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Gold Circle warns of job losses from proposed provincial gaming taxes

Gold Circle Racing.

Gold Circle Racing.

Published Jun 30, 2022

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If the Gaming and Betting Bill comes into fruition, Gold Circle would not survive, Gold Circle chief executive Michel Nairac said in an interview yesterday.

“And if Gold Circle falls, what happens to the Durban July, the 16 000 people whose livelihoods are with us. Another province would benefit from that, but KwaZulu-Natal, which has already been hit hard by Covid-19, the July riots and floods, will be hit even more. That is our concern. The survival of Gold Circle is our concern, the provincial losses are a concern…”

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He said their plight was just one part of the danger.

“The other danger will be in KwaZulu-Natal (KZN)province. When we signed our naming rights agreement with Hollywoodbets years ago, one of the things that was achieved was that Hollywoodbets brought their server to KZN.

The province increased its revenue by R70 million per year, of which half was coming to us. Now if we increase the taxes we remove that contribution, (and) Hollywoodbets might move away. In their submissions, they said they would move to another province where the government is supporting horse-racing,” Nairac said.

He said that the province would lose the R70m, and “we will lose the R35m, our half”.

Gold Circle is set to make a presentation to KwaZulu-Natal legislators on the Gaming and Betting Tax Amendment Bill, provisionally scheduled to take place today.

The eThekwini hearing, which takes place just two days before the iconic Hollywoodbets Durban July, will give the event’s racecourse operator the opportunity to share with legislators the dire economic consequences the bill will have on the embattled province, if passed.

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“Indeed, if the bill is passed in its current form, then there is every possibility that the Durban July, along with all other horse-racing will no longer be economically viable into the future – with dire consequences for the province,” Nairac warned.

Gold Circle submitted its original comments on the bill in February, 2022, urging the provincial government not to pass a provision that would reduce the contribution from betting proceeds paid to racecourse operators by nearly half.

If passed, it warned that the bill would cripple the horse-racing industry, endangering vital livelihoods in KwaZulu-Natal.

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Nairac said the Gaming and Betting Bill proposes cutting the contribution received by racecourse operators from winning punters by nearly half, from 3 percent to 1.6 percent, with the remaining 1.4 percent to be paid over to a Transformation Fund, under the control of the Gaming and Betting Board.

He said what was worse was that they have decided to increase taxes on all types of gambling, which makes the province uncertain.

“Bookmakers who have got their servers in KZN for all the other bets and pay their tax, based on their growth-claiming revenue will probably move their servers to another province, because it becomes more financially efficient to operate in a province where taxes are cheaper,” Nairac said.

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“The province will lose a lot of money because of that bill. It is a badly thought through bill. To achieve a Transformation Fund there are other ways to do that, rather than increase taxes. It could be as simple as conditions of licence as a request.

“But to do it as they are doing it, I think they are making a big mistake and it is going to cost the province plenty,” he said.

Gold Circle also questioned why a Gambling board would do a better job at transformation and distributing funds for it than the participants who were obliged to do so, so that they can meet the conditions of a licence.

“Why would the Gambling board, as a regulator… Why would they be better at rallying transformation than the operators like the casinos, and bookmakers who are already doing that. Gold Circle is a level 2 contributor to B-BBEE. We do this on preferential procurement, on employment equity and helping people grow. Why would a Gambling board suddenly be experts at that? I think that is a big mistake,” Nairac said.

He said this put Gold Circle in jeopardy again, just after it has gone through two years of Covid-19, the fact that one of its partners Phumelela had gone into business rescue and was about to be liquidated; the July, 2021 riots; and this year’s floods. “… But this one we will not survive.”

Meanwhile, 4Racing chief executive Fundi Sithebe said the 4Racing legislative situation with the Gauteng Gambling Board was particular to the region and not necessarily entirely the same as Gold Circle’s in relation to the Gaming and Betting Tax Amendment Bill, published by the KwaZulu-Natal legislature.

She said they did, however, share a common and very major dilemma with Gold Circle in the absolutely dire impact the withholding of betting revenues from gambling boards would have on them as horseracing operators, and on the entire industry as a whole.

"This revenue is absolutely critically important to our industry."

Sithebe said that bookmakers and betting companies added great value to the industry, and they also made considerable revenues from the sport of horse racing. "We believe it’s therefore only fair and reasonable that a percentage of the winnings and earnings from punters must go back towards contributing to sustaining the sport."

4Racing has taken over as industry operators in the wake of the financial collapse of former operators, Phumelela. It said that for this reason, this was an industry under severe strain, which had been a loss maker for a number of years.

"We have no magic wand to fix all the industry’s issues, but have stepped in to do our utmost to safeguard an important industry to this country’s economy, and one that provides and sustains thousands of jobs countrywide. The betting revenues are crucially needed to help transform this industry, to provide better conditions for its blue collar workers such as the grooms who are absolutely integral to the sport, and to ensure greater diversity and representation across all aspects of the sport," Sithebe said.

"We are hopeful that we can find common ground with the Gauteng Gambling Board in ensuring these crucial betting revenues make their way back into the sport. And we stand in support too with Gold Circle in ensuring the same is the case in KwaZulu-Natal," she added.

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