This week's Financial Mail - horse racing topic

In summary:

Horse racing betting has grown from R4.7 billion in 2002 to R8.1 billion in 2011. (But in real terms over 9 years?).

But in 2011 horse racing accounts for only 3.6% of total gambling - even "limited-payment machines, in which gamblers fed R8.7 billion has fared better. (Wow!).

Also declining is the infrastructure supporting horseracing eg the number of registered breeders has fallen by 50% since 2008.

Du Plessis (boss Phumelela) says he is not looking for handouts but for Government support. He is cheesed off that bookmakers only contribute to 12% of the costs of running horse racing but earn 42% of horse racing revenues.

For every R1 million of gross gaming revenue, horse racing created 7 jobs, 24 times more than the casino industry.

On positive notes - the Government is supporting the Sansui Summer Cup and there have recently been larger attendances at favourable meetings.

www.fm.co.za/Article.aspx?id=158912

interesting Mac,

Casinos raked in R209bn — 90% of total gambling spend (excluding the lottery) - maybe P should ask how they do it

Some sobering facts

keniza999 Wrote:

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> interesting Mac,
>
> Casinos raked in R209bn — 90% of total gambling
> spend (excluding the lottery) - maybe P should ask
> how they do it


Simple - the speed and volume of bets. In the half hour that it takes to run a race a casino will have turned over THOUSANDS of bets - each with its own rake off.

Du Plessis should stop complaining about bookies and get his arse into gear and compete better with them...

Does Bettingworld volunteer to pay extra levy?

Garrick Wrote:

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> keniza999 Wrote:
>

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>

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> > interesting Mac,
> >
> > Casinos raked in R209bn — 90% of total
> gambling
> > spend (excluding the lottery) - maybe P should
> ask
> > how they do it
>
>
> Simple - the speed and volume of bets. In the half
> hour that it takes to run a race a casino will
> have turned over THOUSANDS of bets - each with its
> own rake off.


Garrick is spot on here plus at Casino's if you are playing at the table they give you complemetary drinks and make you feel welcome. At the tote you are some miserable operator who steals your change.

Horse racing until Casino's were allowed in this Country had the Monopoly, unless you wanted to drive to The Carousel or Marula Sun. Horse racing since the introduction of Casino's and then the Lottery haven't been pro-active and looked at ways of keeping "their" punters and attracting new ones.

With Casino's how much controversy can they have betting on Black Jack and Roulette plus on Roulette you are betting at 103% compared to racing's 125%. In the racing game we have incident after incident after incident certainally not inspiring any new players to the game and losing plenty of their existing players. Horse Racing also carry's the stigma that the game is rigged and horses are pulled, drugged or whatever else to get them to win or lose.

I love the racing game and will probably be in it for life but changes should have been made ages ago to keep up with the times and transparency shown to try and improve racing's image.

From article:
Du Plessis explains that 58% of total gross horse racing gaming revenue is generated through the tote and 42% through bookmakers. The latter are required to pay 6% of their gross gaming revenue to the gambling board, which channels half of this to race track operators. “In effect, bookmakers contribute only 12% of the cost of running the sport and we [Gold Circle and Phumelela] bring in 88%,” says Du Plessis. EIS says that in 2009 Phumelela and Gold Circle returned R607m to horse racing while bookmakers paid in R75m.

How refreshing if we could get the facts right?

The bookmakers contribute 0% to the costs. The tote monopoly brings in an amount of income, which turns out to be 7 times more than the 6% of winnings that punters had with bookmakers. The entire "bookmaker" contribution in nothing more than the tax of the bookmakers'clients winnings.

But from that perspective, the racing operators have also contributed 0%. Their entire income is also a tax on the same punters, except that the tax comes of every cent they played and not what they won.

Of course the tote can contribute more, because the reality is it's a risk-free turnover based operation which is so profitable that ownership of such a thing is usually licenced out by governments... just like lotteries and casinos.

To be fair, a bookmaker is a completely different thing, and they can and do go under. They have to compete, they have to deliver service and they have to take care of their business and customers, and they are subject to all the normal business risks and then some.

The turnover thing is also misunderstood. Say on two even money shots, on the tote you may win 10,000 and then lose 10,000 and be square and the tote generated R4,000 (20% each time). With a bookmaker, by winning and then losing 10K , the bookmaker is square and the tax is R600 (out the punters pocket because he had to add the R600 to the 2nd bet after being only paid R9400 for the first bet). On the tote, the punters at large lost R4,000 as a victimless crime of some sort.

Perhaps the operators who own the race tracks should grow their own business with the assets they have for nothing, with owners who supply the show for nothing, and with total ownership and monopoly of one of the greatest money making rackets ever invented which they have for nothing.

It's a one way trip for the whole business once we let the top dogs start taxing the service providers (like caterers, feed merchants, bookies and transporters) because they want a cut of absolutely everything.

Good point Hibs.

I have some questions relating to the 6% tax and maybe the bookies can help

1. The 6% tax is funded by punters on winning bets, on average what percentage is then paid on tax on all bets struck or am I misunderstanding how it works? Please explain.
2. Has this tax been in place since the "liberalisation" of other forms of gambling or before the "liberalisation" of other forms of gambling?

Quick comment, large dividends still being paid out by P but it seems very little reinvestment in current infrastructure but very keen to sell off non performing infrastructure (loss leaders).

wool and eyes comes to mind.

Alcaponee Wrote:

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> 1. The 6% tax is funded by punters on winning
> bets, on average what percentage is then paid on
> tax on all bets struck or am I misunderstanding
> how it works? Please explain.

Bookmakers used to pay a percentage of their winnings in the same manner
as punters, but when VAT was introduced they had to pay the 14% VAT on
winning to SARS. That is why they no longer pay "betting tax".

So when you add the VAT and income tax, almost half of the bookmakers
profit is already paid in tax.

Bookmakers collect tax from punters, half of which goes to the provincial
funds and half to the racing clubs.

Thanks for the reply GJ. In short the punter funds racing from the bookmakers side too.

So we're being screwed a little by the bookies and lot by the tote?