Gründlingh and Others v Phumelela Gaming and Leisure Ltd

• Jurisdiction: South Africa

Gründlingh and Others v Phumelela Gaming and Leisure Ltd
2005 (6) SA 502 (SCA)

2005 (6) SA p502

Citation	2005 (6) SA 502 (SCA)
Case No	152/2004
Court	Supreme Court of Appeal
Judge	Howie P, Farlam JA, Conradie JA, Lewis JA and Comrie AJA
Heard	March 10, 2005
Judgment	June 1, 2005
Counsel	C E Puckrin SC (with him A Cockrell) for the appellants.; P Ginsburg SC (with him J M Heher) for the respondent.

Flynote : Sleutelwoorde B

Gaming and wagering — Horse racing — Betting on — Bookmaker offering and accepting 'exotic' bets — Stake on such bets being totalizator dividends or results published by totalizator operator — Whether such bets 'fixed odds bets' as defined in s 1 of Gauteng Gambling Act 4 of 1995 — Such C bets not tote bets as defined in s 1 of Act since bookmaker not operating totalizator — Although odds not known or fixed when bets laid, they provided formula in terms of which odds would be determined or ascertained later — Such formula arguably constituting agreement upon odds at moment when bet struck — Such a permissible interpretation of definition D of 'fixed odds bets' — Definition insisting of agreed odds rather than known odds — Definition ambiguous — High Court accordingly erring in holding exotic bets not fixed odds bets and that bookmakers prohibited from offering and accepting such bets — Bookmakers also not competing unlawfully with totalizator operator in offering such bets based on dividends or results published by operator. E

Trade and competition — Competition — Unlawful competition — What constitutes — Bookmakers offering and accepting 'exotic' bets on horse races — Stake on such bets being totalizator dividends or results published by totalizator operator — Bookmakers appropriating results of totalizator operator's endeavour to calculate pay-out dividends — Whether lawful — History F of relevant legislation indicating that, apart from short period of three years, legislatures not considering it offensive for bookmakers to make use of totalizator dividends in calculating pay-outs on exotic bets — Legal convictions of community and public policy not regarding such practice as unfair or dishonest — Bookmakers' conduct accordingly not amounting to unlawful competition with totalizator operator. G

Headnote : Kopnota

The first and second appellants were licensed bookmakers and the respondent a public company carrying on the business of operating a computerised totalizator, trading under the name of 'Saftote'. The appellants, as licensed bookmakers in terms of the Gauteng Gambling Act 4 of 1995, were authorised to accept 'fixed odds bets' on sporting H events. Such bets were defined in s 1 of the Act as 'a bet taken by a licensed bookmaker on one or more events or contingencies where odds are agreed upon when such bet is laid, but excludes a totalizator bet; . . .'. A totalizator was defined in the Act as meaning 'a system of betting on a sporting event in which the aggregate amount staked on such event or combination of events, after deduction from such I aggregate amount of any amounts which may lawfully be deducted therefrom, whether under this Act or by agreement, is divided amongst those persons who have made winning bets on that event or combination of events in proportion to the amounts staked by such persons in respect of such winning bets, and includes any scheme, form or system of betting, whether mechanically operated or not, which is operated on J

2005 (6) SA p503

similar principles'. Bookmakers had to pay all winning bets from their own resources, whereas, in the case of a totalizator all the bets on a A particular race or combination of events (ie exotic bets) were pooled and that pool, after the deduction of tax, administration expenses and the tote operator's profit, was divided equally between all the successful punters in proportion to their respective stakes. The appellants had offered and accepted 'exotic' bets, the stake formula being the tote dividends or results to be published by the B respondent. Thus the dividend per rand on a trifecta bet (a type of exotic bet) laid with the appellants would be precisely the same as the dividend on the identical trifecta bet laid with the respondent's tote. The difference was, however, that with the appellants there was no pool of bets to be divided among winning punters. The appellants were on risk and had to pay all winning bets from their own resources. In order to put a stop to the practice of bookmakers accepting such C exotic bets, the respondent successfully brought an application in a Provincial Division for an interdict. The interdict as granted restrained the appellants (1) from breaching s 55 of the Act by offering or receiving bets which were not 'fixed odds' bets; and (2) on the basis that the appellants were competing unlawfully with the respondent, prohibited the respondents from 'offering bets to the public or taking bets from the public in terms whereof or on the D basis whereof bets were offered to be paid or are paid out on the basis of result and/or dividends derived or obtained from the applicant's totalisator pool'. In an appeal,

