Howard Hamilton - Horse Sense LAST WEEK we looked at the global problem that racetracks are having with respect to the protection of their intellectual property rights. The rising incidence of the distribution of live racing signals and wagering over the Internet has brought a new dimension to the racing scene.
Racetracks now have to recast their economic models to ensure the additional revenue that they need so as to encourage continued investment by the many participants in the industry. There has been increasing activity by the race tracks in non-racing actions i.e. slot machines, entertainment, merchandising and a range of other activities that, not only attract the crowds, but also provide the much needed additional revenue for horsemen.
At the recent symposium on racing put on by the University of Arizona race track industry programme there was much discussion on this very important subject. One small racetrack reported that it had successfully restructured its operations with the result that racing now only provides 11 per cent of its revenue.
One simple innovation introduced was amateur boxing in-between races. Maybe this is an idea which the promoting company could look at, not only to improve customer attraction, but also to help revive our local boxing.
DIALOGUE
There has been ongoing dialogue between the bookmakers and racing interests and I would like this week to take an impassioned look at the facts related to these discussions.
Bookmakers are really 'agents' of the promoter. They currently pay directly to the promoter a 0.5 per cent rights fee for the use of their property i.e. odds, programmes etc. This right is restricted to sales up to an hour before the first race starts.
The bookmakers have argued that this is unfair since other wagering activities e.g. lotteries and slot machines are available to patrons continuously with no restriction on their operating hours. They have therefore asked that the regulation be changed and that they be allowed to sell all races local and overseas - with no restriction to their opening hours. The promoter Caymanas Track Limited (CTL), has countered that this would be disastrous to their sales, particular, their Off Track sales, which represent about 75 per cent of their total sales. They have offered that those bookmakers who wish to open all day should do so as agents of CTL with all sums wagered automatically passing through its pool.
This suggestion of passing bets through the pool, fails to appreciate the idiosyncrasies of a large percentage of people who gamble on the horses. They feel strongly about betting into the pool because of the effect this would have on the odds paid out. This is where the bookmaker has provided a service. They take the risk and manage that risk as best they can. In fact, most of the time some of their large wagers are 'laid off' in the pool, thus reducing their risk at payout time. While the dialogue has been ongoing and the general feeling is that the regulation will be changed, it is interesting to look at some of the figures for some of those shops which have 'tested the water' by opening all day selling local races.
In every instance that I have examined there has been a dramatic increase in sales. There is one particular shop in a very depressed area where the activities of the illegal 'underground bookmaker' were prominent. He has ceased his operations in this area since the shop started opening to sell local races all day. This shop had average monthly sales from January to August of J$190,000.
Its sales for the period September to December when it opened all day for local racing reached the alarming average monthly level of J$1.1 million, peaking in December at J$1.6 million. The illegal bookmaker had moved on.
It is mind-boggling to think of the extent of sums wagered through these channels. This example, remember, is in a depressed area. In fact, when I look at the total sales of the four-month period of September to December from all those shops that had remained open, sales were almost double what they were for the preceding eight-month period of January to August.
SALE
What is most interesting is that the sales of CTL showed a phenomenal increase in the same period, September to December. They reported sales of some J$660 million compared with the similar period last year when sales were only J$530 million. This period represented about 40 per cent of their total annual sales compared with last year when the similar period represented only 21 per cent of their total sales.
What these figures show is that a substantial amount of money is being siphoned off by the illegal operators and that one way of bringing some of that money into the system is by allowing those bookmakers who will get special approval from the Betting, Gaming and Lotteries Commission to offer an extension of their services to punters who insist on betting outside the pari-mutuel.
This will certainly reduce the illegal activity and improve the contribution to the revenue of CTL. The figures show quite dramatically that there was no reduction in sales by CTL as has been their contention. On the contrary, their sales have increased could this be from increased 'laying off' of bets by the bookmakers?
Next week we will continue this analysis, which I hope will place this dialogue in true perspective. We will also look at the discussion on divestment and how the taxation can be restructured to provide greater incentives for investment.
Howard L. Hamilton, C.D., J.P, is a former chairman of Caymanas Track Limited and is the current president of Thoroughbred Owners & Breeders Association. He can be contacted at howham@cwjamaica.com.
