Tax changes make punting a sure thing

Long before most businesses in Johannesburg’s city centre are open, Top Bet on the corner of Market and Joubert streets is buzzing.

Exhaust fumes from the streets drift through the small doors into a surprisingly spacious betting floor, where men sit focused intensely on their betting sheets while highlights of horse races play across big screens.

This is one of Mike O’Connor’s four Top Bet outlets spread around Gauteng; the others are in Midrand, Northcliff and Boksburg. They employ 80 people.

With every table and most chairs occupied, the place looks busy, but O’Connor, who is also the chairman of the South African Bookmakers’ Association, feels differently.

“It’s empty right now,” O’Connor says. “During soccer season you wouldn’t be able to get through the door it’s so packed. It stays that way for the whole day, seven days a week.”

While the Confederations Cup has fuelled the sports-betting market recently — an industry that is growing at more than 10% annually — soccer leagues around the world have recently concluded for the 2008/09 season, meaning that there are far fewer games being played.

While Top Bet caters for all sports, soccer far outperforms the rest, with the English Premier League, South Africa’s Premier Soccer League, Spain’s La Liga, Germany’s Bundesliga and the Danish league proving most popular.

Every league in the world, from Japan to Norway, is on offer and a knowledgeable sports fan can make R1000 from a R5 ticket.

Despite the advent of online betting internationally, Top Bet continues to grow at a steady pace, pulling in monthly turnover of R12-million, with an average gross margin of 8%.

The average bet placed is R11.50 and O’Connor calculates that 500000 bets varying between R5 and R500 are made at his shops each month.

“I’ve got people from Randfontein coming here,” he said. “It’ll be like this the whole day.

“The thing is most people don’t like online betting because they have to deal with all sorts of money transfers, which take time.

“Here, you bring in your ticket and take your winnings the next day. Another factor is that most people don’t have access to the Internet,” he explained.

O’Connor said the recent growth in the sports-betting industry is largely due to the changes in the betting tax by the National Gambling Board.

In keeping up with the international (driven mainly by the UK) move to scrap gambling tax, the board did away with a 6% tax charged to punters, charging it to bookmakers instead.

Thebi Moja, the board’s acting chief executive, said sports betting across the world is “growing very fast”, but would not give a concrete number.

In the UK, sports betting accounts for 45% of all gaming revenues, but in South Africa it is about 30% of the number of bets.

“When we realised that it was taking longer to grow (in South Africa), we realised it was the tax structure,” Moja explained.

“Punters were reluctant to place bets if they knew they’d be charged 6%.”

In March 2008, the new tax regime was introduced, but only Gauteng has adopted it, meaning that bookmakers across the country are sending bets to be processed in the province, Moja said.

Over the past year, gambling has generated R15.6-billion (0.1 % of GDP) with sports betting constituting only 11.6% of that amount.

O’Connor said he wants to open more branches, preferably in the townships, where, he said, people are starved for entertainment.

The mood in the shop never changes and while alcohol is available, none of the punters is drinking — they are devoting their full attention to their carefully marked cards.

By Zweli Mokgata