The above matter is our reference.

We note with concern that neither Phumelela Gaming & Leisure ("Phumelela") Ltd nor any other horse racing and betting operator in the country was consulted by the Department of Trade and Industry on the final draft National Gambling Bill, 2003 ("the Bill").

This is after we fortuitously stumbled upon the 10th draft of the Bill during July 2003 and went to great trouble to submit comments thereto. The horse racing and betting industry has been totally ignored and excluded from the process of developing legislation that affects its business. We had convinced ourselves that the initial exclusion was an oversight.

We do not know what to make of the recent exclusion and are particularly concerned, especially having discovered that the final draft has introduced new issues and ignored any of our comments to the 10th draft.

The new issues introduced appear to be uninformed and are extremely detrimental to the horse racing and betting industry, and the gambling industry in general.

Betting business is the sole pillar of the horse racing industry, which includes horse racing operators, totalisator operators, owners, breeders, trainers, jockeys, the Jockey Club of Southern Africa, farriers, feed merchants, tack merchants, transport operators, grooms, farmers, liverymen, event managers, caterers and other participants, who are all dependant on the industry.

The industry is a major employer in the country and contributes significantly to the national and provincial fiscals in the form of VAT, corporate tax, gambling tax, personal income tax, etc. It also supports the tourism and export industries.

The implementation of the intended measures will result in major job losses in the industry after a year of stable employment following extensive downsizing necessitated by the introduction of the lottery and casinos, reduction in contribution to the national and provincial fiscals, undermining of all empowerment shareholders and other empowerment initiatives, and possibly commercially non-viable.

This will also negate efforts of provincial governments, who have been supportive of processes to revive the industry.

Having perused the said Bill, we wish to comment specifically as follows:


1. Preamble


1.1 We note that one of the objectives of the Bill is to establish uniform norms and standards applying nationally. We fully support this objective, especially at the back of a strong provincial regulation framework. However, we do believe that this critical principle does not feature extensively, if at all, in the provisions of the Bill.


1.2 Phumelela, which operates horse racing and betting in seven provinces, and Gold Circle, which operates in the other two provinces, ("the operators") offer the same betting products nationally and are required to have their betting rules approved by every provincial gambling board, in addition to other regulatory requirements. Problems are always experienced in that:

a. different provincial gambling boards ("boards") often apply different criteria in considering these rules and possibly with little consultation amongst themselves, resulting in the unfair rejection of the rules by other boards to the detriment of the operators and punters in such other provinces. This means that certain bet types may never be offered in other provinces;



b. there are no standards set on the turnaround time around certain processes by the boards, including the consideration of rules and other dispensations, contrary to Batho Pele principles. Occasionally, some boards never even revert back with a response to a request and some take months to do so. The repercussions are enormous as business opportunities are quickly lost as a result; and

c. different regulatory norms and standards are applicable to betting outlets (branches, agencies, etc.), rendering of totalisator tax returns, the use of IT, equipment, security requirements and advertising, to mention just a few areas of differences.

1.3 It is both costly and inconvenient to operate our business across the country while being subjected to regulatory norms and standards that differ from province to province. A good example here is the rendering of totalisator tax returns. Each province has its own requirements, including the formats and dates on which such returns must be rendered. This is adds to administrative complexities and costs.

1.4 We earnestly believe that boards must be encouraged to implement the principles of co-operative governance and Batho Pele for the benefit of all stakeholders. The provision of these standards is extremely important and, to that extent, we believe they should be incorporated in the Bill and the regulations in terms of Section 38 of the Bill.


2. Section 1 - Definitions


2.1 "open bet"


2.1.1 We note that bookmakers may not offer totalisator bets but, however, they may offer "open bets".

2.1.2 It is not clear what the definition of "open bet" actually refers to or is intended to achieve.

2.1.3 In certain provinces where legislation provides for an open bet, bookmakers have continued to infringe on our intellectual property and engage in unlawful competition with us.

2.1.4 We want to be certain that bookmakers do not see this as a loophole opportunity to encourage this infringement and specifically offer totalisator bets in disguise and use our totalisator dividend, infringing our intellectual property rights.


2.1.5 The totalisator dividend is the result of the operators' labour, including marketing effort and huge investment in property and information technology required to operate a totalisator, and is the operator's property.

2.1.6 Bookmakers' business is the laying of fixed odds bets, for which they are licensed accordingly.


2.2 "gambling machine"


2.2.1 The inclusion of a totalisator machine in the definition of a gambling machine would require it to be registered and certified in terms of Part D of the Bill, whatever it is.

