Hong Kong Jockey Club is tired of draconian Hongkongese gambling laws and is now contemplating setting up an offshore operation. The extremely restrictive taxation rate made the famous Jockey Club think about the last resort – taking its operations offshore.
The Club will reportedly rely upon a practice, where bets are placed with foreign-based operator and then are taken to domestic pool, where the horseraces are actually run. In this case both operators will split the profit, and both will comply with government’s regulations.
Currently there are several operations like this, concerning Hong Kong Jockey Club, where the Club receives a three percent cut. The management told Hong Kong gambling news that a stable home pool will substantially increase their profits up to HK$8 billion per year. Yet the Government is not willing to compromise on taxes, leaving the Club no alternative, than to set up its own foreign operation.
CEO of the Jockey Club, Winifried Engelbrecht-Bresges, commented: “We don’t have any plan to go offshore at this stage, but it is something we would have to consider if we do not get action soon. We have huge illegal exchanges operating just outside our door, and with other countries banding together in a commingling hub to take legal bets between different nations, the external forces on all sides are building up and we are going to be shut out. We don’t live in a vacuum – ultimately, these operations can endanger our business right here.”
The Government’s position on taxes makes the management wonder as according to their calculations, the proposed switch would provide the state coffers with additional HK$180 million a year.
Engelbrecht-Bresges had the following to say: “Amazingly, the end beneficiary of commingling would be the government, which is providing the obstacles. In our increased simulcasting of overseas races, for example, the government, and therefore the community, has benefited by more than HK$150 million, the Jockey Club by around HK$10 million after we have paid all the expenses involved.”