province and the licensing
of
any instrument, machine or contrivance, commonly known as a
totalisator and the imposition of a duty in respect of the takings

thereof, upon the licensees.’
(Emphasis
added.)
The
former provinces were therefore afforded the power to regulate and
control betting and wagering, as to circumstances, locality
or
premises.  I accordingly agree with the submission by Gold
Circle, that despite the prohibition on a ‘sports pool’

in the 1965 Gambling Act, the express reference to the Financial
Relations Act in this Act made it clear that it was the provinces

that regulated betting and wagering, including totalisator betting
and they could determine what forms of betting to licence, or
to
prohibit.  In other words, the prohibition on a ‘sports
pool’ should not be construed as impinging on the provincial

power to regulate totalisator and other betting in general.
[17]
Prior to the passing of the 1965 Gambling Act and the Financial
Relations Act in 1976, the former Province of Natal had in
1957,
promulgated the KwaZulu-Natal Regulation of Racing and Betting
Ordinance 28 of 1957 (the Ordinance). The Premier submitted
that its
promulgation serves as an example of the historical legislative
competence of provinces, in respect of betting and wagering
and
specifically totalisator betting, as opposed to sports pools. Section
28 of the Ordinance permitted a racing club to offer
betting through
totalisators and provided for ‘betting on horse races, sporting
events and any other event or contingency’.
The definition of
‘bet’ or ‘a bet’ in s 2 was broadly defined
as the ‘staking of any money or valuable
thing relating to any
horse race, or sports, or on any other event or contingency
whatsoever’. The promulgation of the Ordinance
by the former
Province of Natal, was quite clearly the exercise of a wide power to
regulate betting and wagering within that province.
Consequently, the
purpose of the savings provision in the 1965 Gambling Act by
reference to the Financial Relations Act, was to
ensure the
preservation of the legislative competence of the provinces in this
regard.
[18]
The power of the former provinces to regulate and control betting,
including totalisator betting and wagering then found expression
in
ss 126(1) and 126(2) of the Interim Constitution Act 200 of 1993.
These sections accorded to provinces the competence to make
laws for
the functional areas specified in Schedule 6, which included
‘casinos, racing, gambling and wagering’. As
a result,
according to the Premier, a number of provinces exercised their
expanded legislative competence at this time and promulgated
gambling
legislation which permitted tote gambling on sporting events other
than horseracing. In terms of s 1 of the Gauteng Gambling
Act 4 of
1995, ‘totalisator’ was defined as ‘a system of
betting on a sporting event or any other lawful event
or contingency.
. .’. In the Limpopo Casino and Gaming Act 4 of 1996
‘totalizator’ was defined as ‘a system
of betting
on a sporting event’ without any limitation. Likewise, in the
Eastern Cape Gambling and Betting Act 5 of 1997,
‘totalisator’
was defined as a bet ‘on any event or combination of events’.
[19]
This expanded legislative competence on the part of the provinces
resulted in the amendment in KwaZulu-Natal of the Ordinance
with
effect from 1 December 1994, to include within the definition of
‘totalisator’, bets on sporting events other
than horse
racing. The definition specifically included sport bets on any
sporting event. As a further exercise of this legislative
competence,
KwaZulu-Natal then passed the KwaZulu-Natal Gambling Act 10 of 1996
which created a licensing regime for gambling within
the province. It
defined ‘gambling’ broadly as follows:
‘
[E]ngaging
in any activity whereby money or any other thing of value is staked
on the unknown result of a future event at the risk
of losing all or
a portion of the money or valuable thing so staked for the sake of a
return . . . .’
[20]
The Premier therefore correctly submitted that totalisator betting on
sports other than horse racing was permitted by the province
of
KwaZulu-Natal, in accordance with its provincial legislative
competence as reflected in the Financial Relations Act as well
as the
Interim Constitution, before the Final Constitution came into force
in 1997.  In addition, according to the Premier,
when the Final
Constitution was enacted the terms ‘lottery’ and ‘sports
pool’ had therefore acquired specific
meanings, quite distinct
from the concept of totalisator betting which had been regulated by
the provinces for over a century.
According to the Premier, the
exercise by the provinces of their Constitutional legislative
competence regarding ‘gambling
and wagering’ including
totalisator betting on sports, meant that these rights had accrued
and vested in the provinces at
the time the Constitution and the
Lotteries Act came
into force. Gold Circle submitted that this
legislative context is essential in construing the
Lotteries Act and
understanding the distinction drawn in the Constitution between
wagering and sports pools. An interpretation that distinguishes

