4th of September 2011 Author: Johnny Karp
High taxes drive the company out of the country
The latest reports from the Hong Kong Jockey Club's involve stories that due to the fact that the Government's taxation rate is restricting its possibility to participate in overseas betting pools has driven it to consider moving its operations offshore and work through a commingling, in which bets placed with foreign operators are channeled into a "home" pool where the race is physically run. In that case, the percentage of bets earnings is split between the operators, each complying with its own Government's requirements.
At the moment, the Jockey Club earns only three percent because the bets taken are channeled into small local pools. Therefore, the company opined that a more stable home pool would double the take from the small pools to between HK$6 billion and HK$8 billion per annum.
However, the Government seems to be rather reluctant to letting go some of its tax, which makes the whole thing commercially unviable. This position is quite surprising, though, as it is predicted that this practice would bring additional HK$180 million into the Government's coffers.
According to Winifried Engelbrecht-Bresges, chief executive of The Hong Kong Jockey Club, "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."
"Amazingly, the end beneficiary of commingling would be the government, which is providing the obstacles," Engelbrecht-Bresges concluded. "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."
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