Separate tote could ruin SA racing RXP

SEPARATE TOTE COULD RUIN SA RACING

A RECOMMENDATION by a Gambling Review Commission that the tote (TAB) be separated from South African horseracing operators Phumelela Gaming And Leisure Limited and Gold Circle could be the death knell of the sport if accepted by a Parliamentary Committee.

As part of the Department of Trade and Industry’s overall review of the gaming environment in South Africa, the Minister commissioned a gambling review in 2009 and its report was published in July this year.
The report is now being considered by a Parliamentary Committee, which has requested written submissions followed by public hearings towards the end of this month.
Both JSE-listed Phumelela and Gold Circle have tendered submissions and requested an opportunity to address the Parliamentary Committee.
While the Commission has recommended an in-depth separate review of horseracing, which Phumelela welcomes, the report contains other recommendations about the sport.
One is that the tote be separated from the horseracing operators and this recommendation is of particular concern to Phumelela.
The current structure of the tote being vertically integrated under the control of the horseracing operators has evolved from a long history of separation, which proved unviable and threatened the sustainability of horseracing in South Africa.
Phumelela and later Gold Circle were established to create viable business models in an environment that was being opened to other forms of gaming and in which horseracing’s intellectual property was not properly remunerated or protected.
“The current structure flows from then Gauteng MEC Finance and Economic Affairs Jabu Moleketi’s directive in the mid-1990s for Gauteng horseracing to be corporatised,” said Phumelela Group CEO Rian du Plessis.
“At the time South African horseracing was poorly structured and struggling financially. Protracted negotiations between Gauteng Provincial Government and horseracing in the region then took place on how best to restructure the sport in order to ensure its sustainability in the face of competition from other forms of gambling,” he added.
“Various models were investigated and the outcome was that all elements of Gauteng horseracing, including the tote which was then a separate entity run by a board comprising horseracing and Provincial Government representatives, were incorporated into a single Black economically empowered JSE-listed company that was named Phumelela.
“Six other provinces subsequently joined Phumelela, while horseracing in KwaZulu-Natal and the Western Cape was corporatised under Gold Circle. These vertically integrated models have enabled horseracing to survive the introduction of other forms of gambling with the tote contributing 75% of the cost of running horseracing. These costs include prize money to owners, regulating the sport and the maintenance of racecourses and training tracks.”
Owners subsidise the remainder of the costs of running horseracing. This is unsustainable in the longer term and separating the tote from the racing operators would simply increase the shortfall in funding, which arises from the sport receiving insufficient commission from bets placed with fixed-odds operators and not being properly recompensed for use of its intellectual property rights.
Horseracing in South Africa makes a significant contribution to the economy and there are obvious risks in tampering with a structure that is utilised in the most successful horseracing countries in the world.
South African horseracing employs more than 16,000 people directly and some 100,000 people in related upstream and downstream industries.
Horseracing’s market share of gambling turnover in South Africa in 2009 was about 10%, according to a recent economic impact analysis, and the industry contributed R2.71 billion to the GDP and R694 million by way of taxation.
The most financially successful horseracing countries in the world include Singapore, Hong Kong, Japan and Korea and the principal reasons are that they are fully integrated and enjoy the total support of their governments.
A 2010 survey carried out by the International Federation of Horseracing Authorities (IFHA) showed that prize money covers 134% of the cost of racehorse ownership in Singapore, 105% in Hong Kong and 63% in Japan.
The IFHA survey showed that in South Africa the operators, who own the tote and most of the facilities, return prize money covering 45% of the cost of racehorse ownership.
This figure could be vastly improved by greater Government support and recognition of the value of horseracing to the country’s economy, as well as by what the Gambling Review Commission refers to as “a levelling of the playing fields”.
The danger of separating the tote from racing operators is best illustrated by UK horseracing.
In the UK, the British Horseracing Board (BHB) manages the sport nationally, but racecourses are owned and run independently. Historically the tote has been owned by government, but was recently sold to a private gaming concern, which has increased the fragmentation of UK horseracing with potentially dire consequences. Currently prize money in the UK covers only 22% of the cost of racehorse ownership.

Spin,there was never a big tote culture in the UK,so using them as an example is a bit misleading.
I have been punting for 25 years and have never had a Tote bet,infact in Scotland I couldn't tell you where a Tote outlet was apart from the tracks

The Gambling Review Commission is ,IMO,the best bit of news I have read in the last 10 years:
1)Their assessment of betting exchanges is in line with a number of the reasons I believe are beneficial,and have posted in the past.
2)I have always believed(and posted) that the NHA board is inappropriate and should be independant.
3)The management of Saftote and tab-online has been pathetic,forever.I can't express how much I look forward to the prospect of it being in other hands.
Pools should remain national but access to them should be competitive IMO and remove the monopolistic service.

Mr Du Plessis should not confuse what is good for racing with what is good for Phumulela,and nor should the rest of us,as they have never been the same thing.
Almost all his statements and press releases are merely excuses for a badly managed company.
I am delighted that my view of "P"s handling of the tote is the same as the commisions.

