PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY HORSE RACING AND BETTING

1
PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE
AND INDUSTRY- HORSE RACING AND BETTING

• NATIONAL GAMBLING BILL
• (B48 2003)
• September 18, 2003

2
BACKGROUND

• Horse racing dates back to the times of ancient
  Greeks and Romans
• However, thoroughbred racing has its origins in
  England during the 16th century
• Introduced to South Africa in 1797
• Only form of legalized gambling in SA (excl
  TBVC) until 1994

3
BACKGROUND(Cont)

• Until the the corporatisation of horse racing
  during 1997, it was run by clubs.
• Clubs constituted by horse owners and trainers
• Benefits accrued to clubs and their members.
• Betting subsidized clubs

4
BETTING DEVELOPMENT

• Totalisator and fixed-odds (bookmakers)
• On-course mechanical tote
• Off-course tote - 1972 (limited betting hours)
• 1991 (all day betting)
• Telephone betting - 1974
• Out of province - 1984 ( Equine flu , led to
  national fixtures being developed )

5
STAKEHOLDERS

• Breeders
• Owners
• Trainers
• Grooms
• Jockeys
• Farriers

• Veterinarians
• Tack merchants
• Farmers
• Liverymen
• Feed merchants

6
STAKEHOLDERS (Cont.)

• Horse racing Totalisator operators
• Regulators (Jockey Club of SA, etc)
• Transport operators
• Event managers
• Caterers and other participants, who are all
  dependant on the industry

7
NEW GAMBLING ERA

• Since 1998 betting income has declined
  considerably
• Cellular phones, etc
• Illegal gambling
• Casinos and Bingo halls
• Lottery
• Global competition mainly Internet sites

8
Turnover 1994 - 2002
9
CYCLE OF DECLINE
Poor attendance Deteriorating facilities
Drop in stakes and sponsorship
Declining contribution to racing activities
Declining media interest
Reduced return to owners
Declining betting turnovers
Fewer horses bought and owned
Reduced field size
10
NEW GAMBLING ERA (Cont.)

• Provincial Governments intervened
• Operations restructured, consolidated and
  corporatised
• Phumelela Gaming Leisure Ltd (PGL)
• Gold Circle
• Transformation initiated
• Betting taxes reduced
• Turnaround effected
• PGL listed on JSE

11
TOTALISATOR BUSINESS

• Supports the whole Racing Industry
• Revenue source
• 80 000 to 100 000 jobs (Direct Indirect)
• Properly licensed and regulated

12
TOTALISATOR BUSINESS(Cont.)

• How we operate
• Branches
• Agencies
• Telephone
• Internet

(424 cf 8000 Lottery)
13
The horse racing industry only accounts for 11
of the Gross Gaming Revenue in the gambling
market,
yet it accounts for more than 50 of the jobs!!
14
KEY STRATEGIC OBJECTIVETo Reduce Levels of Cash

• Branches Only Cash Betting
• High incidence of crime
• Telephone Betting Deposit Accounts
• 18 of business
• Convenience
• Cashless operation (minimize risk of robbery)
• 14000 Active users (only 200 granted credit)

15
KEY STRATEGIC OBJECTIVETo Reduce Levels of Cash

• Telephone Betting (cont.)
• Customer obtains record of transactions can
  analyze his performance
• No Queues or Crowds

16
PROBLEM GAMBLING

• Low incidence in horse racing
• lt 3 of problem gamblers
• Not impulse gambling
• Call centers
• Credit , deposits
• Not aimed at poor people, contrary to the Lottery
• National Responsible Gambling Programme
  Quarterly Report

17
PROBLEM GAMBLING(Cont.)

• Call centres(cont.)
• Telephone
• DSTV decoder
• Incidence of bad debts negligible

18
EFFECTS OF S13 OF BILL ON THE BUSINESS

• Restrictions on deposit and credit
• Call centres closure
• Loss of turnover
• Punters will turn to other activities encourage
  betting on overseas illegal internet sites

19
EFFECTS OF S13 OF BILL ON THE BUSINESS (Cont.)

• Restrictions on deposit and credit (cont.)
• Job losses(direct)
• Shrinkage of the business (18) further job
  losses (direct indirect)
• Domino effect on the industry
• Reduced tax contribution
• Undermine economic empowerment initiatives
• Revert to cycle of decline

20
EFFECTS OF S14 OF BILL ON THE BUSINESS

• Monitoring excluded persons
• Impractical to implement with our multiple
  outlets
• However, easy to monitor on cashless operation
• Telephone betting monitor accounts

21
OTHER MATTERS

• Open Bet
• Level playing field
• Gambling machine
• No such thing as a totalisator machine
• Standard for Gambling Premises
• Understand timeline limitations

22
CONCLUSION

• We believe that a balanced regulatory
  environment, taking cognisance of all the above
  matters and based on rational national norms and
  standards, will be beneficial to all
  stakeholders.

23
CONCLUSION (Cont.)

• We believe that while regulation must be in the
  best interest of the public, measures aimed at
  protecting the public or any interest group must
  be supported by empirical research and not be
  arbitrary.

24
CONCLUSION (Cont.)

• This industry is a major contributor to
  employment, empowerment initiatives, the national
  and provincial fiscals and to the economy in
  general.

25
CONCLUSION (Cont.)

• We support measures aimed at effectively curbing
  any negative social effects of gambling.