Discounts have to be more accessible
The Hong Kong Jockey Club may lead the world in the revitalisation of thoroughbred racing through one simple change - the 10 per cent rebate on losing bets to bigger customers.
After four meetings, the evidence is getting stronger by the day that the rebate is stimulating wagering growth. And yet, because the rebate threshold is so high - operating only on losing tickets of HK$10,000 or more - the great majority of punters haven't had the benefit.
Turnover at Sunday's meeting was up 12.5 per cent on raw figures against last year's fixture and although that may have been slightly exaggerated because the comparative meeting was a Saturday, it represents an estimated 8-9 per cent increase in 'real' terms.
The previous Wednesday night meeting at Happy Valley, however, was comparing apples against apples.
Turnover on the night was up just on HK$40 million to HK$625.5 million (up 6.8 per cent), while the attendance was up by 2,000, or 11.8 per cent from the previous year's meeting.
Most significantly, the total win betting across eight races was up from HK$110 million to HK$129 million (17 per cent).
The place pool increased from HK$82 million to HK$92 million (12 per cent), the quinella from HK$148 million to HK$161 million (8 per cent) and the quinella place from HK$136 million to HK$145 million (6.5 per cent), while turnover on the final race was up 13 per cent year on year, from HK$91 million to HK$103 million.
It has been amazing to listen, over the past three years as the Jockey Club has worked to win the minds of racing and non-racing folk alike on the need for reform, and hear so many supposedly knowledgeable people say wagering reform was not necessary and would make no difference.
There have even been some within the club who attacked the quality of the racing product itself, despite its international acceptance as world-best practice.
Once again we have seen evidence of the great paradox that common sense is anything but common.
Horse racing has been losing market share over the past decade since peaking at the time of the 1997 handover. Yet, the anti-gambling lobby in Hong Kong was still almost able to derail reform and getting it passed by the Legislative Council was never a sure thing.
Fortunately, the diplomatic and political skills of former chairman Ronald Arculli made the difference.
The reality, in nearly all countries where there is horse racing, is that betting on the sport is outdated, particularly win and place betting. These bet types, at high take-out rates, are now inferior wagering products compared to sports betting and casinos.
Racing is the business and its product is gambling. The price of the product is the take-out rate and it's extremely price sensitive - a percentage point either way makes a huge difference to players. Yet, for most part, horse racing has had almost no control over pricing the product - governments do, and what most politicians know about the finer points of wagering would make a very short documentary indeed.
So how can Hong Kong racing take the next step? By making the discounts more accessible.
Instead of a discount on losing bets, it should be a discount on all turnover, and the players could then get the benefit at the tote window by receiving the discount up front (a HK$10,000 bet would cost HK$9,000).
The discount could be graduated according to turnover and, for account customers, it could be turnover linked so rebates kick in on total turnover rather than individual bets.
The bottom line, in the story so far, is that the truth of the market has been established: betting on horse racing is price-sensitive and the industry needs the capacity to be competitive in the marketplace.
