Australian racing in same dilemma as Hong Kong, says Read


The following story about the dilemma facing Hong Kong Racing, by Murray Bell, is reproduced by permission of the South China Morning Post.
IAS Chairman, Mark Read, says the comments by Hong Kong Jockey Club executive director, Winfried Engelbrecht-Bresges, about the beak future of Hong Kong racing unless changes are made, are very pertinent to Australia.
Read says that in the last 20 years racing has gone from being the predominant gambling medium to now having less than a 10 percent share of the Australian gambling market because TAB deduction rates make racing too expensive and relatively unattractive.
Read says that the initial legislated maximum deduction rates of 16% made allowance to pay for massive infrastructure, TAB betting shops and staffing.
“However, pubs and clubs now provide the majority of outlets and the staffing, so these cost cuts should be passed onto the customer in the form of reduced totalisator deductions,” Read said.
“The use of the internet has also reduced costs substantially, but again, the benefit of these reductions are not being passed onto consumers.
“Governments, too, have their hands out all the time for a slice of racing action and they must realise that they will kill the golden goose if they continue unabated.”
He said Mr Winfried Engelbrecht-Bresges could well be talking about the future of Australian racing, so similar is the situation.

Hong Kong Jockey Club raps ‘greedy’ Treasury

By Murray Bell, South China Morning Post (11th April 2004)

The Hong Kong Treasury was yesterday accused of callous disregard for the world's best racing-wagering product by the Jockey Club's executive director of racing, Winfried Engelbrecht-Bresges.

At the end of another excellent 10-race programme on Easter Sunday at Sha Tin, where the racing was crisp and competitive, Engelbrecht-Bresges was forced to admit to yet another turnover drop, with the Jockey Club holding just $857.5 million. Not long ago, a Sha Tin turnover of less than $1 billion was unthinkable.

The year-to-year decrease may not look too bad on paper because it was only down 1.1 per cent on the Easter meeting 12 months ago, but what made it so appalling was last year's meeting was emasculated by the knock-on effects of Sars in the region, and a turnover increase this year had been anticipated.

"This is incredibly frustrating," Engelbrecht-Bresges began. "Everyone who comes to Hong Kong, from anywhere in the world, tells us this is the world's best racing product. We are doing everything we can to make this great product even better, but what racing in Hong Kong urgently needs is a change in our taxation.

"We are now operating in a totally different gaming environment to what existed previously," he continued. "Hong Kong now has soccer betting, and they are two completely different products that attract completely different levels of taxation.

"Internally and externally, the level of taxation on Hong Kong racing is too high and we told the government this three years ago, but still they refuse to listen."
Engelbrecht-Bresges made no apology for his hard-hitting outburst, but added "the situation is now becoming critical and someone needs to say it".

Racing is in its sixth successive year of decline, yet repeated representations to government have fallen on deaf ears. With a take-out of 18 per cent on win, place and quinella betting, and more than 20 per cent for the so-called exotic bet types, like treble, double trio, triple trio and six-up - among the highest take-out rates on the planet.

Jockey Club officialdom is still seething that former financial secretary Antony Leung Kam-chung, in his first and last Budget in 2003, raised the take-out from exotic bets by a further percentage point without consultation with the Club.

The take-out from wagering - of which approximately two-thirds is tax and one-third goes to the Jockey Club to pay for overheads and prize money - is the pricing mechanism of the product. Horse racing is one of the few industries of the world where the actual business has no control over the price of its product.

The faceless men and women of the treasury hold these strings. And despite a recent report from the Jockey Club recommending a substantial drop in the take-out rate for Hong Kong racing - and a list of likely benefits if the recommendation was adopted - the treasury has again refused to budge.

"Their reply to us is that the average punter has no idea about the pricing of the product," Engelbrecht-Bresges continued. "Well, I disagree. My 10-year-old daughter would be able to see the sense in this. There isn't a punter, anywhere, who wouldn't prefer a dividend of $40 compared to $35."

Engelbrecht-Bresges, regarded as one of the best racing administrators in the world, is about to enter his seventh year as executive director of racing at the HKJC. The taxation issue, he says, remains the biggest single issue that is holding Hong Kong back.

"This year, we have had a 40 per cent increase in the number of members who wish to own a horse - that's a very encouraging sign," he said.

"We are committed to a massive upgrading of facilities for our owners because we know these are our biggest investors and our most important customers.

"Looking at it from the other side, I appreciate that this is not an easy decision [for government]. Reducing taxation on horse racing may not be an easy thing to do politically. But this needs to be done.