between a sports pool and provincial betting on sports, it is
submitted, is the only interpretation that does this.
[21]
The Constitution in s 104(1)
(b)
(i) read with Schedule 4,
provides that an area of concurrent competence between national and
provincial legislatures is: ‘[c]asinos,
racing, gambling and
wagering, excluding lotteries and sports pools’. As pointed out
above, Gold Circle, relying upon the
views of Professors M Carnelley
and S Cornelius
Gambling and Sport in South Africa
, in
Anderson et al
Sports Betting: Law and Policy
(2009) at 720,
submitted that the Constitution draws a clear distinction between
lotteries and sport pools on the one hand and
gambling, casinos and
wagering, on the other. The authors state the following:
‘
The
Constitution of the Republic of South Africa, 1996, divides the
legalized forms of gambling into two Sections:
Lotteries
and sport pools that are regulated nationally in terms of the
Lotteries Act by
the National Lotteries Board;
Gambling,
casinos and wagering (including the wagering on horse racing and
sporting events) that are regulated concurrently at both
the national
and provincial level.’
Gold
Circle submitted that this distinction in the Constitution is
reflected in the legislation, in terms of which the
Lotteries Act
regulates
lotteries and sports pools and the
National Gambling Act
and
provincial legislation regulates wagering, consisting of both
bookmaker betting and totalisator betting, on all events.
[22]
The approach of the bookmakers is, however to deny that the
Lotteries
Act and
the
National Gambling Act, reflect
such a distinction. This
is because central to their argument, is that tote betting on
sporting events other than horseracing,
falls within the definition
of a sports pool in the
Lotteries Act. As
pointed out above, they
emphasised that the power of provincial legislatures to pass
legislation dealing with lotteries and sports
pools is precluded. Any
such legislation would be susceptible to being struck down as
unconstitutional. In response, the Premier
submitted that inherent in
the bookmakers’ approach is the withdrawal of power and rights
from the provinces, which had accrued
under the prior legislation
referred to above, to regulate and control ‘gambling and
wagering’ including totalisator
betting on sports. It is
submitted that such an interpretation runs counter to established
principles of statutory interpretation.
[23]
It is against the background of the Constitution and the legislative
history that I return to the central issue in the appeal,
namely, a
determination of the meaning of a ‘sports pool’ as
defined in the
Lotteries Act and
the meaning of ‘totalisator
betting’ as defined in the
National Gambling Act. Thereafter
it
must be determined whether totalisator betting on sports other than
horse racing, falls within the definition of a ‘sports
pool’
in the
Lotteries Act.
[24
]
In terms of
s 4
of the
National Gambling Act which
deals with ‘Bets
and wagers’, provision is made in
s 4(2)
for totalisator
betting, which is defined as follows:
‘
A
person places or accepts a totalisator bet when that person stakes
money or anything of value on the outcome of an event or combination

of events by means of –
(a)
a
system in which the total amount staked, after deductions provided
for by law or by agreement, is divided among the persons who
made
winning bets in proportion to the amount staked by each of them in
respect of a winning bet; or
(b)
any
scheme, form or system of betting, whether mechanically operated or
not, that is operated on similar principles.’
Consequently,
in totalisator betting the payout that each of the winners receive is
determined by the amount staked by each of them
in their winning
bets, in proportion to the total amount staked by all of the persons
participating in an event, or combination
of events, after any
deductions from the total amount staked, in terms of any law or
agreement. As the Premier correctly pointed
out, totalisator betting
in any form, is by its very nature part of ‘gambling and
wagering’ and has been recognised
as such, for some time.
[25]
A ‘sports pool’ is defined In the
Lotteries Act as
follows:
‘“
sports
pool” means any scheme,
excluding
any scheme or competition in respect of horse racing which is
authorised by the board, or which is conducted in the same
format and
manner and under the same circumstances as a scheme or competition in
respect of horse racing that existed prior to
18 June 1997
,
under which-
(a)
any
person is invited or undertakes to forecast the result of any series
or combination of sporting events in competition with other

