The Hong Kong Jockey Club (HKJC) says a new tax proposed by the city’s Legislative Council could break the back of its business.
According to Inside Asian Gaming, lawmakers just passed a bill that would require the HKJC to fork over an additional HK$2.4 billion (US$306 million) per year over the next five years, with the potential for even more taxes in the future. The government is looking to plug an HK$140 billion (US$17.8 billion) budget hole caused by the Covid-19 pandemic.
“In proposing to levy the SFBD (special football betting duty), we have taken into consideration a number of factors, including the affordability of the Hong Kong Jockey Club … and the external competition faced by the local football betting business,” said Secretary for Financial Services and the Treasury Christopher Hui, as reported by Hong Kong Free Press.
Tommy Cheung Yu-yan, chairman of Hong Kong’s Liberal Party as well as an honorary voting member of the Jockey Club, suggested that other sports including basketball could be subject to similar tax increases in the future.
Officials at the HKJC issued a statement in January saying the new levy demonstrated a “lack of understanding of the competition in the wagering market and the club’s investment and business.” They said it could “create irreversible damage to Hong Kong by destroying the club’s longstanding successful business model and Hong Kong’s world status as a leading racing jurisdiction and will jeopardize the public interest.”
They said a tax increase would obligate the HKJC to pay HK$31 billion (US$4.0 billion) to the government, up from HK$25 billion (US$3.2 billion), while reducing gross revenues from HK$15 billion (US$1.91 billion) to HK$9 billion (US$1.15 billion). They also contend increased costs would also drive away consumers.
“The club is the only licensed betting operator in Hong Kong but not the only operator,” it said. “It is facing fierce competition in an uneven playing field from Macau as well as from illegal and offshore bookmakers across the globe. This is because Hong Kong has the highest betting duty rates in the world, ahead of other operators by 15 percent to 65 percent.
“In addition, illegal and offshore bookmakers, who are not subject to regulatory restrictions, provide better odds, a wide range of betting products such as basketball, Formula One, golf and tennis etc., and credit lines. This makes it increasingly difficult for the club to compete.
“Any increase in football betting duty will reduce the club’s competitiveness and drive more Hong Kong people to bet with illegal and offshore bookmakers. Under these circumstances, the government will receive less, not more, tax and duty.”
IAG reported that HKJC is the single largest taxpayer in Hong Kong, with HK$33.6 billion (US$4.3 billion) assessed during the 2021-22 season.
