A SURE BET: HORSE-BETTING FILLS MALI STATE'S

UNCLAS SECTION 01 OF 02 BAMAKO 001322 SIPDIS SIPDIS E.O. 12958: N/A TAGS: ECON ETRD EFIN ML SUBJECT: A SURE BET: HORSE-BETTING FILLS MALI STATE'S COFFERS ¶1. Summary: On October 25 off-track horse-betting fans in Mali were able, for the first time, to place bets on real-time horse races beamed direct from race tracks in France. The two live-feed offices complement what has become, since 1994, one of the most profitable state-owned enterprises in Mali and a key source of income for the Malian government. Despite legal and religious barriers that, until 1994, rendered organized gambling taboo in Mali, profits from off-track betting now gross more than USD 42 million annually for the Malian government, some of which funds a variety of development projects, but most of which is classified by the Malian government as "general budget support." End Summary. -------------- -------------- ALL BETS ARE ON: PMU JUMPS LEGAL AND RELIGIOUS HURDLES -------------- -------------- ¶2. Off-track betting on French horse races was introduced in Mali in 1994 as a revenue-generating activity for the Malian government. Government officials tasked the then-Secretary General at the Ministry of Commerce and Transportation, Harouna Niang, to bring the French-based joint venture company Pari Mutuel Urbain (PMU) to Mali to help reduce the national deficit while building up basic infrastructure. The government's intent was to allocate the profits for "anything of general interest." ¶3. Niang's first challenge was overcoming legal restrictions that appeared to outlaw gambling in Mali. Article 186, Section VI of the Malian penal code outlaws gambling "except where the law fixes certain conditions." Malian lawmakers consequently ratified a law fixing off-track betting as one of these "conditions." Overcoming religious objections to gambling proved more challenging. In a country that is more than 90 percent Muslim, many Malians believe gambling is forbidden by Islamic law. Opposition to PMU-Mali is easy to find among Mali's Muslim leadership. In the words of one Sunni Imam, Cheick Amadou Diakite, who runs a large mosque near Bamako's international airport, "all money derived from games of chance is dirty money." In response to objections from Mali's Islamic community, government officials argued that the Prophet Mohammed himself enjoyed attending horse races and added that most of the horses raced in France today are of Arabian descent. ¶4. PMU's franchise in Mali was organized as a 75% state-owned enterprise, leaving 25% to private investors so that PMU-Mali could be organized under private rather than public equity law. A company with even one private shareholder in Mali is accountable to private instead of public law which in theory makes the enterprise more transparent as the company must report to a Board of Directors, composed of public and private members, instead of reporting only to a government ministry. -------------- THE MONEY IN THE HORSES -------------- ¶5. According to Idrissa Haidara, President of PMU-Mali, PMU generates around USD 42 million in profits for Mali annually. During PMU's tenure, Mali has allocated USD 18 million to projects such as ramping up security forces, improving education by building high schools and auditoriums, creating a fire department and emergency response system, extending the national television network, and developing a program to fight poverty. The remainder of the funds have been used for general budget support. -------------- EMPLOYMENT CREATION -------------- ¶6. Haidara believes that the horse-betting business has created more than 2,000 direct and indirect jobs for the domestic economy. The PMU counts 75 permanent employees, 800 ticket sellers, and 300 ticket sorters. In addition to these direct hires, the PMU has created indirect employment with printing businesses and betting newspapers. ¶7. Certified vendors sell betting slips at formal or informal kiosks around the country, and may also employ others to sell betting slips for them for a percent of the profits. Vendors make a 3% commission on their sales. One vendor estimated he could make anywhere from 50 to 400 USD per month. Vendors work in all regions of the country except Kidal in northern Mali, where distances are too far to allow betting slips to make their way to PMU headquarters in Bamako. Most of those betting on races in Mali are men. -------------- COMMENT BAMAKO 00001322 002 OF 002 -------------- ¶8. Since its arrival in Mali in 1994, PMU has clearly made substantial sums of money for shareholders in both Mali and France, and is now an entrenched economic interest. While Malian Islamic leaders continue to oppose PMU-Mali and state-sanctioned gambling, they have largely accepted the fact that off-track betting is now a facet of Malian society. While some of the funds have gone to worthy projects, it is unclear that operating costs and "general budget support" have generated more jobs than if Malians spent their funds in other ways. That said, PMU has met with widespread public acceptance, provides a badly needed revenue stream for the goverment---and some betters occasionally win. McCulley