participants; and
(b)
a
prize is to be awarded to the competitor who forecasts the said
result correctly or whose forecast is more nearly correct than
the
forecasts of other competitors, or a number of prizes are to be
awarded on the basis aforesaid,
and
for the purposes of this definition the forecast of a result includes
not only the forecast of the person, animal, thing or
team that will
be victorious or otherwise, but also any forecast relating to the
system of scoring employed in the sporting event
in question, or to
the person who will be responsible for the score.’ (Emphasis
added.)
[26]
Leaving aside the meaning and extent of the highlighted exclusionary
clause, to which I will return, a sports pool is any scheme
in which
any person is invited or undertakes to forecast the result of any
series, or combination of sporting events in competition
with other
participants and a prize is awarded to the competitor who forecasts
the said result correctly, or whose forecast is
more nearly correct
than the forecasts of other competitors.
[27]
In my view, totalisator betting on horse racing and other sports does
not fall within the definition of ‘sports pool’
in the
Lotteries Act, for
the following reasons:
(a)
Historically and before the passing of the
Lotteries Act and
the
National Gambling Act, the
provinces enjoyed provincial legislative
competence in respect of totalisator betting on sports, which is a
form of wagering. This
legislative competence is reflected in the
Constitution, which draws a clear distinction between lotteries and
sport pools on the
one hand and gambling, casinos and wagering, on
the other. This distinction is then reflected in the legislation, in
terms of which
the
Lotteries Act regulates
lotteries and sports pools
and the
National Gambling Act and
provincial legislation regulates
wagering, consisting of both bookmaker betting and totalisator
betting, on all events. The distinction
between sports pools and
totalisator betting ensures that the national regulation of lotteries
and sports pools, does not impinge
upon the provincial legislative
competence in respect of totalisator betting on sports.
(b)
The
Lotteries Act did
not repeal the 1965 Gambling Act but did repeal
the prohibition on ‘lotteries’ and ‘sports pools’
previously
contained in s 2 of this Act. Save for the exclusionary
clause, the
Lotteries Act, however
, retained the definition of
‘sports pool’ in the 1965 Gambling Act, which emphasises
the inherent distinction between
sports pools and totalisator betting
of all types. In totalisator betting the individual amount staked by
the winning participant
who correctly forecasts the result of a
sporting event, together with the total amount staked by all of the
participants, determines
the dividend payable. That cannot be equated
with a sports pool where there is no accumulation of a pool or
dividend to be paid,
but instead a prize which invariably bears no
relationship to the amounts staked. In addition, the definition of
‘prize’
was amended from ‘any movable or immovable
property’ in the 1965 Gambling Act, to read ‘the prize
awarded to
the winner of a lottery’ in the
Lotteries Act. The
Premier therefore correctly submitted that the definition makes it
clear that a sports pool is a type of lottery, because a lottery
as
defined is the ‘distribution of prizes by lot or chance’.
Tote betting does not distribute prizes by lot or
chance, which is
the essence of a lottery. A bet wins because the eventuality
predicted occurs.
(c)
I also agree with the submission by Gold Circle, that if the purpose
of the
Lotteries Act was
to prohibit totalisator betting on sports
events, it would have utilised the clear legislative language of
totalisator betting
when defining a sports pool, because this type of
betting had been operated and regulated in the provinces for some
time. The vested
private rights of the totalisator operators and the
public law rights of the provinces, which had been regulating and
obtaining
tax from totalisator betting on all sports events, would be
affected. The withdrawal of power and rights from the provinces which

had accrued under the prior legislation referred to above, to
regulate and control ‘gambling and wagering’ including

