The Hong Kong Jockey Club has warned a proposal by the New People’s Party (NPP) to increase the city’s football betting duty by 30% would eat away its entire surplus and prevent investment into the community.
In a strongly worded statement issued late last week, The HKJC said the proposal represents a “lack of understanding of the competition in the wagering market and the Club’s investment and business” and would “create irreversible damage to Hong Kong by destroying the Club’s longstanding successful business model and Hong Kong’s world status as a leading racing jurisdiction and will jeopardise the public interest of Hong Kong.”
Specifically, The HKJC said raising the betting duty would theoretically raise its taxation to the government from HK$25 billion (US$3.2 billion) to more than HK$31 billion (US$4.0 billion) while reducing revenue before operating costs from HK$15 billion (US$1.91 billion) to HK$9 billion (US$1.15 billion), resulting in zero or negative surplus and preventing the Club from making necessary investments to secure its future and from contributing to the community.
It would also likely lead to some customers looking elsewhere for more competitive prices.
“The Club is the only licensed betting operator in Hong Kong but not the only operator,” it said. “It is facing fierce competition in an uneven playing field from Macau as well as from illegal and offshore bookmakers across the globe. This is because Hong Kong has the highest betting duty rates in the world, ahead of other operators by 15% to 65 %.
“In addition, illegal and offshore bookmakers, who are not subject to regulatory restrictions, provide better odds, a wide range of betting products such as basketball, Formula One, golf and tennis etc, and credit lines. This makes it increasingly difficult for the Club to compete. Any increase in football betting duty will reduce the Club’s competitiveness and drive more Hong Kong people to bet with illegal and offshore bookmakers. Under these circumstances, the government will receive less, not more, tax and duty.”
The HKJC said it has recently invested HK$5 billion in a state-of-the-art IT system to combat illegal and offshore bookmakers and planned to invest another HK$7 billion over the next five years but that an increase in betting duty would limit its ability to do so.
“In addition, any football betting duty increase will affect racing,” it added.
“Given the existing high take-out rate in racing, the Club cannot pass the duty increment to its customers in order to increase its surplus. As such, the Club will not be able to invest in world class racing products via increases in prize money, racecourse customer facilities, IT technology etc. for the upholding of Hong Kong’s world class racing as an international brand.”
The HKJC is the single largest tax paying entity in Hong Kong, having returned a record HK$33.6 billion (US$4.3 billion) to the community during the 2021/2022 season.
