The Hong Kong Jockey Club (HKJC) has long been concerned about the competition that Hong Kong racing is facing from other gambling activities in the region. The Club believes the expansion of gambling elsewhere in Asia combined with the high tax burden and commercial constraints on its operations in Hong Kong is hitting its ability to compete. But as 2011 comes to a close it is reported that the HKJC could move offshore in an attempt to fight back.

Writing back in January 2011 HKJC’s Chief Executive Winfried Engelbrecht-Bresges pointed to the surging growth of Macau’s casino industry:
“Coupled with similarly positive figures from the new casino operations in Singapore, this illustrates the huge competitive challenges our racing business in Hong Kong is facing, along with our racing counterparts in the Asia-Pacific region. [We have to take] new measures to increase the attractiveness of our races, betting products and services, so as to maintain our competitiveness against other gaming operators in the region.” 

“We simply can’t afford to get left behind. But due to tax and regulatory constraints, we cannot take such measures on our own, and we must rely on the government’s understanding and support. If Hong Kong racing were to become unsustainable in the long term, the consequences for the wider community could be unimaginable.” 

Engelbrecht-Bresges believes that Macau’s casinos are strong competition to the Jockey Club’s activities: “Hong Kong people are losing more money to the casinos in Macau than in Hong Kong,” he explained in an article in the South China Morning Post in July 2011. A study conducted by the HKJC in 2011 reported that Hong Kong citizens spent HK$ 22 billion in Macau’s casinos.
At the start of December 2011 the Racing Post reported that the HKJC could move some operations to an offshore jurisdiction (i.e. outside Hong Kong) in the coming year. The HKJC is close to finishing a study into the prospects of moving to a jurisdiction that would enable it to co-mingle pool bets with other international operators.
The HKJC is currently limited to just 15 days of simulcasts of international races per season upon which Hong Kong gamblers can bet. 
Engelbrecht-Bresges told the Racing Post: “We have impressed on the government the need for more co-mingling of bets, which I think would be in the interest not only of Hong Kong, but also international racing.”
“So we have to think seriously of going offshore to pool Hong Kong bets, with a view that at a later stage we could bring the money back onshore if the government processes our application. We have talked about it for a long period of time, but the market is moving in a direction that could jeopardise our turnover base. It’s not that we would go offshore to avoid tax, like the bookmakers in the UK.” 
The Hong Kong Jockey Club’s tax revenues accounts for around 7% of all tax revenues collected in Hong Kong. It pays a gambling tax rate of around 73% on gross profits from horse racing. 

Read more about Hong Kong and other Asian gambling markets in GBGC’s Global Gambling Report