Background / Overview

Phumelela Gaming and Leisure Limited is licensed to operate horseracing and totalisator betting in seven of South Africa’s nine provinces.

Horseracing in Gauteng was corporatised and totally restructured in 1997. Phumelela was formed that year in order to facilitate the “corporatisation” of horseracing in Gauteng.

“Corporatisation” came about at the behest of the Gauteng Provincial Government in order for the sport to remain competitive within a burgeoning gambling market that was about to legalise casinos and a national lottery in South Africa.

A critical element of the restructuring was a commitment to rationalise the horseracing infrastructure in order to, inter alia, “facilitate transformation, transparency, accountability and create a sustainable business model”.

The three racing clubs that had run racing in the region until then transferred their assets to the new company, Phumelela, which took over the management of the sport in the province.

Phumelela’s main shareholder, the Thoroughbred Horseracing Trust (26.72% shareholder), is a not-for-profit entity which was formed at the insistence of the Gauteng Provincial Government.

The principal objective of the Trust is to “promote the interest of all persons interested in, and affected by, the sport of thoroughbred horseracing in South Africa with a view to the long-term viability of the sport”.

Additional objectives relate to the promotion of B-BBEE initiatives and affirmative action schemes with the intention of facilitating transformation within horseracing.

Horseracing in the Northern Cape, the Free State and Eastern Cape, subsequently joined the corporatisation process under the Phumelela umbrella. The tote business in North West Province was acquired by Phumelela shortly thereafter.

The racing clubs in KwaZulu-Natal and the Western Cape joined in the corporatisation process by rationalising their operations under the banner of Gold Circle in 2000. They demerged in 2013 and since then horseracing and tote betting in the Western Cape has been under the management of Phumelela, with Gold Circle continuing in KwaZulu-Natal.

The corporatisation process was a financial and competitive imperative given the significant challenges that faced the sport at the time, in particular the cycle of decline in betting turnovers, owners, horses, trainers, jockeys, prize money and financial reserves, all exacerbated by high betting taxes and the imminent legalisation of other forms of gambling, notably casinos and a national lottery.

It is important to record that it was a political imperative imposed by government with a goal to transform the sport to a “transparent, accountable, professionally managed, governed and profit-driven enterprise with appropriate black economic empowerment credentials”.

The Racing Association, with a membership comprising owners and former racing club members, was established to represent the interests of owners.

The Racing Association is run by a board of directors elected from the ranks of its members. The directors appoint five of the seven trustees to the Thoroughbred Horseracing Trust, which holds racing’s 26.72% share in Phumelela.