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Overhead photo of Greyville Racecourse with Durban in the background

Gold Circle Horseracing & Betting is one of the two companies that control all horse racing and tote betting activities in South Africa: John O’Hanlon talks to COO Graeme Hawkins about the difficulties the industry has experienced and Gold Circle’s strategies for survival and growth. 2

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or historic reasons horse racing in South Africa is divided by region, with Phumelela Gaming and Leisure Limited running activities in the Free State, Northern Cape, Eastern Cape and Gauteng: Gold Circle has the reins in the Western Cape and KwaZulu-Natal. It owns the Clairwood circuit in KZN as well as the Summerveld Training Centre, and holds the Greyville and Scottsville tracks on lease from Durban and Pietermaritzburg councils respectively. In Western Cape it owns the Kenilworth racetrack and leases Durbanville from the City of Cape Town. All racing in South Africa is run on the flat, and the industry is as deeply rooted in the national consciousness as in the UK, for example, or France. There is at least one race meeting every day in the year, and Gold Circle’s courses host some of the classics including the Vodacom Durban July Handicap, the African continent’s biggest and most prestigious event, first run in 1897 at its flagship Greyville racecourse. The August meeting features the Canon Gold Cup, while another of South Africa’s best attended horse races, the J&B Met run in January, is a conditions race that is also a huge social event in Cape Town and one of the highlights of the South African summer season. Gold Circle’s primary source of revenue is the commission it receives through the Tote, though which the company earns around R400 million a year. “We own the Tote and all the totalisator channels, whether on-course betting, internet, telephone betting or off course totes,” says Graeme Hawkins. Punters in South Africa will be familiar with the TAB brand, run

by Gold Circle in collaboration with Phumelela Gaming – it is an example of how these two companies collaborate rather than compete. South Africa has been sheltered from the global recession but has not altogether escaped, and the gaming sector is one that has been feeling the pinch over the last couple of years. Gold Circle’s turnover has fallen by about 10 percent over this period, and the company dipped into loss in the 2008/09 and 2009/10 financial years. During this time it has come through a period of restructuring, cutting over R14 million in operating costs and addressing one of its perceived weaknesses, the mismatch between prize money and tote revenues. In the days of plenty it was possible to maintain high stakes in the industry; however the downturn has seen other countries cutting their levels of prize money in line with lower income levels from betting. “We were loath to follow countries like Ireland and the UK in reducing prize money,” says Hawkins. “We were able to hold the levels for two years, using our reserves, because we were trying to avoid sending negative messages through the industry for as long as we could.” Now Gold Circle has had to introduce a formula for the payment of stake money, which will now represent a percentage of the annual total of totalisator bets laid. So these have been difficult times for the industry, but Gold Circle is weathering the storm, considering the effect of the recession on the industry as a whole says Hawkins. “It is probably fair to say that the entire South African betting industry, lotto, casinos,

We recognised that there was a gap in the market because nobody else was exploiting these opportunities: we had to look beyond our borders

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sports betting as well as horse racing, is approaching saturation. Though it will be difficult to grow domestic business, we have been developing other strategic initiatives that we think will in the future serve the company well and put it in a far more profitable and sustainable position.” Other sources of revenue include sponsorships, land rental and the like, however going forward the best hope for growth probably lies in international betting initiatives and to some extent diversification into other betting products and sports other than racing. Reflecting upon South Africa’s constraints of population and income, the industry started some years ago to consider how it might grow beyond the domestic market. “We recognised that there was a gap in the market because nobody else was exploiting these opportunities: we had to look beyond our borders. We could not just rely on the domestic product to grow our business. So in collaboration with Phumelela Gaming & Leisure we established an international division,” Hawkins explains. The two companies set up a joint venture company called Phumelela Gold Enterprises (PGE). This drives both partners’ international business, selling live South African racing images abroad and importing overseas meetings for the South African betting industry. “Now about R100 million or a quarter of Gold Circle’s annual revenue comes from imported product,” Hawkins says. “This includes Australian, UK, French, Hong Kong or Singapore racing that we bet on locally, as well as what we sell to those countries.” At any one time, South African punters can bet in real time on races in different parts of the

world. And this is a market that has only just started to open up, he believes, offering more opportunities for growth than the domestic horse racing market can offer. While horse racing will always be Gold Circle’s core business, domestic growth is likely to come as much from other channels. One of these is non-tote bookmaking operations through Betting World, another 60/40 JV company, with PGL owning the larger share. For complicated regulatory reasons Betting World can only operate licensed premises in Gauteng and the Western Cape though it conducts telephone and online betting throughout the country. This is a fixed-odds bookmaking operation, and it is not limited to racing. “The biggest part of that business is still horse racing, but interest in other sports is increasing all the time. We have started betting on soccer in particular.” UK fixtures are very popular; every single Premier League match is shown live on South African TV without exception. TAB’s Soccer 6 and Soccer 4 are pool bets, and they are growing in popularity year by year, Hawkins says. The website gives odds on racing meetings all over the world as well as soccer, motorsport, boxing, rugby, cricket and even tennis. With horse racing under pressure globally, perhaps it’s time to offer people different options. However as a horse racing professional Hawkins has no doubt about the future of what is more a way of life than a sport: “We will work our way through the difficult times, just making sure we are packaging and marketing it in a way that keeps pace with the changing times.” END

About R100 million or a quarter of Gold Circle’s annual revenue comes from imported product

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It’s all about

WINNERS!

In the shadow of the winning post, feel the thrill of victory as one sleek thoroughbred thunders past another to land the spoils. Gold Circle, the company that controls horse racing in KwaZulu-Natal and the Western Cape, plays host to the two most important racing seasons on the South African racing calendar. The 100-day Champions Season headlined by the Vodacome Durban July during the KZN winter, and the Sizzling Cape Summer season with the J & B Met and L’Ormarins Queens Plate among the highlights. These racing carnivals attract the cream of the continent’s thoroughbred racehorses, jockeys and trainers, all competing in the cut and thrust of a globally competitive sport. The various training establishments throughout the two provinces produce winners year round with professional trainers and a world of skilled specialists keeping the breeding, racing and betting industries on a winning track. Gold Circle is proud to play a leading role in supporting the South African economy by promoting tourism, providing employment, improving the skills base and advancing transformation in a winning nation.


South Africa Magazine, Suite 9 and 10, The Royal, Bank Plain, Norwich, Norfolk, UK. NR2 4SF

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Tel: +27 (031) 3141500 Email: headoffice@goldcircle.co.za

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GOLD CIRCLE FEATURE