totalisator betting on sports, runs counter to established principles
of statutory interpretation. This indicates that the purpose
of the
Lotteries Act, was
not to govern or prohibit the provincial licensing
of totalisator betting, on sports events.
(d)
I also agree with the submission by Gold Circle that the
National
Gambling Act, which
was passed after the
Lotteries Act, accepts
that
totalisator betting on any event or combination of events, without
limitation is authorised, provided that it is licensed
by the
provinces. Implicit in this must be the acceptance by the national
legislature that totalisator betting on sports does not
amount to
conducting a sports pool.
[28]
I therefore disagree with the submission by the bookmakers that there
are   two notable features of the definition
of a ‘sports
pool’, that support their argument that totalisator betting on
sports other than horse racing, falls within
the definition and is
therefore prohibited in terms of the
Lotteries Act. The
first is that
the definition of a ‘sports pool’ is broadly cast, in
that it refers to ‘any scheme’ and
‘any scheme’
is linked to two things, namely, it must be a scheme under which ‘any
person is invited or undertakes
to forecast the result’ and
second, a prize is to be awarded to the competitor who forecasts the
result correctly. The bookmakers
submit that this is what the tote
respondents do, in relation to taking bets on the sports of soccer
and rugby, which is prohibited
in terms of the
Lotteries Act.
[29
]
The erroneous interpretation of the bookmakers results from a
disregard of the historical legislative context in which the
Lotteries Act and
the
National Gambling Act were
passed. It also
disregards the distinction drawn in the Constitution between
lotteries and sport pools on the one hand and gambling,
casinos and
wagering, on the other which is reflected in the legislation, in
terms of which the
Lotteries Act regulates
lotteries and sports pools
and the
National Gambling Act and
provincial legislation regulates
wagering, on all events. It also fails to have regard to the inherent
differences between a sports
pool and totalisator betting on sports.
Significantly, as pointed out by Gold Circle, the bookmakers offer no
rationale as to the
purpose of the alleged distinction in the
national legislation, to exclude the provincial licensing of
totalisator betting on sports
other than horse racing and yet allow
provincial bookmaker betting on any sports, without limitation.
[30]
In any event, totalisator betting on horse racing and sports falls
within the exclusion contained in the definition of ‘sports

pool’ in the
Lotteries Act, for
the reasons set out below. For
the convenience of the reader, the provisions of the exclusionary
clause are reproduced:
‘“
sports
pool” means any scheme, excluding any scheme or competition in
respect of horse racing which is authorised by the board,
or which is
conducted in the same format and manner and under the same
circumstances as a scheme or competition in respect of horse
racing
that existed prior to 18 June 1997. . . .’
(a)
The primary consideration is the language used in the exclusionary
clause. The words used must be given their ordinary grammatical

meaning, unless to do so would result in an absurdity. Of particular
importance in construing the exclusionary clause are the rules
of
punctuation and particularly the use of the comma. In R W Burchfield
Fowler’s Modern English Usage
3 ed at 162 when dealing
with the use of the comma, provides as follows in point 7:
‘
7
A restrictive (or defining) relative clause does not require a comma.
A non-restrictive (or non-defining) relative clause, i.e.
one which
by its nature supplies extra information, does.’
The
relative clause, ‘excluding any scheme or competition in
respect of horse racing which is authorised by the board’,

because of the presence of the word ‘which’, quite
clearly restricts and defines the meaning of the words ‘any

scheme’. The subsequent relative clause,
‘
.
. . or which is conducted in the same format and manner and under the
same circumstances as a scheme or competition in respect
of horse
racing that existed prior to 18 June 1997’, preceeded as it is
by the presence of the comma after the word ‘board’,

