It is said that a trip to Hong Kong must include a night at the races but for the betting-mad Chinese visiting the Happy Valley or Sha Tin racetracks is an essential part of life. The Hong Kong government has long profited from taxing the sport of kings but over recent years the Hong Kong Jockey Club (HKJC), the non-profit making government body that regulates and administers horseracing and betting, has found itself under attack on several fronts simultaneously with declining turnover the result.
BR> World-class racing is on offer at both Happy Valley, founded in 1846, and Sha Tin which was opened in the New Territories in 1978. It is estimated that illegal bookmakers, offering better odds because they pay no betting duty, drain billions of Hong Kong dollars annually from potential HKJC earnings. In May this year the government announced that betting on football, introduced two years ago, was helping to stem the flood of gambling dollars to the illegal bookies by as much as 90% - a victory for the HKJC on one front.

A more difficult area of combat is online betting, with many offshore companies taking wagers on Hong Kong races. Lobbying the government produced an amendment to the Gambling Bill that criminalizes the activity, with penalties of hefty fines and up to 7 years in prison. The HKJC believes that it is at a commercial disadvantage when compared to offshore bookmakers and is seeking to level the playing field with fiscal reform.

Macau may be a beacon of light in the gambling industry but it is fuelled in part by lost dollars to Hong Kong racing. HKJC turnover has fallen over 30% since 1997 and is continuing to slide. In January the government in Hong Kong approved an application from the Macau Horse Racing Company to act as a betting agent, allowing Macau residents to bet on the races in Hong Kong and provide an estimated HK2 billion annually to the Hong Kong government. However, if the amount of money that it makes from local horseracing continues its downward spiral then the government may be forced to rethink its whole tax system. At present most social services spending comes from racing revenue and the majority of Hong Kong’s labour force pays no income tax.

Fundamental changes are proposed for altering the method by which betting tax on races is collected. The HKJC want a system whereby its gross profit is taxed and not on amounts bet. This would increase payouts and make the HKJC better able to compete with the illegal bookmakers. Cutting edge technology at its two racetracks is another way that the club attempts to maintain its profile as a top entertainment venue.

In order to survive as a major contributor to government funding - it is the largest taxpayer in the territory – the HKJC will have to continue to adapt and attract younger race goers. It may win significant tax changes this winter in the Legislative Council but the next challenge could come from mainland China. Some analysts are predicting that as China will open its borders for the 2008 Olympics, the 1949 ban on gambling on horseracing within its borders will go in order to provide revenue for the Olympic programme. The HKJC has already allowed mainland gamblers to open betting accounts in Hong Kong but if the Chinese legalize betting on horseracing at home then the fight for those racing dollars will intensify. (E-11.11.05)

© Copyright 2005 CasinoCompendium



>>> return to archives
>>> return to frontpage