High Court orders levies on horse racing bets to be repaid to Phumelela

Phumelela had held an exclusive licence until December 1, 2021, to conduct horse racing totalisators and betting pools in Gauteng. SUPPLIED.

Phumelela had held an exclusive licence until December 1, 2021, to conduct horse racing totalisators and betting pools in Gauteng. SUPPLIED.

Published May 31, 2024


Inept government decision-making was there for all to see in a High Court judgment that set aside a Gauteng gambling regulation amendment that would have stripped horse racing totaliser Phumelela Gaming and Leisure of the levy it requires to fund horse races.

Gauteng High Court, Johannesburg, Judge Stuart Wilson ordered yesterday that Phumelela be repaid the levies. “Taking a step back, it is hard to imagine a process more festooned with the rituals of fairness and rationality, while being so obviously devoid of their content,” the judge commented.

He wrote in his judgment that he was not able to decide on the fairness of the amendment, because the procedure that Gauteng’s then MEC for Economic Development, Lebogang Maile, had adopted in the amendment of regulation 276, “was plainly unfair and irrational.”

The judge said there “is no evidence whatsoever that the MEC applied his mind to the potential effects of removing the subsidy on horse racing in Gauteng or on the revenue stream that betting levy generates for the provincial government”.

He said the MEC had to do more than just “receive the information (the Phumelela had provided in mitigation of the amendment) as part of a notice and comment procedure. He had to engage with and have adequate regard to it. In other words, for the notice and comment procedure to be meaningful, the information Phumelela presented should have been seriously considered.”

The judge said in some cases of regulatory amendment, a simple notice and comment procedure was enough to ensure procedural fairness. However, this case was exceptional, as the amendment could only directly affect one person: Phumelela.

“The effect on Phumelela’s operations was bound to be drastic. Phumelela told the MEC that it would be catastrophic. In these circumstances, it was procedurally unfair to treat Phumelela as if it were just any member of the public commenting on an ordinary run-of-the-mill regulatory amendment,“ the judge said.

On the MEC’s inability to apply his mind, Judge Wilson said: “It is common cause that Phumelela’s submissions and the reports on which they were based never made it to the MEC’s desk. What happened instead is that Phumelela’s submissions, together with those of other members of the public who responded to the notice and comment procedure, were reduced to a table in which summaries of the submissions were reproduced. That, I was told, was what served before the MEC.”

“The table is itself barely intelligible. It does not engage with the substance of Phumelela’s submissions or the reports on which they were based.

It would be virtually impossible for anyone reading the table to appreciate the seriousness and substance of what Phumelela had said in its submissions,” the judge said.

The judge ordered the Gauteng government to repay to Phumelela, and the next appointed totaliser and successful intervener in the case, 4Racing, the funds they would have received from the levy, with interest, since the amendment to the gambling law was enacted by the Gauteng government.

As an example of the amounts likely to be involved, the net subsidy Phumelela received came to just over R77 million in 2017.

Phumelela had held an exclusive licence until December 1, 2021, to conduct horse racing totalisators and betting pools in Gauteng. The licence was granted by the Gambling Board.

A totalisator is a term for a tote board, which is a device that tabulates the nature and number of bets placed on a particular horse race.

To pay for the organising of horse races, half of a 6% levy on the value of each bet placed on a horse race with bookmakers in Gauteng, had to be paid to Phumelela, as the totalisator licensee.

On April 1, 2019, the MEC had amended the Gambling Regulations. One change was to eliminate Phumelela’s share of the proceeds of the betting levy.

On December 1, 2021, 4Racing, took over the totalisator licence from Phumelela.