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Stakes Tumble In Phumelela Territories

13% drop from November

Phumelela have advised that due principally to a decline in TAB tote revenue in the 2018-19 racing season and the withholding of the Gauteng provincial levy, prize money at its racecourses will be reduced by around 13% from November.

More than half of the prize money at Phumelela tracks is derived from a set percentage of TAB tote turnover, which is governed by a stakes agreement between the company and the Racing Association, which represents racehorse owners in Phumelela regions.


In terms of the agreed stakes formula, set percentages of other Phumelela revenue streams also flow directly into the prize-money pool.

Total stakes for each racing season (1 August to 31 July) are mostly determined by the monies generated by this prize-money formula in the previous season.

The amount allocated for stakes in the first five months of each season is based on an estimate of the amount likely to be generated by the prize-money formula in the previous season.

Two Gun Kid

Once the figures have been finalised and audited, any adjustments needed to balance the estimated total to the actual total are applied to prize money in the last seven months of the season (January to July).

Prize money in the Western Cape is governed by an arrangement in terms of which total stakes are set at 26% of the combined net stakes pool in Phumelela regions.

After engaging with the Racing Association, Phumelela and Kenilworth Racing wish to advise stakeholders that prize money will be reduced with effect from 1 November 2019 in order to spread the impact across nine months of the season, rather than waiting for the audited total and only applying the reduction from January.

Should the various audits, however, reveal a higher-than-expected total, stakes would be adjusted accordingly from January to July next year.

The stakes pool has been impacted by various factors, including declining TAB tote turnover and a negative return from fixed-odds operator Betting World.

Added to that is the loss of the Gauteng Provincial Government levy on winning bets with fixed-odds operators, 30% of which used to flow to the stakes pool.

It should be noted that Phumelela is currently negotiating with the Gauteng Provincial Government and the Gauteng Gambling Board in an attempt to have its share of the levy reinstated.

Simultaneously, Phumelela is in discussions with the Gauteng Gambling Board and fixed-odds operators to resolve the long-standing commercial dispute around the provision of Tellytrack.

The other major impact on prize money is that the stakes pool will not benefit from share dividends this year.

Normally 80% of the share dividends accruing to the Thoroughbred Horseracing Trust from its 26.7% shareholding in Phumelela are added to the stakes pool.

This amounted to some R19 million for the 2017-18 financial years. But as a consequence of the collective negative factors impacting Phumelela’s profitability, no dividend will be paid for 2018-19.

The Racing Association, through its Stakes Committee members, have engaged with Phumelela and Kenilworth Racing and innovative ways of addressing the reduction in stakes have been agreed.

Details are as follows:

  • Reducing the number of races at midweek meetings to eight.
  • Reducing stakes of selected major Grade 1 races, as well as the majority of Grade 2 and Grade 3 race so as to lessen the burden on minor-race stakes.
  • Introducing different minor-race stakes levels in and out of season on the Highveld and in the Western Cape (the Highveld feature season runs from 1 October to the first Saturday in May, whilst the Western Cape feature season runs from 1 November to the end of February)
  • Introducing a lower stakes level for minor races restricted to fillies and mares (with the exception of Maiden, Maiden Juvenile and Juvenile Plates) across all regions

Full details of the new stakes levels can be viewed on www.sahorseracing.co.za from Monday 14 October.

Click here

RA LogoThe Racing Association has also taken a decision to change the distribution of stakes in all races run in Phumelela regions (Highveld, Eastern Cape and Northern Cape).

With effect from 1 November, the winning portion of the race stake will be reduced from 62.5% to 58% and redistributed to pay down to 10th place as follows:

1st – 58%

2nd – 20%

3rd – 10%

4th – 5%

5th – 2%

6th to 10th – 1% each

In the event of less than 10 starters, any stakes not allocated will be stockpiled for future distribution.

It is worth noting that as things stand the current stakes pot receives zero revenue from TAB tote (open) bets taken with fixed-odds operators.

As an example, for every R1 million wagered on Pick 6’s in the form of open bets, R75000 is lost to the stakes’ pot.

The magnitude of the lost revenue to prize money is highlighted by the National Gambling Board statistics for 2018.

