Hong Kong Jockey Club - Low Tax/High Technology

Founded in 1884, the Hong Kong Jockey Club oversees the administration of horse racing and betting in Hong Kong, including the operation of two racecourses, Happy Valley in Hong Kong and Sha Tin in the New Territories. The Club is a not-for-profit organisation, donating its surplus funds to community and charitable projects.

Of all the global Tote bodies, it is the Jockey Club that has been the most innovative, both in terms of embracing new technology and employing savvy marketing techniques to attract and retain new punters. Its website stands as a lesson to all other Totalisator operators, as to how things could and should be done.

The Jockey Club's own website is replete with added value services such as audio commentaries, video replays, results, cards, mobile services etc...

In December 2004, the Jockey Club joined forces with the mobile operator 3 Hong Kong to provide a service offering real-time race clips and betting services on 3G video mobile phones. Customers of the jockey club with access to 3G, can log on to 3's Racing Channel, select "Horse Racing Live" and then watch races at Sha Tin or Happy Valley racecourses live. Real-time odds, racing results and dividends are also available.

The Hong Kong Jockey Club recently announced that its total turnover from all operations for the 2006/07 racing season had passed HK$100 billion for the first time. The Club's racing activities showed a 6.6% increase in turnover to HK$64.00 billion and a 2.0% increase in attendance to 1.92 million, reversing a trend of 10 years' steady decline since 1997.

A new Gambling Act entered into force in Hong Kong on 1 September 2006, introducing a tax system based upon gross profits after dividends and rebates rather than a tax based on betting volume. The duty is being set at 72.5 percent for the first HK$11 billion (US$1.4 billion) in gross profit, increasing by steps of 0.5 percentage points for every subsequent HK$1 billion until the 75 percent that will also apply to the remainder exceeding the HK$15 billion (US$1.9 billion) tier.

At the 41st IFHA Conference in Paris on the 8 October 2007, Bobby Chang, in a paper entitled "Impact of Takeout Rate on Revenue" said that the lowering of the effective takeout rate from 17.5% to 15.7% had increased revenue in 2006 from HK$49B (US$6.3B) to HK$53B (US$6.8B).

The Hong Kong Jockey Club also recently introduced a cash rebate scheme of 10% for losing bets over HK$10,000. Officials hope that the measure, which is comparable with one offered by illegal bookmakers, will help the club recoup between HK$5 billion and HK$12 billion annually from underground pools.

In July 2007 an application by the Jockey Club to allow American racing fans to bet directly in Hong Kong racing pools was approved by the government. The American bets will be channeled into the more simple pools such as win, place and quinella, gradually expanding to include exotic bets like the triple trio. Early projections are that the American bets could amount to between HK$10 million and HK$20 million each raceday, adding about HK$1.2 billion to total season turnover.

Turnover Hong Kong Jockey Club 2002 - 2006 (HK$M)

With regard to illegal gambling, the Legco of the Gambling (Amendment) Bill (2000), seeks to combat cross-border bookmaking activities by criminalizing, inter alia: offshore bookmaking if the bettor concerned is in Hong Kong (with penalties of up to $640,000 and seven years in prison) ; betting in Hong Kong with an offshore bookmaker; promoting or facilitating offshore bookmaking; and broadcasting via TV or radio betting information on an unauthorized horse or dog race during the 12 hours preceding that race.

Competitive threats abound; not least, from the growth of Macau and the potential opening up of the Chinese betting market.

In March 2006, Ladbrokes, the UK based bookmaker announced details of its consultancy role in the launch of China's first sports lottery pool betting shops which have opened in Beijing Province. The shops are the first in mainland China to offer singles betting on football matches.

In January 2008, the Changjiang Times newspaper in Wuhan reported that Chinese citizens may be allowed to bet on horse races in 2009, for the first time since the Communist Party came to power in 1949. This follows on from the news that the central government has approved the establishment of regular horse racing in Wuhan, the capital of central China's Hubei Province.

Many see the announcement as the precursor to the full scale legalisation of horse race betting in China.

A spokeswoman with the China Sports Lottery Administration Center told Xinhua that "The proposal of betting on horse racing was indeed being reviewed and discussed but that there was no concrete information on when or whether it will begin." Bad news indeed for the boys at the Hong Kong Jockey Club.

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