If nothing else the arguments and counter-arguments are likely to reveal the true reason for the lack of value the tote provides(6/1 shots paying R3 a win and R1 a place)
I look forward to seeing what comes out of a transparent reveal of distribution and lets see who's hands were in what cookie jar.
In the "bad old days" even money shots paid an average of R1.20 a place.

As we speak,Countess Du Bois @ SP of 15/10 pays R1.70 a win on Saftote....explain to us Mr DuP,why we would agree with you?

rob faux Wrote:

---

> Mr Du Plessis should not confuse what is good for
> racing with what is good for Phumulela,and nor
> should the rest of us,as they have never been the
> same thing.

(tu)

rob faux Wrote:

---

> As we speak,Countess Du Bois @ SP of 15/10 pays
> R1.70 a win on Saftote....explain to us Mr DuP,why
> we would agree with you?

To be fair Rob, if you use this as an argument then you were just selective to suit yourself.

If you decided to be honest, then you would admit that out of 8 races today, the tote dead/heated 2 races with the bookies SP, and won 4-2 on the dividends on the day....and then you would have to agree with Mr Dup, not so?

You are being disingenuous to use this as an case either for or against the gambling Review Commission's recommendations anyway.

You can take poison that greater government involvement ain't gonna solve your problems if you are a gambler, you can be with me on this.

Jack,if you check the time of the post ,it happened to be on the tellytrack screen,so it just happened to be timeous.(6 of the 8 races you quote hadn't been run yet)
I don't think that I am an orphan in being convinced that the value is lacking on the tote.Whilst that might not be every single race,it is often enough to make it a fair generalisation.
How many cases a week or month would you think would make it a fair statement....perhaps we could compare tote vs fixed price over,say. any 10 concurrent meetings.

I am obviously happy,as it is human nature ,that my opinions,on the issues that are dear to my heart,seem to to concur with the commissions findings.
Government involvement is obviously a concern,but not if it is in the form of better regulation and transparency.
I have to admit that I was extremely and pleasantly SURPRISED at what I consider to be an enlightened view of the commission.
Maybe not everybody is happy with it, but I certainly am!
I just hope it is implemented,close to the way it has been proposed.

(sorry I didn't comment on the other dividends......I stopped using the tote for anything other than exotics some time ago,so I don't generally take much notice of those dividends- On reflection,the tote did compare unusually favourably today but you will notice that it happens most often when winners drift,which applied to most of the winners today))

If there was another tote operator would profits from that operator also be distributed (directly or indirectly) to horse racing namely stakes? Surely the tote is the lifeblood of horse racing? How else would horse racing survive? The bookmakers wont support it. So who else would?
From a punting perspective I remember when we used to have to two totes, it was dreadful as pools were diluted and dividends were skewed. If Rob has a problem with Countess du Bois now, both he and we will have many more similar problems if there were two totes.
Apart from poor customer service, but with the open bet daylight robbery and the raping of racing intellectual property rights I think the tote is being scr*wed.

Mac,there is no suggestion that there should be no tote or more totes,just that the one tote should not be in the hands of the operator.
If it was a managed by a non-profit company, take out would not have to cater for shareholders dividends,leaving more to fund stakes whilst leaving more in the nett pool for punters......how can that be bad.The tote will still fund racing,but with more to stakes and more back to punters.
Just as an example ,in those "bad old days" greyville guaranteed R1.10 a place.....even for a 1/3 shot.
I would also point out that the open bet was caused by the inefficient tote.......tattersalls were open,totes were not!!!!!
As I have said before "how pisspoor does management have to be when it can't monopolise a monopoly" How did they lose a grip on their own product?
Why would you buy your Steers burgers from Kentucky Chicken?............,only if Steers were cocking up.
With a little bit of ingenuity Saftote could have convinced bookies to give up the open bet,but they needed a forceful incentive ......not a whinging appeal from somebody who sued them and failed.
Mr DuP,states that the present structure of the tote has enabled racing to survive the introduction of other forms of gambling.....Oh Yeah..those other forms now are sponsors of racing......they are helping to keep racing going....ask yourself why that is!

@ Mac

I don't think separate totes are suggested. Just another body.
I am not sure how HK operates now, but in the mid 1990's the tote was operated by the Jockey Club of Hong Kong. Every cent is ploughed back into racing.

@ Rob

I remember reading this article last week (can not remember where),. I agree with the contents and your comments.
I also seem to recall a follow up question that someone asked -
What happens to the difference in the "round-down" in payouts and also unclaimed winnings.
Some say that it goes directly into Phum and GC coffers to enhance profits, thus increasing dividends to shareholders.

What do you think?

East,I am not sure how they would be distributed in an "ideal" situation,but it would either benefit stakes or dividends,or both.
I bet they go to the corporate bottom line right now,and therefore to shareholders.
They are a bonus to turnover so would not need to be reduced by any expense ratio,therefore straight to Gross Profit.
Technically it is not their money,but "retained payout"