They show that R3,9 billion was wagered on horseracing on the tote versus R7,68 billion with fixed-odds operators, of which a substantial portion can be attributed to open bets.

Declining tote betting turnovers on horseracing are a trend facing many racing jurisdictions around the world and are by no means unique to South Africa.

That said, Phumelela is totally committed to engaging with regulators and fixed-odds operators to find solutions for the issues that have impacted so negatively on its business and the sport of horseracing.

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30 comments on “Stakes Tumble In Phumelela Territories

  1. Steve Reid says:

    The release of this news on a Sunday afternoon speaks volumes and echos the release of good news regarding Phumelela performance – or lack of it – on SENS once the markets are closed on a Friday afternoon.

    The reality of the situation is that owners will be racing for far less than a 13% reduction. The loss of one race per meeting in midweek equates to roughly a further 7% reduction in races offered, and without doing the sums, this will push stake reductions to at least 20% for this season vs last season.

    In the light of increasing costs of keeping a horse in training, the idiots who claim that they represent owners agree to the winning purse being reduced percentage wise and a single percent being paid out to horses running 6th – 10th. What a crock of shit. Besides the obvious rewarding of mediocrity at the expense of the winner, what exactly will the owner get out of an 8th place in a maiden plate after the jock, trainer and groom have taken their chops? A question – why would the opposite not be looked at? Give the winner 70% of the reduced stake, 2nd 20% 3rd 10%. Small minds wanting to appease do not see the bigger picture.

    I am looking forward to seeing the reduction in salaries at both Phumelela and the Racing Association to mirror the reductions in stakes

    1. karel says:

      Your use of language is pathetic. When will you grow up?

  2. Steve Reid says:

    That’s very mature karel. Your use of language is as mature as your age, I stand humbled.

  3. Ian Jayes says:

    This is what the racing public voted for, so let them enjoy the consequences.

  4. Rian says:

    Punters never voted for this, they dont get to vote on any matters , they just burn money nowdays on a daily basis.Maybe SP can sponsor a race or two
    Enjoy reading your posts Steve , that was a childish comment from K

  5. jai says:

    we talk about state capture in the goverment its rife here in the horse racing industry

  6. Art says:

    The opening sentence is just one problem that Phumelela have.relating to the reduced stakes.’principally due to TAB tote revenue’.Take just one tote in the Western Cape namely the Sea point Betting world and tab tote corner of Fir and main road Sea point.How many time have we brought to their attention the fact that the betting display boards do not work on many days.How many times have have we reported to their customer care line that they are off line.How many times have punters walked out in disgust.How many times have betting sheets not been available.We have had the head office boys investigating and putting in scathing reports about the SPTote.We have had the Regional Managers come around to investigate only to disappear and never to be seen again.Instead of making the place conducive for betting for the long suffering punter they carry on regardless running the business into the ground.Now this is only one tote of many.No punters equals loss of tote revenue on a daily basis x by the number of tab totes in the Western Cape x7 days s week is a lot of revenue down the drain .But Phumelela ploughs on and blames a lack of TAB tote revenue.I no longer frequent the tote as regular as I did.I find it a waste of time and I have given up with your customer care department because there is none.

  7. Rod Mattheyse says:

    Art sedley Barr runs a facility at Vascos… pump up the 7.69bn

  8. G. Stolz says:

    Horse racing has been in my blood forever. This announcement has been the transfusion that I needed to get it out of me.

    I know quiet a bit about corporatisation and what was promised to owners, punters and trainers at that time. PGL and the RA have the shortest memories of all when it comes to their promises.

    It is a real travesty that the RA agreed to a reduction in stakes. It should not gave reached this agreement with PGL and had no obligation to do so.

    The mantra on the RA website is You look after your horses, but who looks after you? In my esteemed view, the RA certainly does not look after its members or its owners. I have concluded this based on these simple circumstances .

    1. Owners have always owned the copyright to the signal and transmission of their horses, when racing. During corporatisation, the RA concluded a contract with PGL where it ceded and transferred all owners rights to the signal and transmission in exchange for stakes. PGL has distributed the signal of the races worldwide and makes subatantially more money every year on this distribution of the copyright than it pays to owners for stakes. PGL has the audacity to say that this business is not part of its horse racing business. If PGL was honest with us and put this business into its horse racing business, it would be making a pretty penny. The RA has forgotten that it sold out owners on this aspect.

