Howard Hamilton

There is only one thing certain in racing right now the world over - it is having to compete more and more with other leisure activities.

The consumer is king and racing is finding it difficult to attract a new, younger crowd when they have so much else on which to spend their leisure dollar. The expansion of racing through simulcasting and co-mingling of pools is the subject of much discussion.

The efforts of Fortune Gaming and others have emphasised the need for a clear statement on policy with respect to the future of the racing industry. The industry has been in limbo for much too long.

'While Nero fiddles Rome burns.' The promoters of racing, Caymanas Track Ltd. have been unable to operate efficiently because of this protracted divestment discussion. The industry is, therefore, suffering because of the gross inefficiency of those responsible for taking decisions.

Change necessary

To sit for over three years without being able to do necessary maintenance and expansion is a situation which would never be tolerated elsewhere. We are indeed a long-suffering people. There comes a time, however, when change is necessary - as the politicians often say: "the poor can't take no more".

We should all realise that Thoroughbred racing is an expensive undertaking. Putting on the racing show requires a tremendous amount of capital for facilities and purses. The industry has only been able to survive because of the opportunities now offered for expansion through a much wider market.

It is important that we reflect on how racing has been traditionally funded. A portion of the wagers which go into the pari mutual pool is taken out to keep the industry solvent. In most jurisdictions this averages out at about 20 per cent (in Jamaica, it is about 47 per cent.

In the beginning, before the development of off-track betting, the formula was very simple because all legal wagers were placed at the track.

Today the situation is quite different with more than 90 per cent of wagers being away from the race track. The technology for simulcasting racing has been an important development in the industry. The experience of other racing jurisdictions must be recognised in negotiating simul-casting contracts.

North American racetracks are finding that the national pricing model for simulcast racing provides the majority of revenue to the facility where the wager is made instead of the host track which produces the product. In fact they liken this situation to the car dealer making more money than the manufacturer.

The current pricing model allows the host track only three per cent, on average, with off-track bet takers averaging some 17 per cent. The model that has been proposed by some industry leaders is a shift to 15 per cent to the host track and only five per cent to off-track bet takers.

What has been argued is that there are too many intermediaries. We must ensure that the model that we negotiate guarantees the maximum return to horsemen.

The objective of simulcasting is to expand distribution. We must therefore make sure that our live racing does not suffer and that we do not become just another off-track outlet.

Other countries

The experience of other countries is worth looking at.

The United Kingdom continues to increase attendances at the track which is fantastic, but has a weak tote and an eternal battle between collecting and increasing the bookmakers levy and an alternative commercial model to fund racing.

The United States, due to is size and geography, has embarked on the simulcast route, sending New York's racing to California and vice-versa. Some tracks race to empty stands and others with small seasons attract big crowds.

Many observers claim the three to five per cent racing charges to have its product simulcast many miles away is too low. The cash though is extra to that what it previously received. Betting only to the local market and those actually at the track and the pools are stronger as a result.

The U.S. continues to diversify into slots and Instant racing terminals to help fund the purses and increase the taxes paid to government.

Australia has three totes, a monopoly in the high street and bookmakers and totes both available on course.

France is a tote monopoly, so is Japan, undoubtedly producing the highest tote turnovers on the planet. South Korea plays virtual computerised racing in a big way.

South Africa has both fixed odds and tote, but nonetheless has a united front with racing owning the tracks and the tote and forges ahead strongly with its international expansion programme moving its race times and programmes to fit in with an increasing global audience.

There really is no right or wrong way, with each countries model having its merits.

Next week we will continue the discussion on the expansion of the racing industry.