Phumelela warns of job losses if lockdown is extended

Horse-racing operator Phumelela Gaming and Leisure has warned that if SA’s lockdown is extended past the beginning of May, there is likely to be significant job losses in the racing industry.

The group said on Monday revenue from online betting was insufficient to offset loss of revenue from the suspension of race meetings and the closure of betting shops, saying about 40,000 jobs were dependent on SA’s horse racing industry.

“If racing is not given authority to resume in early May, together with the opening of betting shops, it is likely that a rationalisation of the entire horse racing industry and associated value chain in SA will occur with consequent significant loss of jobs and reduced tax collections,” Phumelela said.

Phumelela had described its year to end-July 2019 as the “worst in its history,” warning at the time its losses couldn't be sustained after it reported a headline loss of almost R100m.

The company said it would either need to introduce an equity partner, or restructure debt, or go to shareholders as it faced regulatory changes and weak economic conditions in SA.

The group is battling withdrawal of its 50% share of the 6% levy on punters’ winnings on fixed-odds bets on horse racing in Gauteng, with effect from April 2019. This has cost it about R75m per year, and Phumelela said it is continuing to engage with authorities in the province.

In morning trade on Monday,  the group’s share was down 20.86% to R1.10, putting it on track for its worst one-day performance in over a month. Phumelela’s share has lost almost 95% of its value over the past three years.

gernetzkyk@businesslive.co.za