indicates a non-restrictive meaning in the context of the definition
as a whole. This relative clause therefore supplies extra
information
as to the meaning of the words ‘any scheme’ ie any scheme
which is conducted in the same format and manner
and under the same
circumstances as a scheme in respect of horse racing, but which is
not restricted to a horse racing scheme.
(b)
I disagree with the submission by the bookmakers that the two ‘which
is’ phrases introduce the two limbs of the
exclusion, which
qualify the subject, namely, ‘any scheme or competition in
respect of horse racing’ and that the use
of the words ‘which
is’ in both parts of the sentence, must be taken as a
deliberate decision by the legislature to
indicate that the subject
‘any scheme or competition in respect of horse racing’,
is qualified in two ways, so that
both limbs of the exclusion pertain
only to horse racing. This argument fails to have regard to what
Fowler describes as the use
of ‘which’ as a relative
pronoun, at the head of restrictive and non-restrictive clauses. The
word ‘which’
in the phrase ‘which is authorised by
the board’ is quite clearly used restrictively, ie horse racing
that is authorised
by the board. However, the subsequent use of the
words ‘or which’, preceded by a comma, is used
non-restrictively as
it provides additional information as to an
alternative meaning of the phrase ‘any scheme’, ie any
scheme which is
conducted in the same format and manner and under the
same circumstances as a scheme in respect of horse racing, but which
is not
restricted to a horse racing scheme.
(c)
I agree with the alternative submission by Phumelela and Kenilworth
that for the interpretation of the bookmakers to be correct,
the
qualifier in respect of horse racing would have to be repeated at the
start of the second leg of the exclusion, to qualify
‘any
scheme’. In other words, the definition would read as follows:
‘“
sports
pool” means any scheme, excluding any scheme or competition in
respect of horse racing which is authorised by the board,
or
any
scheme or competition in respect of horse racing
which is conducted in the same format and manner and under the same
circumstances as a scheme or competition in respect of horse
racing
that existed prior to 18 June 1997.’
(Emphasis
added.)
Phumelela
and Kenilworth are therefore correct in their submission that ‘any
scheme’ does not have to be a horse racing
scheme. To qualify
for the exclusion, the scheme must be run in the same format and
manner as a horse racing scheme before June
1997, but the scheme does
not have to be horse racing, and may involve any sport. The point,
according to Phumelela and Kenilworth,
is that on this interpretation
the qualifier ‘in respect of horseracing’ qualifies the
format and manner of the scheme
(‘which is conducted in the
same format and manner and under the same circumstances as a scheme
or competition’), not
the scheme itself (‘any scheme’).
Gold Circle therefore correctly submits that the competitions or
schemes which were
conducted in the same manner, form and
circumstances as any scheme in respect of horse racing prior to June
1997, and which are
excluded from the definition of sports pools, are
provincially licenced bookmaker and totalisator betting on horse
racing and sports.
(d)
The interpretation of the bookmakers not only fails to afford to the
words used their correct grammatical meaning, but also
fails to have
proper regard to the context and purpose of the
Lotteries Act, the
National Gambling Act, as
well as the Constitution. The nature and
extent of the exclusionary clause becomes clear once it is accepted,
as pointed out above,
that the Constitution draws a clear distinction
between lotteries and sport pools on the one hand and gambling,
casinos and wagering,
on the other and that this distinction is
reflected in the legislation. In addition, as pointed out by the
Premier, if the interpretation
of the bookmakers were correct, it is
difficult to see why the legislator did not simply formulate the
exclusion to read; ‘excluding
totalisator betting on horse
races, but including all other forms of totalisator betting’.
(e)
The bookmakers’ reliance on the Afrikaans text of the
definition of a ‘sports pool’ in the
Lotteries Act, as
support for their interpretation, is also misplaced. They submit that
a direct translation of the relevant portion reads as follows:
‘“
sports
pool” means any scheme, excluding any scheme or competition in
respect of horse racing which is conducted in the same
format and
manner and under the same circumstances as a scheme or competition in
respect of horse racing that existed prior to
18 June 1997, or which
is authorised by the board, under which. . . .’
On
this basis the bookmakers submit that although the two limbs of the
exclusion appear in a different order to those in the English
text,
it is clear that the two exclusions both relate to horse racing and
that the Afrikaans text makes it clear that the subject
of the scheme
excluded from the prohibition on sports pools, is horse racing. There
is therefore a conflict between the Afrikaans
text and the English
text and not a mere ambiguity between the two versions. As decided in
Du Plessis & others v De Klerk & another
[1996] ZACC 10
;
1996 (3) SA
850
(CC) para 44, the English text which was signed by the President,
must therefore prevail.
(f)
The answer to the bookmakers’ reliance on the 2016 Final
National Gambling Policy, of the Department of Trade and Industry

