RISK MANAGEMENT

Risk Management

Risk Management

Introduction

The FIFA World Cup, soccer's premier event, is taking place in South Africa from June 11th to July 11th. This is the first time that the event has been held in the African continent and is a huge source of pride to both the host nation and the other 5 other African nations taking part. International teams include the US, England, Australia, France, and Germany. Games will take place in Johannesburg, Pretoria, Durban, Cape Town, Port Elizabeth, Bloemfontein, Polokwane, Nelspruit, and Rustenburg.

The ticket sales for the World Cup to be held this summer in South Africa is below expected levels at this point according to MoneyWeb. There are over a 3 million tickets available for the tournament. The deadline for sale of tickets through national football associations for their respective teams' group games just passed and many of the allocated tickets looks set to be returned to FIFA. DFB, the German Football Federation, has sold 1,000 of its allocated 21,000 tickets for the three group games scheduled against Australia, Ghana and Serbia. The Dutch association is said to have sold 2,000-3,000 tickets of its targeted 10000 and has requested a deadline extension from FIFA. The Dutch and English fans are traditionally the ones who travel in large contingents with their teams and this has prompted Germany's Sueddeutsche Zeitung to wonder, "If the three federations known for fans who like travelling (with their teams) have such problems what does it look like for Paraguay, Serbia or Honduras?" Germany has had around 25,000 orders in the first five phases of ticket sales for the 64 matches totally.

Then came three important changes. In the 1990s, the National Lottery brought gambling in from the cold, letting the middle classes experience the thrill of a flutter. Secondly, the Internet found that gambling was, like pornography, perfectly suited to the medium. That led, thirdly, to Gordon Brown's decision to eliminate betting tax. In a recent paper, three academics, David Paton and Donald Siegel of the Nottingham Business School, and Leighton Vaughan Williams, director of the Betting Research Unit of the Nottingham Trent University, show how the repeal of the tax is helping to usher in a new "golden age" for gambling. Since October, when taxes on the value of bets were eliminated and replaced by one based on bookies' profits, turnover from racing and sports bets has risen by 70% to pounds 1.3 billion ($1.97 billion) a month, or 1.6% of Africa's GDP. (Abraham,1998)

The tax change, say the authors, reflects the government's desire to maintain Britain's share of the global gambling industry. It was also spurred by tax competition from Ireland. Though the tax cut will reduce receipts in the short term, retaining the old betting tax would have been far worse as bets were fleeing offshore. As part of the tax cut, Internet bookmakers agreed to return home from places like Antigua. Today, although the dotcom boom is but a memory, bookmakers are one of the online world's few success ...