Gauteng Gambling Board told to investigate state-owned assets bought by listed Phumelela Gaming and Leisure. Photo: Supplied

JOHANNESBURG – Public Protector Busisiwe Mkhwebane yesterday hit out at the race horsing industry for lack of transformation and ordered the Gauteng Gambling Board to investigate state-owned assets bought by listed Phumelela Gaming and Leisure.

Mkhwebane, in a report on horse racing in South Africa, said the chief executive and board of directors of the Gauteng Gambling Board must take urgent steps to “conduct an audit of all state-owned assets which were transferred to Phumelela Gaming and Leisure for a song with a view to establishing their origin, value on transfer and ownership prior to transfer, as well as to establish whether they were utilised for the benefit of the horse racing industry and citizens who are affectionate about the sport of horse racing”. 

She also wants the 50 percent bookmakers’ levy, which is paid to Phumelela by the Gauteng Gambling Board, to be stopped and channelled to a new entity that will serve as the regulator for Thoroughbred Horseracing in the country.

Mkhwebane has estimated that 50 percent of the annual gambling levy paid by gambling boards across the country to Phumelela is in the region of R70m. The public protector has given the Gauteng Gambling Board a month to present her with a plan on how it will implement her recommendations and wants all of them done in the next six months.   

The investigation by Mkhwebane followed a complaint by businessperson Phindi Kema that a 1997 decision by the Gauteng provincial government to privatisation and restructure the horse racing sector in the province was illegitimate.

Mkhwebane further hit out at former Gauteng MEC of Finance and Economic Affairs Jabu Moleketi for the decision to restructure the horse racing industry in the province.

She said the decision saw the sport handed on a “silver platter” to Phumelela. “It appears the Gauteng Provincial Government’s intention was to protect the new entity that was later called Phumelela Gaming and Leisure at all costs and ensured it succeeded,” Mkhwebane said.

“So many role-players and architects of the corporatisation of the horse racing industry subsequently became directors of a private company, Phumelela Gaming and Leisure. The shareholders of Phumelela unjustifiably benefited from public funds in the form of 50 percent of the 6 percent levy on bookmakers. ”  

Phumelela, already engaged in a legal battle with the Gauteng Gambling Board, wants the court to review and set aside the board's amended regulations that will see a 3 percent cut of all winnings in Gauteng paid to it stopped.

Phumelela has said the proposed amendment to the gambling regulations could cost it R75m a year and could damage the local horse racing industry. It said the betting tax it received in Gauteng accounts for 90 percent of its betting taxes in South Africa.

Phumelela said it was still studying Mkhwebane’s report and will comment on it in due course. 

The Gauteng Gambling Board could not be reached for comment.