Hong Kong Jockey Club in Trouble

HONG KONG – As reported by the Hong Kong Standard: "Sweeping changes to the way horse racing is taxed and regulated in Hong Kong are a last ditch effort to save the sport here and restore its financial health, the Jockey Club has warned.

"A Home Affairs Bureau paper, to be discussed by the Legislative Council's home affairs panel tomorrow, says club turnover from racing fell 30 percent from HK$92.4 billion in 1997 to HK$65 billion last year, and may fall by another 30 percent to HK$45 billion by 2008 if nothing is done.

"The warning, which is contained in the paper, and the fact that the club is one of the SAR's largest employers with 19,000 people on its payroll, adds to the pressure on the government to help it regain its financial health.

"However, the reform, aimed at giving the Jockey Club flexibility in setting dividends and betting products to boost revenue, could run into some political resistance from legislators who are concerned it will nurture new gamblers. Under the government-approved proposal, the number of racing days will be extended from the current 78 to 83. In addition, the Jockey Club will be allowed to simulcast top international races held on non-racing days.

"The proposal will also bring the taxation system on horse racing more in line with football gambling by switching from a direct tax on bets to a tax on profits. This will allow the Jockey Club to offer better odds to punters.

"…The package came after months of negotiations between the government and the sole legitimate operator of horse racing following a seven-year slide in betting turnover fueled by rampant illegal bookmaking and offshore bets…"