    2. Who gave the RA the right to negotiate or a reduction in stakes for non members of the RA. There are more non members of the RA than there are members. The RA and PGL know this and are acting in an anti competitive manner. None of the super rich are willing to take them on. This is bothersome. It’s made worse when I see the so-called paragons of horse racing giving authorities to act to a trainer who is notorious for having been found guilty for using prohibited substances on his horse. It’s no longer about tea, scones and being a good breeder, it’s all about winning no matter the cost. Horse racing and its famously rich patrons have left the sport down.

    3. Many years ago the RA said that it could not get stakes increased because it had a stakes agreement that required both parties to agree and PGL was not willing to agree. A decade later and the RA is agreeing to a reduction when it could hold PGL to constant stakes. The RA has effectively screwed over its members and other owners for the shareholders, management and directors of PGL.

    Basically, the RA has thrown owners under the bus. PGL could have trimmed its business in various ways and kept the stakes the same. No matter how I look at it, my return on investment is poor and only an extremely wealthy or foolhardy person will buy an interest in horses.

    The RA has slashed it’s own wrists. I will not be using its blood for my transfusion.

  9. waynefouche says:

    There is surely one line missing at the end of the post.

    ” Contact Vee Moodley for a full explanation”.

  10. Pops says:

    Hats off to Larry he broke your heart
    He told you lies now it’s your turn to cry cry cry
    Now that Larry said goodbye to you

    Don’t Worry Be Happy

  11. Brett Maselle says:

    In a question and answer interview with Larry Wainstein by a competing website, the following question and answer was posted on 13 March 2017:-

    “[Website]: In the end, everything remains in your control. Can you not ‘cook’ the books and present the public with the figures you desire?
    Wainstein: No. The Stakes Pool Commitment Calculation, the agreed formulas and supporting documents are audited on an annual basis by Ernest and Young.”

    Wainstein’s statement was and is false.

    Ernest and Young have not audited the Stakes Pool Commitment Calculation, the agreed formulas and supporting documents. This is a serious problem because the RA and Wainstein have known that Ernest and Young only provide a stakes report and that there is no auditing done.

    The report I have seen states the following by Ernest and Young:-

    ” We have performed the procedures agreed with you and described below with respect to the Stakes Pool Commitment for the 2016 financial year. Our engagement was undertaken in accordance with the International Standards on Related Services (ISRS 4400) applicable to agreed upon procedures engagements. The procedures were performed solely to assist you in evaluating the accuracy of the calculation of the commitment to the Racing Association for the 2016 financial year”

    The above para is the first para in the report.

    The report goes on to set out the procedures performed and the findings and thereafter concludes with the following paragraphs:-
    “Because the above procedures do not constitute either an audit or a review made in accordance with International Standards of Auditing, we do not express any assurance on the 2016 Stakes Pool Commitment.
    Had we performed additional procedures or had we performed an audit or review of financial statements in accordance with International Standards on Auditing or International Standards on Review Engagements, other matters might have come to our attention that would have been reported to you.
    Our report is solely for the purpose set forth in the first paragraph of this report and for your information and is not to be used for any other purpose or to be distributed to any other parties. This report relates only to the 2016 Stakes Pool Commitment and items specified above, it does not extend to any financial statements of Phumelela Gaming and Leisure Limited taken as a whole”

    In the same interview Wainstein stated: Let me qualify this. We at the RA make provision every year for contingencies, for unforeseen circumstances or times in need, for example if an Equine Flu would break out. These funds come from cancellation of race meetings, lost races due to bad weather, and so on. Situations are then re-assessed and funds are re-distributed.
    The increase in stakes for the mentioned races were funded from these contingency funds, because both are prestigious races with an international profile, and in the case of the Sun Met, we had a hugely important new sponsor on board and we deemed it essential to launch this new event in the best fashion possible.

    Nothing has been said by Phumelela or the RA about the contingency amounts saved in the past years and whether it was taken into account for the new stakes.

    Based on the above, you can excuse me for questioning everything that the RA does.