"We at the Jockey Club have taken wage cuts, the trainers and jockeys have had pay cuts, we have become more and more efficient in our management. We have made cost savings and improved productivity in many areas and been recognised for this. We have a clear structural problem and the solution lies in the take-out rate that applies to racing being too high.
"There is more competition on the horizon, too. When we were in Macau last week for the running of the Macau-Hong Kong Trophy, we were given an insight into the new casinos there," he continued.

"The price structure [i.e., take-out rate] of Hong Kong racing was set in a completely different era when racing was the only game in town. The government seems to operate under a set of assumptions [about racing] and I'm sorry to be so blunt about it, but they are simply wrong."

Of course the TAB take is too big here and that is why Read can offer better odds than tote prices.

When are TABs going to learn that its about time punters got a better deal.

I hope they - and governments - read this article and absorb the implications

Which is exactly why IAS should offer a flat 5% better than the HIGHEST TAB dividend, because there is so much margin for profit these days.

Giving firstly, higher than the largest tote dividend, then higher than Unitab, is of no real advantage when SuperTaB pays more than those two in the longrun anyway.

Listen to the customers.

THEY WON"T
The reason being is that the average punter here just wants to have a bet on their selection and don't take into consideration the odds they are getting on the tab's.
I bet everyday 7 days a week and use 2 tabs and 2 fixed odds sites.
Some dividends are absolutely ridiculous on the tabs.
I laugh to myself sometimes when for example I have just placed a bet at say $2.7 fixed odds place and the same bet on tabs are showing $1.8
How these people expect to win in the long term taking these divi's I don't know.
The biggest problem is that the majority of tab punters are in a tab outlet or a pub or club and don't have access to other markets.
In relation to the second two outlets the majority of them are ********ed and don't care about value anyhow.
I still apply the red light betting and that is get my money and run.
I have lost count of the number of days that if I had just been just betting on the tabs I wouldn't have reached the stop light.
Just one last point in relation to place betting you HAVE to have a unitab account, as the difference a lot of the the times to the nswtab is unbelievable.

Cheers

I'll add this in as a prime example.
I wasn't going to because I know I'll get the usual knockers WHY didn,t you tell us before the race.

GENERATOR.
unitab $4.6
nswtab $5.5
fixed odds $8.0

To Alex Read,
I have to agree with Chrome Prince your new set up stinks, why can't you go back to the best of the tabs, you are still going to come out in front anyhow???????
The other matter is when the hell are you going to get your NEW site operating correctly, it freezes all the time and will not update and I find it nearly Impossible to use.
I rang to complain and was told you did have problems with your server but was also told that if my computer was over 12 months old it would not operate properly on your site.
Without going into Specs My comp IS over 12 months but very high grade and using broadband.
If this is the answer you are giving to clients then I suggest you wipe 90% of them off your clients.

[ This Message was edited by: kenchar on 2004-04-14 18:02 ]

[ This Message was edited by: kenchar on 2004-04-14 19:21 ]

Kenchar

I will say this in response to what your saying I think currently the TAB can still get away with it because of the older punters who can't opperate a computer well enough to be confident to bet from home so they would rather go down to the pub, club or TAB because it is far easier for them to understand there.

I think as the younger generation gambler comes through that is when the problems will start with TAB. All of a sudden you have punters who have grown up around computers and would rather sit at home watch the races there and bet on the computer using a number of different of accounts.

All of a sudden TAB starts to see a greater dropoff in profits and so fourth and who knows what happens after that maybe there won't be any TABs anywhere 20 or 30 years down the track by that time maybe the only way to gamble will be phone accounts and internet accounts and possibly something we have not seen yet.

Raw Instinct, I really can't understand this, I was 59 last week :cry:
3 years ago I was totally a computer illiterate, but got one for the kids, got interested, and went on from there.
I really think the biggest problem is that the majority of punters are just in it for the thrill.
My answer to that is stuff the thrill give me the $$$$.

Kenchar what you say is true to an extent but I wouldn't trust my old man on my computer at all he has not got a clue and I know alot of older punters who just have no clue how to use one. I turned 27 a couple of weeks ago and my old man is 52 this year.

I also think it is more that people are used to what they have always used and really just can't be bothered looking at something better or different from the normal happy medium.

I do see where you are coming from though.

Anybody who bets on anything & does not at least try to get the best odds that they can is not serious about winning.

Kenchar, my computer is about 12 months old & I nearly smashed it on Saturday when, because of IAS freezing for the 4th time, I had to restart the ************ thing. Come on IAS get your act together! It's obviously not the computer if only the one site is crashing it all the time.

It is not your computer it is there site.....they have a half assed web developer in my opinion.....my 14 year old could do a better job