HKJC tips hat at Royal Ascot to boost revenue

    Royal Ascot file photo

    The Hong Kong Jockey Club is shaking up simulcast betting, with the planned introduction of a so-called “world pool” on the U.K.’s five-day Royal Ascot meeting in 2019, bringing together a powerful mix of racing cultures.

    Hong Kong’s horse racing giant has bet on Royal Ascot before, but next year marks a monumental change in the way it will be done, with the commingled “world pool” launched and betting on all five days available for the first time.

    Previously when the HKJC bet on Royal Ascot, it was only the club’s customers betting into a Hong Kong-based pari-mutuel pool on a simulcast arrangement.

    What makes the “world pool” different is that while the HKJC will still “host” the tote, customers in the United Kingdom will be able to bet into the massive pools as well under commingling arrangements.

    In 2017, the HKJC held just over HK$619 million ($78.9 million) in bets over three days on Royal Ascot, but that amount is expected to jump significantly once the commingled pool and two extra days are introduced.

    While the totalisator is king in the Asian monopoly markets like Hong Kong, Japan, Korea and Singapore – pari-mutuel betting plays poor cousin to bookmakers in British racing.

    Now liquidity will be lifted to new heights by the HKJC new venture, which will initially see on course bets taken through AscotTote and through Totepool’s off-track betting centers.

    Massive liquidity and new, albeit unfamilar, bet options mean betting into “the tote” will look much more appealing for both large and small customers.

    “We have got to the point where bookmakers have basically strangled the market,” explained industry expert Scott Ferguson. “The tote hasn’t been competitive for years. Anything that can be done to bring in legitimate offshore money, particularly when it is a massive operation like the Hong Kong Jockey Club, is a great thing.”

    “As it stands now race-to-race betting just doesn’t exist on the existing tote. The low liquidity and high take out rates have made the tote uncompetitive against the concessions bookmakers can offer and the low takeouts on Betfair,” he said.

    Just how much liquidity there will be is unknown, but HKJC CEO Winfried Engelbrecht-Bresges claimed in one report that a 30 percent increase on the current simulcast holds were feasible.

    Given the HKJC will be betting on all five days of the meeting, that could mean a HK$1 billion handle on Royal Ascot alone.

    Commingling into the Jockey Club’s pools on races at Sha Tin and Happy Valley began in 2016-17 and has been a massive boon for the wagering giant.

    In 2016-17 commingled bets from overseas represented 6.5 percent of turnover and has jumped to around 15 percent in the season just concluded, with races now broadcast to 11 different countries and bet on through 38 different wagering operators.

    The fee paid to race clubs by the HKJC to bet on overseas simulcast isn’t made public, but it is estimated that Royal Ascot received around US$2million in 2017, a number that would increase if the expected leap in turnover comes to fruition.

    Which brings us to the aforementioned clash of racing cultures: with the HKJC pouring billions into the Royal Ascot coffers, will it want its pound of flesh and ask for changes to scheduling, field sizes or even rules and regulations?

    Royal Ascot is an event steeped in tradition, and although races don’t always run on time, Her Royal Highness Queen Elizabeth II always comes out at 2pm sharp each day in a horse drawn carriage.

    In other sports like football, basketball and tennis the power of broadcast rights dictate starting times and even the way sports are played.

    Other jurisdictions have made moves to re-shuffle race times, boost fields and change pre-race protocols to pander to the HKJC’s customers.

    “Good luck with that,” says Ferguson. “There’s no way the Queen’s carriage doesn’t go at 2pm! And as for any expectation that the races are run on time, the first race is always six minutes late.Then there are things like coming into the parade ring late and not parading in order in the paddock before a race.”

    Geoff Banks, a long-time leading English betting expert expects Royal Ascot to be more amenable to bending with the winds of change, but the HKJC impact also impact means more upside for customers.

    “The influence that the HKJC and its customers demand will be superior to the influence of the broadcasters,” he said. “It is new competition really as the tote has been in steady decline so some sort of arrangement was inevitable.”

    “And it was inevitable that it was a track with the power of Royal Ascot that was first to take it up as it’s probably the most powerful racetrack in the world. Where Ascot leads, others will follow.”

    The HKJC initiative also creates the potential for more Hong Kong-trained horses to make the trip to the world’s most prestigious race meeting.

    When Hong Kong-trained horses have raced at Royal Ascot previously they have started favourite in Jockey Club markets simply by virtue of “blind support” from Hong Kongers and creating more attractive odds about other horses.

    “That’s one of the most interesting questions: if the Hong Kong horses come, how will that distort the tote?” Banks said.”How will it affect the customer payouts when the far more powerful Hong Kong gambling sect gets involved in the pool. For most racetracks the tote product has been in huge decline but now there will be significant liquidity. The more global product becomes, the more interesting it becomes.”

    Banks doesn’t see the global pool as a threat to bookmakers but believes the on course operators should now be rewarded with better deals.

    “I hope the benefits are shared with the on course market,” he said. “It has been suffering with increased costs and diminishing turnover. If you are going to increase the competition then we want to see a reduction in our fees to reflect the situation. On course bookmakers are an incredible aphrodisiac for punters. If you take away the on course bookmakers from Ascot it would suffer for it, they add to the atmosphere and overall race day experience.”

     

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