Phumelela Gaming & Leisure’s shares ended Thursday at R5,75 after hitting their worst level in nearly 15 years amid a mooted shake-up of Gauteng’s gambling regulations that could shave millions off the company’s profits.
Business Day reports that in March, Phumelela said the proposed amendment to Gauteng’s gambling regulations could cost it R75m a year while also damaging the local horseracing industry.
In January, a member of the province’s executive council published proposed changes to the province’s gambling rules, including a proposal that would deprive Phumelela of the 3% betting tax gain it derives from punters’ winnings.
The amendment is aimed at directing this tax gain to the Gauteng Gambling Board.
“If the amendment is implemented and Phumelela is deprived of the betting tax, it will have a material adverse effect on Phumelela and on racing in general,” the group said at the time.
Earlier in June, Phumelela said it was in talks with Gauteng policymakers and the province’s gambling board “in an attempt to reach a mutually acceptable resolution”.
Phumelela’s shares recently traded earlier at R5.25, the worst level since September 2004. The horseracing and totalisator betting group listed in 2002. By the end of 2016, the stock was at R24.25.
The company also faces a legal tussle with SA’s public protector Busisiwe Mkhwebane.
In May, Phumelela’s legal advisers recommended that it apply to the high court to set aside a report by Mkhwebane into allegations of maladministration and improper conduct regarding “the corporatisation of the horseracing industry in SA”.
Mkhwebane directed the Gauteng provincial government and the province’s gambling board to withdraw Phumelela’s portion of the 6% levy on punters’ winnings on fixed-odds bets.
The company advised Shareholders on 4 June that they should refer to the cautionary announcement dated 17 April 2019 whereby an update on the amendments to the Gauteng Gambling Regulations was provided.
Shareholders were advised that Phumelela continues to engage with the Gauteng Member of the Executive Council responsible for Economic Development, Agriculture and Environment (“the MEC”) and the Gauteng Gambling Board in an attempt to reach a mutually acceptable resolution.
Shareholders were advised to continue exercising caution when dealing in the Company’s Securities until a further announcement is made.