  12. Brian says:

    I dont know who, ultimately, is in charge of TAB. Whoever it is should be fired. I was cross when I found out Interbet was partly owned by PG.

    Right there is THE example of how to run things yet their own is a complete foxtrot uniform

  13. Tony says:

    why dont all the staff at Phumelela and the RA take a reduction in there wages ,they are always screwing the owner’s who put good money in to get nothing out without them those idiots would not have jobs.

  14. PL.NEL says:

    Action pretty K please. And K stands neither for Kenilworth or Klevar Karel…
    Action please.
    One month or one week. Yup lets put pressure on this barge of unhappiness and claim back what is ours Yup. Lets dig into our pockets and loose out on earnings for strike period plus cover trainers by adding 10% more on stable keep. This loss should surely result in long term truthfulness?
    New representation for owners, voted in by at least 51% representation, and for those owners who don’t have a clue as to who to vote for,,, speak to your trainers.
    DRIVING IT HOME,,, benchmark
    Why not take back these salaries that have upset everybody? If they have so grossly mishandled our interests, then sue them..
    Action please.
    Please, let us not reward mediocrity but rather through fair competition seek the next champion.

  15. Steve Reid says:

    Something that stands out for me is lack of accountability from those that have placed racing in the position that it is in.

  16. Craig says:

    Too much is not told to us. Is the whole directorship of the RA responsible for not having the stakes audited. Who does the buck stop with. How can we get the stakes audited. Can the directors be held responsible if the stakes are not correct.

  17. Yungsta says:

    Wonderful request for Vee Moodley’input , when one contacts the NHA for there advice you are put thru to Heckle and Hyde . When tackled about trainers not paying stakes timorously to owners the answer is this is a civil matter and nothing to do with us, contact the RA they are your representative joke!!!!!! If the owners have to take a 13% knock so should management of these associations because when the sales figures drop , at e they all hanging around to boost pensions as they double every 5 years of employment, if you hit a good broker and don’t invest in Steinhoff

  18. Yungsta says:

    And Phumelela

  19. Leon Smuts says:

    @Brendon. You make a lot of sense in all your posts but to punish owners by not supporting the Tote would be a very unwise course of action. It would be as unwise as Phumelela’s lack of commitment to their Tote products which if expanded upon with the right types of products will make it a very worthwhile exercise for any punter to support. The Tote is the only effective funding mechanism that remains for racing (dividends will not be forthcoming for a long time and the lost levy very uncertain) and if this is allowed to fail it is almost certain to complete the demise of the sport. We should seek ways of supporting the Tote but for this to happen it calls for those at P to eat humble pie, acknowledge that mistakes were made, and renewed efforts to give customers a proper product portfolio and service to back it up. Can be done but I have to agree that this is probably doubtful.

  20. Anthony says:

    So if i was an owner I could unilaterally decrease the stable fees I pay by 13% because the economy is bad and my business is not achieving its budget and growth?

  21. D. Cook says:

    No disrespect is intended to all owners who are suffering from this reduction in stakes but from a business perspective I see this move by Phumelela as a masterstroke. Those in the know are already jumping on the bandwagon and the Phumelela share price has blossomed today.
    What most owners don’t realise is that Phumelela is in an indirect manner raising cash for itself by reducing the stakes pot. Phumelela is not reaching any compromise with owners because owners are not creditors per se.
    Whatever saving Phumelela will have in the reduction of stakes will not be repaid to owners.
    Phumelela is in a win win situation and the benefactors are Phumelela shareholders. Thus the positive movement of shares.
    Phumelela needed the buy in of the Racing Association which it got without demure. The RA went on a roadshow to inform trainers about what was intended. Little was offered or explained.
    Although, the RA agreed to this reduction, it did so the prejudice of the people it is supposed to look after which are the owners.
    When the RA was formed the founding members did not want the RA to own shares in Phumelela. The racing Trust was devised to hold shares for the betterment of horse racing.
    In 2016 and for bad reasons, the RA purchased shares of Phumelela. It has a substantial amount of shares where there is currently a R15 or something loss per share. The drop in the Phumelela share price has a significant effect on its total asset base.
    The RA directors are no lo overthinking of their members and owners. They are too worried that they will personally carry the can for purchasing Phumelela when they should not have.
    It is so much easier to pass the headache onto members and owners.

