The Hong Kong Jockey Club (HKJC) is down on its luck, as profits tumbled by 30 per cent to US$90 million from $130 million year-on-year for the racing season.
But the gloomy economy is not the only challenge the HKJC faces. The bright lights of neighbouring Macau, and its relaxed gambling laws, are draining away at least $30 million a year in potential betting revenue, according to industry estimates.
The club recently announced plans to extend the Hong Kong racing season by five race meetings. The reforms mark the first extension of the number of meetings to be held in any one season for more than 10 years.
It’s been slow progress, and the Hong Kong Government has been accused of micro-managing the process. HKJC officials suggest the Government’s failure to grant the club greater operational flexibility had come to restrict the HKJC’s regional competitiveness in an aggressive market.
Horse racing, along with betting on soccer matches through the HKJC and a weekly Government-run lottery, are the only legal forms of gambling in Hong Kong.
The HKJC is also mandated to return a minimum of US$1 billion per year to the Government in the form of tax revenues.
The requirements imply an effective betting tax rate of more than 70 per cent, according to HKJC officials.
Speaking at the G2E Asia summit held in Macau in early June, Stephen Chandler, the HKJC’s executive director of security and corporate legal services, said he thought that current regulations governing the Jockey Club were too strict.
“We’ve been pushing very hard for the regulators to change the tax regime, but in the current economic climate there’s little chance of that,” he said.
As the regional gambling marketplace heats up, does the HKJC need to boost its brand in the eyes of Hong Kong people?
Warwick Bartlett, chief executive, GBGC.com
“Horse racing globally is in decline, not necessarily because of the way the sport is run; it just faces extreme competition for the consumer’s leisure dollar.
Fighting against this macro trend isn’t easy and the way forward is to become proactive and move ahead of the change that is taking place.
Putting aside competition from the leisure industry, direct competition is at hand in the gambling industry. HKJC faces the popularity of Macau, the growth of the super casino, illegal street gambling and the global internet gambling market worth US$20 billion. It is estimated that illegal gambling is three times the amount bet legally in Hong Kong. This unregulated gambling provides no consumer protection and therefore the key to a solution is for HKJC to convert those gamblers into legitimate taxpaying gamblers.
The Hong Kong Government has the biggest role to play by reducing the rates of tax so that HKJC can compete on a level playing field.
The price of the tax on the bet needs to be adjusted down to a rate where the gambler will pay the premium to bet legally in properly regulated surroundings.”
Richard Thomas, president & CEO, DDB Worldwide
“It has taken the Government years to recognise that consistently robbing the goose that lays the golden egg is tantamount to insanity.
Despite the constant challenges faced to retain the attraction of racing and betting, for younger generations particularly, the HKJC brand can thrive. But only with support from regulators and those who set the boundaries in which HKJC operates.
It’s high time the establishment recognised the massive value a healthy and thriving Jockey Club offers - whether it’s giving back to the community by retaining gambling revenue within Hong Kong’s borders, or ultimately benefiting Hong Kong with increased jobs and tourism.
Clearly, the HKJC must embrace a new reality and provide product experiences that appeal to an audience that has many more choices today, compared to 10 years ago. But to do so in isolation of a legislative position that recognises its value and supports its initiatives will be even harder.
It’s time to celebrate and support the HKJC, as opposed to bemoaning its issues and problems. What an asset, what an opportunity! Racing truly is an experience that cannot be replicated.”
Got a view?
Email [email protected]
This article was originally published in 10 September 2009 issue of Media.
But the gloomy economy is not the only challenge the HKJC faces. The bright lights of neighbouring Macau, and its relaxed gambling laws, are draining away at least $30 million a year in potential betting revenue, according to industry estimates.
The club recently announced plans to extend the Hong Kong racing season by five race meetings. The reforms mark the first extension of the number of meetings to be held in any one season for more than 10 years.
It’s been slow progress, and the Hong Kong Government has been accused of micro-managing the process. HKJC officials suggest the Government’s failure to grant the club greater operational flexibility had come to restrict the HKJC’s regional competitiveness in an aggressive market.
Horse racing, along with betting on soccer matches through the HKJC and a weekly Government-run lottery, are the only legal forms of gambling in Hong Kong.
The HKJC is also mandated to return a minimum of US$1 billion per year to the Government in the form of tax revenues.
The requirements imply an effective betting tax rate of more than 70 per cent, according to HKJC officials.
Speaking at the G2E Asia summit held in Macau in early June, Stephen Chandler, the HKJC’s executive director of security and corporate legal services, said he thought that current regulations governing the Jockey Club were too strict.
“We’ve been pushing very hard for the regulators to change the tax regime, but in the current economic climate there’s little chance of that,” he said.
As the regional gambling marketplace heats up, does the HKJC need to boost its brand in the eyes of Hong Kong people?
| FACT BOX |
| - HKJC’s profits fell by 30 per cent to US$90 million from $130 million year-on-year for the racing season. - The Hong Kong Jockey Club was given permission by the Government in August to add five race days and 15 telecasts of overseas races for people to bet on - its first extension in 10 years. - Under Hong Kong’s laws, the HKJC is mandated to return a minimum of $1 billion per year to the Government in the form of tax revenues. The requirements imply an effective betting tax rate of over 70 per cent, according to HKJC officials. |
Warwick Bartlett, chief executive, GBGC.com
“Horse racing globally is in decline, not necessarily because of the way the sport is run; it just faces extreme competition for the consumer’s leisure dollar.
Fighting against this macro trend isn’t easy and the way forward is to become proactive and move ahead of the change that is taking place.
Putting aside competition from the leisure industry, direct competition is at hand in the gambling industry. HKJC faces the popularity of Macau, the growth of the super casino, illegal street gambling and the global internet gambling market worth US$20 billion. It is estimated that illegal gambling is three times the amount bet legally in Hong Kong. This unregulated gambling provides no consumer protection and therefore the key to a solution is for HKJC to convert those gamblers into legitimate taxpaying gamblers.
The Hong Kong Government has the biggest role to play by reducing the rates of tax so that HKJC can compete on a level playing field.
The price of the tax on the bet needs to be adjusted down to a rate where the gambler will pay the premium to bet legally in properly regulated surroundings.”
Richard Thomas, president & CEO, DDB Worldwide
“It has taken the Government years to recognise that consistently robbing the goose that lays the golden egg is tantamount to insanity.
Despite the constant challenges faced to retain the attraction of racing and betting, for younger generations particularly, the HKJC brand can thrive. But only with support from regulators and those who set the boundaries in which HKJC operates.
It’s high time the establishment recognised the massive value a healthy and thriving Jockey Club offers - whether it’s giving back to the community by retaining gambling revenue within Hong Kong’s borders, or ultimately benefiting Hong Kong with increased jobs and tourism.
Clearly, the HKJC must embrace a new reality and provide product experiences that appeal to an audience that has many more choices today, compared to 10 years ago. But to do so in isolation of a legislative position that recognises its value and supports its initiatives will be even harder.
It’s time to celebrate and support the HKJC, as opposed to bemoaning its issues and problems. What an asset, what an opportunity! Racing truly is an experience that cannot be replicated.”
Got a view?
Email [email protected]
This article was originally published in 10 September 2009 issue of Media.
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