Underground bookmakers are facing a cash crisis under the twin pressures of police and Hong Kong Jockey Club moves to crack down on the illicit business. Underworld bookmaking sources have revealed that since the start of the racing season, at least half of an estimated 1,000 active underground bookmakers have gone bust, despite desperate attempts to salvage their business. More than 160 bookmakers were arrested last year in police raids on establishments operated by gambling syndicates. Horse racing and soccer betting slips worth almost $70 million were seized. The crisis culminated in an emergency meeting of illegal bookmakers and their 'bankers' two weeks ago, at which it was decided to further tighten discounts they give to attract punters in a bid to shore up profits. Discount rates for punters have been slashed from 28 to 9.1 per cent - the third such reduction in six months. To lure punters from betting with the Hong Kong Jockey Club, bookmakers on both sides of the border had been wooing clients by offering gamblers up to 25 per cent discounts on bets. In order to cushion possible huge losses, bookmakers channel bets to bankers who then place parallel bets - mostly on strong favourites - with the Jockey Club as insurance. The losses come as the government prepares to submit its controversial soccer gambling bill to the Legislative Council. Legalised soccer betting will also take chunks out of the illegal bookies' coffers. Bookmakers blame their losses on the high success rate of bets on the win, place, quinella and even tierce combinations involving certain favourites, arising from a row between new Jockey Club chairman Ronald Arculli and his Macau counterpart, business tycoon Stanley Ho Hung-sun, over offshore betting. There had been no progress since a meeting between Mr Arculli and Mr Ho last September. Though both sides have stated there is no schedule or deadline set for reaching an agreement, there has not been a second meeting. However, spokesmen for the clubs said communications were continuing. At the meeting in September - the first of its kind between the two racing bodies - discussions were held in a bid to pave the way for a possible deal that could see the clubs appointing each other as betting agents in their respective jurisdictions. The meeting was also seen as the first step towards ending a simmering row between the two clubs. At the height of a four-month dispute before the meeting, Mr Ho threatened to accept bets on Hong Kong races and, like the illegal bookmakers, he would have to give discount to punters to attract them. He was quoted as saying he would offer discounts of up to 20 per cent. One Shenzhen-based bookie, the bulk of whose clients are from Hong Kong, claimed he was a victim. 'I have lost more than $1.5 million in the past few months, forcing me to go bankrupt, mainly because of the high success rate for bets on hot favourites,' he said. 'Since the beginning of this race season, more than 500 bookmakers have been forced out of business.' He said they had also been dealt a blow by Hong Kong police stepping up efforts to root out illegal bookmaking after the tough offshore betting ordinance came into effect. Up until the race meeting on February 16, there had been 398 races, with favourites winning in 111 of them, or 27.8 per cent. The favourites averaged a return each of $32.54 on a $10 bet. For the first 400 races of last season, 108 favourites won - or 27 per cent - with dividends averaging $33.39. In the 2000-01 season, 25.3 per cent of favourites won; in 1999-2000, the figure was 25.8 per cent and in 1998-99 22.8 per cent. A police spokesman said officers looking for illegal bookmakers conducted 150 gambling raids last year, arrested 163 bookmakers of racing and soccer and seized betting slips worth $68.7 million. He said the mode of authorisation of soccer betting recommended by the government was similar to the mode of horse-racing betting. The diversion of illegal soccer betting activities into the authorised channel would enable the police to focus resources more on major bookmaking syndicates and other more serious crimes.