  22. Tony Mincione says:

    Brendon, I assume you mean us punters when you say the racing public.

    As a former breeder I can say they will be horrified by the implications that stakes cuts have on sales. You don’t need a degree in economics for this one. Breeders have big and long term investments locked into the game, and no wiggle room. Breeders have sucked it up for a long time now, they are real enthusiasts and soldiers. It’s a tough business and they continue to march the long journey. many people are in difficult industries and breeding racehorses must be right up there.

    But it’s important to note that the owners are the members of the RA, and also the majority owners of Phumelela. They are also the ultimate controllers of the NHRA. It’s time they get their shit together, don’t you think?

    The racing public, so let’s just call a spade a spade: gamblers, are the customers. I find it utterly unacceptable that Phumelela make so many excuses, and that the owners, and it’s owners, accept this. As a punter, there is not a single product that they offer, other than the race day experience, that isn’t better supplied elsewhere.

    I cannot put this more simply, if a one-armed-bandit machine pays 90% of what it takes, and another pays out 95% of what it takes, how would any rational person select a machine to spend their cash?

    Punters don’t “owe” racing anything. It has never been easier to find something else to do with your money. I still choose horse racing, I am always ready for more. But, I don’t deal with the tote on principle. And the reason is they think blackmail or guilt is an effective marketing tool, and it isn’t.

    If the owners are happy to let the tote stand like a bloke with bad spelling on a piece of cardboard at a robot and one shoe, then they have to be happy with me thinking “get your shit together”.

  23. Graham Hurlstone-Jones says:

    6 tracks, 6 owners, 6 trainers, 6 punters and the men with many hats….it’s really happening. I would say the RA has been “captured” and though its lack of openness and silence ( what meeting ? ) I would say complicit as well, the enemy within so to speak. Looks like the slowest car crash ever was planned because no one has pressed the brakes and has in fact hit the accelerator….Brett’s post reads like the Zondo commission. I wonder what will be next….its in free flow….

  24. DavidS says:

    Leon, see the woods from the trees, is the P managment just making honest stupid mistakes or are the making self serving decisions,, did you not watch the destruction of Formgrids by the very people that should have embraced and supported it,,

  25. George says:

    bring back the couplings only for the pick 6 bet and you will have many more happy every day punters believing they have a better chance of winning thus improving the revenue and pools and then those that can, may invest higher amounts for the hope of higher returns

  26. Mr Fly says:

    It is all about the 3%.

    Phumelela tells us that it is negotiating with the Gauteng Government. If the Gauteng Government is going to reinstate the 3%, it should should insist on a full forensic audit of Phumelela and its subsidiaries. It is the least that the Gauteng Government can do and insist on.

    A short word to Phumelela and the Gauteng Government. You can be assured that if the 3% is reinstated litigation will ensure from outside parties to have it set aside. There can be no rationality in withdrawing the 3% and then reinstating it. I look forward to the Premier Soccer League, SA Rugby and many others approaching the Gauteng Government for a 3% hand out.

    These interesting rumours have been doing the rounds:

    Rumour #1

    An extremely wealthy and well known family in horse racing offered to help Phumelela with its financials woes subject to it’s own forensic audit of the books of Phumelela. The offer was turned down because Phumelela did not want anyone to scrutinise its books. The end result, is that despite the generosity of this well healed family, Phumelela and the RA took the soft option of reducing stakes and causing prejudice to owners.

    Rumour #2

    Phumelela is looking to change the make up of its face to the Gauteng Government. Phumelela has been told that should it have a black chairman and CEO, the Gauteng Government will move heaven and earth to try and give the 3% back to it.

  27. Prasheen Harrimohan says:

    If Larry weinstein stops spending so much money on fancy suits for different racing functions Maybe the stakes won’t have to be slashed

  28. Concerned says:

    Why cut stakes at Northern cape it is already not existing.

  29. Roderick Mattheyse says:

    Every dark cloud has a silver lining. Our stallions have been transformed into super stallions over night … even last of 15th in a maiden earning 900 of our South African Rands is being recorded as a placed runner on the NHA statistics our stallions are now returning 70% places to races run. Let’s not miss this marketing opportunity if the international markets open up!

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