Hong Kong Jockey Club chief executive, Winfried Engelbrecht-Bresges, is predicting a commingled tote turnover of more than $HK 1 billion within two years on Royal Ascot and its new relationship with the prestigious week is the first step down an expansion path to becoming the central betting hub for the world’s major racing events.
The Jockey Club operated simulcast pools on four of the five days of Royal Ascot last week and generated just over $HK 619 million ($US 78.9 million) in turnover from within its Hong Kong customers, however, the announcement on Saturday that it would be the host for all Royal Ascot pools from 2019 is of even greater significance.
The Jockey Club’s total racing turnover this season is heading for somewhere in the region of $124 billion, a year-on-year rise of more than 5 per cent, and the Royal Ascot move
is linked to the huge successes of simulcasts (worth $HK 3.8 billion this season) and, even more so, the explosion of commingling.
“Obviously, with our success in commingling - which was 6.5 per cent of our turnover last season and is now 15 to 20 per cent - more and more people see the benefits of commingling and especially the commingling with Hong Kong, with our big pool size and our advanced technology,” said Jockey Club chief executive Winfried Engelbrecht-Bresges.
Even the club’s relationship with Royal Ascot has elevated since talks commenced about the host pooling project for 2019.
“Initially, we had discussions with Royal Ascot that it would make sense, due to the significant liquidity, that all the bets outside of Great Britain would be commingled in our pool,” Engelbrecht-Bresges said. “And then we looked at even the extra step, that bets taken in England in betting shops would also come into our pool so that we would be the world pool for the meeting. Around 70 per cent of turnover generated outside of the home country in any international commingling event is in Hong Kong, so it makes sense to choose us.”
Like all the staging jurisdictions on which simulcasts operate, Royal Ascot already receives a fee from Hong Kong for the simulcasting, which is not declared publicly but would likely be in the region of $US 2 million for last week’s operations, and that will increase significantly under the new partnership with Hong Kong.
Part of that would be the simple maths of adding another day to cover all five cards, part would be the regular growth we have seen year to year, and part would be the additional expected growth in the turnover attracted by the greater liquidity.
“So, with 70 per cent already from Hong Kong, that guarantees another 30 per cent from other countries and I would expect that, at least, an additional 30-40 per cent of total turnover growth via this arrangement and even more would not surprise me,” Engelbrecht-Bresges said. “That would be another $HK 10-15 million on top of an average $HK 25 million per. The staging operator, in this case Royal Ascot, would benefit through a much bigger fee income and, secondly, it would benefit us as we can establish Hong Kong as the world’s global commingling pool. That can lead us to other expansion opportunities and I can see us becoming the world hub for commingling in connection with the leading races around the world. Of course, there is a positive income aspect for us as well, but it elevates our brand - the brand of Hong Kong and of the Jockey Club – even further to establish our position as a world leader. If you think about this 30-40 per cent rule, in two years we should get to $HK 1 billion on Royal Ascot alone.”
And the Jockey Club isn’t letting the Royal Ascot turf grow under its feet, with discussions already under way to expand its portfolio of great races.
“We have had already discussions with other wagering operators around the world who have expressed interest, Australia for example, that they would commingle for these international racing events in our pool and we hope to extend the concept to other major events,” Engelbrecht-Bresges said. “For example, Dubai would be another world class meeting that we could look at. There are some pools operating in other countries, including South Africa, but, again, it would make more sense for all these smaller, scattered pools to be amalgamated into Hong Kong – the pool should be where you find the greatest liquidity. This is an ongoing strategy for us now as we seek to further establish ourselves as the world hub.”
Engelbrecht-Bresges says his ultimate aim, for Hong Kong to operate as the world’s horseracing betting centre, isn’t to be a rival for the Isle Of Man hub operated by South Africa’s Phumelela and Australia’s Tabcorp, but an enhancement.
"The IOM hub is a technical service, a connection enabler between jurisdictions, rather than a pool service and this would enhance its effectiveness because the turnover goes into one pool instead of multiple pools. We have had discussions already and I see our concept as complementary, not competition,” he said.
Initially, the pool hosting for Royal Ascot will offer “standard bets” but it is unlikely to remain that way.
“Offerings will be standard pools but this will give further incentive to extend to exotic pools,” Engelbrecht-Bresges said. “If you look at totalizator operators who are in competitive environments it would make sense to shift some of the offerings and some of the focus to exotic pools as well. Hopefully, this will become a driver for developing of exotic two-pool protocols which I think then makes much more sense to do this when you have segregated liquidity.”
Engelbrecht-Bresges was the racing administrator who first pushed for commingling around the world in discussions at the 2007 Asian Racing Conference in Dubai.
“It has taken a little longer than I expected but I mentioned this would be a major driver of turnover and, if you look at the economic impact and the competitiveness that pool operations get through this tool with a globalized approach, I’m pretty satisfied that we are moving in the right direction,” he said.
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