(the DTI), which states that sports pools are constitutionally the
sole mandate of the lottery and that operating totalisator betting
on
sporting activities other than horse racing, must be discontinued, is
the decision in
Akani Garden Route (Pty) Ltd v The Pinnacle Point
Casino (Pty) Ltd
2001 (4) SA 501
(SCA) para 7, where the
following was stated:
‘
[L]aws,
regulations and rules are legislative instruments, whereas policy
determinations are not. As a matter of sound government,
in order to
bind the public, policy should normally be reflected in such
instruments. Policy determinations cannot override, amend
or be in
conflict with laws (including subordinate legislation). Otherwise the
separation between the Legislature and Executive
will disappear.’
On
a practical level, I agree with Gold Circle that if the DTI believes
that totalisator betting on sports other than horse racing
should not
be licensed and regulated by the provinces, then it should make the
necessary legislative changes in the
Lotteries Act and
the
National
Gambling Act. As
pointed out by Gold Circle, totalisator betting on
sports other than horse racing was openly conducted before the
legislation was
enacted and has been openly conducted for almost two
decades, since it was enacted. If the DTI is of the view that
provincially
licensed totalisator operators should not be offering
bets on sports, other than horse racing, then it is difficult to
understand
why no steps have been taken to prevent this. The long
standing status quo in this regard, also leads to the compelling
conclusion
that the application brought by the bookmakers, was
opportunistic and aimed at achieving a monopoly in respect of betting
on sports,
other than horse racing.
[31]
Consequently, totalisator betting on sports does not fall within the
definition of a ‘sports pool’ in the
Lotteries Act and
is
regulated in terms of the National Gambling Act and the provincial
legislation. This conclusion, renders a consideration of
the validity
of the nature of the relief sought by the bookmakers, unnecessary. In
addition, as correctly conceded by the bookmakers,
this finding means
that the provincial legislation lawfully regulates and controls
totalisator betting not only on horse racing,
but also on other
sports events. The provincial licences were therefore validly issued
by the provincial gambling boards, to the
tote respondents, in
accordance with the provincial legislation.
[32]
At the hearing of the appeal, the bookmakers challenged the so-called
‘deemed authorisations’, which Phumelela
says were
granted to it by some of the provincial gambling boards, in respect
of its consolidated rules. The bookmakers strenuously
argued that
Phumelela only possessed the requisite approval from the provincial
boards in the provinces of Gauteng, Mpumalanga
and the Free State. It
was submitted that Phumelela did not possess the requisite
authorisation in the remaining provinces of Western
Cape, Northern
Cape, Eastern Cape, KwaZulu-Natal, Limpopo and North West.
[33]
In order to properly understand this challenge, the relationship
between the need for a totalisator licence as well as approved
rules,
requires to be understood. This is illustrated by a general example
taken from the Gauteng Gambling Act 4 of 1995. Section
52 provides as
follows:
‘
No
person shall conduct the business of a totalisator or betting pool
without a totalisator licence.’
Section
53(2) provides as follows:
‘
The
holder of a totalisator licence shall conduct totalisators and
betting pools in accordance with rules made by such holder and
which
have been approved.’
A
totalisator operator therefore requires a totalisator licence, as
well as rules made by the totalisator operator which have been