Held (per Comrie AJA, Howie P, Farlam, Conradie and Lewis JJA concurring), that the exotic bets under review were not tote bets as the appellants did not operate a 'totalizator' as E defined. They maintained no pools of bets to be divided among winning punters, nor did any actual divisions of this kind take place. The appellants were on risk and had to pay all winning bets from their own resources. On any given race or combination of races, they might show a profit or a loss. That was quite different to a totalizator which, ran no betting risk and which showed no betting loss or profit. It followed that the bets under review were not outlawed by the concluding words of F the definition of fixed odds bets: 'but excludes a totalisator bet'. (Paragraph [14] at 509H - I/J.)

Held, further, that with the appellants' exotic bets the odds were not known or, in that sense fixed, when such bets were laid. From that moment until the race or combination of races was run, the odds fluctuated according to the amounts of money which were wagered G (on the tote) and the horses which were selected. Thus the appellants' exotic bets did not fix the odds; they provided formulae in terms of which the odds would be determined or ascertained later. Such a formula arguably constituted an agreement upon the odds, at the moment when the bet was struck, even though the actual odds were determined later (in terms of the formula). That was a permissible H interpretation of the definition of a fixed odds bet, which insisted on agreed odds when the bet is laid rather than known odds. The definition was therefore ambiguous. (Paragraph [16] at 510D - F.)

Held, further, that the Court could not agree with the Court a quo that the definition of fixed odds bets was clear and that it meant that the odds had to be determined (ie the potential payout determined) when a bet was struck. (Paragraph [19] I at 511D.)

Held, accordingly, that the Court a quo had erred in granting para (1) of the order. (Paragraph [19] at 511E - F.)

Held, further (per Farlam and Conradie JJA, Howie P, Lewis JA and Comrie AJA concurring), that, on the unfair competition leg of the appeal, the evidence demonstrated that Saftote and its predecessors had developed a business J

2005 (6) SA p504

system of such reliability and sophistication that it had earned the trust of the betting public, a A trust that was manifested by a readiness to do business with Saftote. The resulting income potential was part of its goodwill and as such a valuable asset. (Paragraph [33] at 515H/I - 516A.)

Held, further, that the appellants in the course of their business appropriated the results of the respondent's endeavour to calculate pay-out dividends, something that was fundamental to the operation of its totalizator business. (Paragraph [34] at 516B.) B

Held, further (per Farlam and Conradie JJA, Howie P and Lewis JA concurring, Comrie AJA dissenting), that, having regard to the history of the relevant legislation, that the review of the legislation in the Transvaal, more recently in Gauteng, and also nationally, showed that in regulating the racing industry the provincial (and latterly national) legislatures had not, apart from a C short interval of proscription (between 1998 and 2001) enacted by the Gauteng Provincial Legislature, considered it offensive for bookmakers to make use of totalizator dividends in calculating the pay-out on exotic bets. Under the National Gambling Act 7 of 2004 presently in force it would be lawful for a bookmaker to take a bet where the payout is based on a totalizator dividend. For many years before 1995 it was also expressly permitted in the Transvaal. (Paragraph [39] at D 517D - F.)

Held, further, that the test for the unlawfulness of a competitive action was essentially public policy and the legal convictions of the community. The latter concept ordinarily included not only right-thinking members of the community who might be expected to hold a view on the particular topic but also those involved in the industry, '(t)he business ethics of that section of the community E where the norm is to be applied'. (Paragraph [40] at 517F - H.)

Held, further, as to whether the appellants, who at the time of the institution of these proceedings used totalizator dividends for the purpose of calculating their own payouts, acted fairly and honestly in the eyes of their fellows and having regard to public policy. Public policy, as reflected in the provincial legislature's commands, had (apart from one brief interruption) for F almost half a century not required bookmakers to act otherwise. It was only to be expected that, during the long time that bookmakers were...