2.2.2 This, however, creates confusion as to what is intended here since there is no such thing as a totalisator machine. This is more evident from the fact that no such machine is defined in the Bill. A totalisator is the entire betting system, including intellectual property, software, computer hardware, networks, etc.

2.2.3 If it is intended that the front-end ticket issuing machines should be certified or registered, this will create major problems and will serve no purpose, as these are dumb terminals at the end of a line.

2.2.4 This requirement will be impractical to implement as these machines are often moved around or swapped, with the majority being very old.

2.2.5 Finally, the ticket issuing machine is merely a means of recording a transaction between the punter and the operator, which requires no certification.


3. Section 13 - Restrictions on granting credit or discounts to gamblers


3.1 Betting on horse racing is the oldest form of gambling, having been introduced to South Africa in the late eighteenth century. This form of gambling involves a measure of skill and intellect, with racing taking place at intervals up to 30 minutes. Since its introduction, there has been no significant incidence of problem gambling among punters in terms of available data. This is also borne by the fact that the level of bad debts is negligible within the sector of the industry.





3.2 The restrictions intended here will lead to the demise of the horse racing and betting industry, while there is no empirical research supporting the suggestion that the introduction of these measures will achieve the purpose intended.

3.3 Section 13(1)(a) and (b)

Our telephone betting operations are dependent on us being able to extend credit to and taking deposits from punters using this service to engage in betting. These operations are huge in terms of infrastructure, resources and turnover, and cater mostly for the convenience of the punters in the top end of the market.

3.3 Section 13(1)(c)

3.3.1 Horse racing is both a sport and an important social event, with certain of these events, such as the Vodacom Durban July Handicap, J&B Met, Triple Crown and the Summer Cup, forming part of the major social and tourism attractions in the country.

3.3.2 The restriction on the industry providing meals, drinks or other refreshments to thousands of patrons attending these events, whether for free or at discounted prices, will limit these important events in the social and tourism calendar, with detrimental consequences for the industry.

3.3.3 Event management and catering are integral parts of horse racing, supported by betting. This also introduces new patrons and corporates to the sport of horse racing.

3.4 Section 13(1)(d) and Section 17(2)

The placing of cash dispensing machines on licensed premises is purely a convenience to punters, while their removal does not limit punters' desire to engage in betting.


4. Section 14 -Excluded persons

4.1 Section 14(8) and (9)

It will be impractical for our multiple betting outlets to monitor excluded persons on the promulgation of this legislation.






5. Section 17 - Standards for gambling premises


5.1 Section 17(1)

While Phumelela may have betting outlets within the vicinity of a school, depending on the definition of a school, it must be noted that schools (private colleges) have often been established within a vicinity of a betting outlet after the outlet has been established. Persons under the age of 18 are also not allowed in the betting outlets.

5.2 Section 17(2)

Refer to paragraph 3.4 above


6. Section 40 - National Licence


6.1 Section 40(1)(b) contemplates a national licence for a Horse Racing Authority. There is, however, no provision for the effective functioning of the Authority, for example, funding and accountability of that Authority.

6.2 On the contrary, we question why the sport of horse racing, being one sporting event on which the operators offer bets, is required to be licensed. Does that mean soccer or any other sporting event on which the operators are licensed to offer bets will become licensed by the boards? Clearly, that is untenable and probably not envisaged.

7. Section 48(1) - Limitation of rights to a licence


7.1 It is clear that the intention of this Section is to limit the issue of licenses to juristic persons. However, Phumelela requests that a transition be provided for in respect of the current position in the Free State.

7.2 Phumelela holds its licences in the Free State in a partnership as a result of previously existing legislation in that province.


7.3 While an application for transfer of these licenses to Phumelela is pending, it is not known when this process will be concluded. A juristic person does not include a partnership.


    1. Section 59 - External Probity Reports


8.1 Section 55 (1)(c) appears to be merely empowering to the extent that it provides for the reliance by one board on an external probity report of another board.

8.2 Given the cumbersome and expensive probity investigations, we believe that this provision must become peremptory, perhaps with modification to allow the requesting board to satisfy itself of an issue or two raised in such a report.

8.3 We strongly recommend that standards be set to avoid both over-kill and superficiality in the investigations by boards. These practices are already rife and extend to other regulatory requirements by certain boards.

8.4 The requirement in section 59(3) establishing a national probity register does not take the above matters any further.


9. General


9.1 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.

9.2 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.

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















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

9.5 A similar submission has been forwarded to the Minister of Trade and Industry.


I trust that the above is in order and wish to express our appreciation at being afforded an opportunity to submit comments to the Bill.