approved by the relevant provincial gambling boards, to conduct the
business of a totalisator.
[34]
The challenge arises from the answering affidavit of Phumelela and
Kenilworth in which it was stated that because of the delay
of the
provincial gambling boards (other than Gauteng, Mpumalanga and the
Free State), in approving Phumelela’s consolidated
‘Revised
Operational Totalisator Betting Rules’, it wrote to these
boards recording that in the absence of any contrary
indication from
them, it would assume they had no objection to Phumelela offering the
bets reflected in the proposed rules. No
response was received to
these letters so Phumelela maintained that the consolidated rules
were deemed to have been approved. The
bookmakers submitted that this
conduct amounted to ‘self-help’ on the part of Phumelela,
which is an affront to the
rule of law and constituted no
authorisation at all.
[35]
In response Phumelela pointed out that the only challenge raised by
the bookmakers in their notice of motion and founding affidavit,
was
that the tote respondents did not possess the requisite licences,
alternatively, that any licences they possessed were invalid.
The
challenge was never directed at a lack of authorisation of the
consolidated rules of Phumelela and this was not the case it
was
called upon to meet.
[36]
Although the bookmakers accepted they had not attacked the validity
of the consolidated rules of Phumelela, in their notice
of motion or
founding affidavit, they maintained they were now entitled to do so.
However, no formal challenge to the validity
of the consolidated
rules was raised in their replying affidavit, nor was notice given
that amended relief would be sought in this
regard.
[37]
Of particular concern is that none of the provincial gambling boards
opposed or took part in the proceedings, with the result
that no
information was provided by them with regard to the status of the
applications by Phumelela for the approval of its consolidated
rules.
If this challenge had been clearly formulated in the notice of motion
and the founding affidavit, a response from one or
more of the
provincial gambling boards, may have been of assistance in resolving
this challenge.
[38]
The bookmakers referred to a number of authorities, in support of
their contention that a challenge to the validity of the
consolidated
rules of Phumelela should be entertained, at this stage. In support
of a submission that it was not an inflexible
rule, that an applicant
was not entitled to amplify a case in the replying affidavit,
reference was made to
Lagoon Beach Hotel v Lehane
[2015] ZASCA
210
;
2016 (3) SA 143
(SCA) para 16. It is correct that the rule is
not an inflexible one and whether an applicant will be entitled to
amplify a case
in the replying affidavit, depends on the facts of
each case. In
Lehane
this court decided that the facts of that
case justified a relaxation of the rule. Reference was also made to
the decisions in
Malan v City of Cape Town
[2014] ZACC 25
;
2014 (6) SA 315
(CC) para 73 and
Pretoria Portland Cement Co Ltd &
another v Competition Commission & others
2003 (2) SA 385
(SCA) para 63, as support for the proposition that in certain
circumstances, it may be incumbent upon a respondent to deal with
new
evidence contained in a replying affidavit. Again, whether a
respondent is obliged to do so must depend upon the facts of each

case. Finally, reference was made to the decision in
Yannakou v
Apollo Club
1974 (1) SA 614
(A) at 623G-H as authority for the
proposition that it is the duty of the court to take the point of
illegality
mero motu
, even if it is not pleaded or raised.
However, it was added that a court:
‘
.
. . can and will only do so if the illegality appears
ex
facie
the transaction or from the evidence before it, and, in the latter
event, if it is also satisfied that all the necessary and relevant

facts are before it.’
Because
of the absence of any information from the relevant provincial
gambling boards as to the fate of the applications by Phumelela
for
the approval of its consolidated rules, all of the necessary and
relevant facts concerning the alleged unlawful conduct on
the part of
Phumelela, are not before this court.
[39]
I am satisfied on the facts, that Phumelela was not obliged to deal
with a challenge to the validity of its consolidated rules,
when the
case it was called upon to meet, was a challenge to the validity of
its licences. This was an entirely different challenge
to that
advanced in the notice of motion and founding affidavit. In addition,
no clear formulation of this challenge was set out
in the bookmakers’
replying affidavit, nor in the heads of argument, to alert Phumelela.
It was accordingly not incumbent
upon Phumelela to deal with this
issue. I am therefore of the view, that the bookmakers are not
entitled to challenge the validity
of Phumelela’s consolidated
rules, at this late stage of the proceedings.
[40]
I make the following order:
The
appeal is dismissed with costs, such costs to include the costs of
two counsel, where employed.
K G
B Swain
Judge
of Appeal
Appearances:
For Appellants: G Marcus
SC and M du Plessis SC (with T Palmer and S Lushaba)
Instructed
by:
J
H Nicolson Stiller & Geshen, Durban
Lovius
Block, Bloemfontein
For First and Second
Respondent: A Cockrell SC (with J Mitchell)
Instructed
by:
Roodt
Inc, Sandton
Honey
Attorneys Inc., Bloemfontein
For Third Respondent: A
Katz SC (with A Coutsoudis)
Instructed
by:
Barkers
Attorneys, Durban
Matsepes
Inc., Bloemfontein
For Seventeenth
Respondent: A M Annandale SC (with B Jackson)
Instructed
by PKX Attorneys, Pietermaritzburg
McIntyre
Van Der Post, Bloemfontein