Horse racing is galloping back, says PhumelelaComment on this story
Johannesburg - After several years of shrinking market share following the boom of casinos and the lottery, horse racing was growing again in South Africa, gaming and leisure company Phumelela said on Friday.
South Africa’s biggest racetrack owner and the only racing operator other than Gold Circle with a totalisator licence said while local trading conditions remained challenging, its local betting division, racing operations, on-course attendance and hospitality performed ahead of expectations in the six months to January. In this time, it saw on-course attendances increase by 15 percent and totalisator betting on local horse racing increased by 2 percent.
Phumelela group chief executive Rian du Plessis attributed this to “hard work” rather than a change in market conditions. “My measure of horse racing really is on-course attendance. More people came to race. This growth was actually going down for a few years. We believe that now it has bottomed out.”
The company owns and manages five of the nine racing tracks in the country. While the R10 billion local horse race betting industry bounces back, Phumelela has identified more areas that will drive its growth. “We are looking to grow our international business and our local tote business particularly on soccer. Our soccer pool betting is growing very nicely and so is our fixed odds operations,” Du Plessis said.
Totalisator soccer pool bets increased by 32 percent in the period under review and exceeded betting on international horse racing.
Last year, Phumelela set a target to generate half of its revenue from sports betting in five years time as its horse racing business had been under pressure for several years.
In the period under review, local net betting income for other sports increased by 30 percent when excluding fixed odds while net betting income for horse racing was down 1 percent.
But on inclusion of fixed odds, net betting income on horse racing was down 5 percent to R25 million while other sports recorded a 55 percent decline to R5m.
On the international operations, horse racing’s net betting income was down 2 percent to R252m while income from other sports rose 17 percent to R99.3m.
The group’s total net betting income increased by 6 percent to R374m.
Total income from local operations increased by 7 percent to R475m. International operations grew by 143 percent to R112m.
Du Plessis said while there was still room for growth in the international market, it would not ignore the local market.
In the six months to January, Phumelela increased its Betting World retail footprint by 34 percent to 55 stores. These are the outlets where people can bet on sports such as soccer, rugby and cricket.
During this period, Betting World’s profits were adversely affected by the cost of expansion as well as procurement of new betting software.
“We probably were a bit too ambitious. We should have done only the software and then looked at the growth of the retail shops in the following six months. But it augurs well for us going forward, now that it’s behind us,” Du Plessis said.
He said the company continued to look for opportunities to expand this footprint.
Phumelela’s interim profit after tax increased by 32 percent to R52m. Its headline earnings a share were up by 30 percent to 67.77c.
Shares rose by 3.41 percent to close at R21.20 on Friday. - Business Report