Today’s edition
House Rules
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Good morning, and welcome to your Thursday Roundup. Sun International is trying to get ahead of South Africa’s growing gambling problem, while government has a problem of its own ahead of next week’s mini-budget. Meanwhile, dairy farmers are fighting back against falling milk prices, China’s luxury slowdown has reached the JSE, and British American Tobacco wants to make cheap cigarettes more expensive. Let’s get into it.
MARKETS
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Sun International is trying to get ahead of South Africa's gambling problem, before Treasury's tax does it for them
Gambling ads are everywhere in South Africa, from rugby matches to billboards to banking apps, and business is booming. South Africans wagered R1.5 trillion in 2024/25, and what bookmakers kept after paying out winnings has grown almost fivefold in five years to R52 billion. Treasury's answer is a proposed extra 20% tax on online betting revenue, to discourage problem gambling. Conveniently, it could also raise more than R10 billion a year.
On Tuesday Sun International, which owns Sunbet, launched a voluntary charter to show it can look after its own customers. It pulls its ads from 6am to 8am and from noon to 6pm, and blocks customers who declare a Sassa grant or NSFAS funding as their income.
Where it falls short:
- Evenings are untouched, when most people are watching sport and placing bets.
- The time limits don't extend to social media, search or push notifications.
- The grant block relies on customers declaring their income honestly.
Sun warns heavier taxes push bettors to offshore sites with weaker protection, and with the 20% tax possibly coming in the 2027 Budget, the charter could help its case. Whether it dents the gambling problem is another question.
GOLD COMFORT
South Africa's growth forecast is about to be cut, and Moody's still has an upgrade on the table
Next Wednesday, our Finance Minister delivers his mini-budget, essentially government’s mid-year update on how much money it’s collecting, spending and borrowing. And there’s a problem. Back in February, Treasury expected South Africa’s economy to grow by 1.6% this year. The International Monetary Fund - or IMF - now expects just 1%, after the economy actually shrank between April and June. That matters because slower growth generally means less tax revenue, making it harder for government to pay its bills.
It also complicates South Africa’s efforts to improve its credit rating, which is essentially a measure of how risky it is to lend money to the country. Moody’s, one of the agencies that assigns these ratings, has South Africa on a positive outlook, meaning an upgrade is possible. But it wants to see government debt falling relative to the size of the economy. The faster that economy grows, the easier that becomes.
Fortunately, government has collected more tax than expected this year, largely thanks to high gold and platinum prices boosting mining profits. But the catch is that mining production fell 12.7% in August, while gold sales almost halved. Moody’s will be watching to see how much of government’s improved finances depend on those commodity prices staying high.
BAGEL BITE
What is the hardest substance in the human body?
A. Tooth enamel
B. Bone
C. Dentine
DOING THE ROUNDS
Cybersecurity is becoming a bigger priority for businesses, and Bytes Technology Group wants a larger piece of that market. The UK software company, which is also listed on the JSE, has agreed to buy London-based cybersecurity firm CyberOne for £19.4 million, with another £18 million potentially payable depending on its performance. The acquisition comes as Bytes reports a 6% increase in first-half earnings per share, while its services business grew 41%. CEO Sam Mudd says cybersecurity is where customers are increasing their spending the fastest. Full story →
South African dairy farmers are producing more milk, but getting paid less for it. Lactalis, the company behind Parmalat, cut what it pays farmers by 20 cents a litre in September and October, with another 30-cent cut planned for November. The company blames an oversupply of milk, partly caused by a warmer winter that boosted production, alongside fewer export opportunities. But farmers warn the cuts could force them to sell milk at a loss. Now, a cooperative representing nearly 200 farmers has approached the Competition Commission to challenge the reductions. Full story →
Richemont’s shares fell more than 1% on the JSE this week, despite the company not releasing any results. The reason? Disappointing numbers from one of its biggest luxury rivals, LVMH, which owns Louis Vuitton. The French group reported a 5% decline in fashion and leather goods sales, far worse than analysts expected. It blamed weaker demand in China, a major market for luxury brands, even as sales grew elsewhere. Investors worried the slowdown could affect other luxury companies too, sending shares across the industry lower, including Richemont’s. Full story →
A pack of cigarettes carries about R27 in tax, yet some South African shops are selling them for as little as R7. A study commissioned by British American Tobacco South Africa found cigarettes priced below the tax amount in roughly 75% of shops surveyed. The company now wants government to introduce a minimum price of R38 per pack, arguing it would make life harder for illegal sellers. But SARS has warned that while a minimum price could discourage illegal sales, it wouldn’t necessarily mean the taxes were actually being paid. Full story →
WEATHER
BAGEL GAMES
Have you got what it takes to win today’s Wordle? Play here →
THE ANSWER
As for the Bagel Bite, the answer is: A. Tooth enamel
It is even harder than bone and is made mostly of tightly packed mineral crystals. This hardness helps teeth withstand years of biting and chewing. Unlike bone, enamel contains no living cells, so once it is worn away or broken, it cannot grow back. However, early mineral loss can be repaired through remineralisation, using minerals from saliva and fluoride. That is why protecting it from decay and wear matters so much.
That's your Thursday sorted. Enjoyed it? Forward it on, a friend can subscribe in a click. Written by the Business Bagel crew.