New York Times Article On Hong Kong Racing

A hat tip to regular reader Swale for alerting me to this great piece in yesterday's New York Times.

In lieu of tonight's (early tomorrow's) races from Hong Kong, The New York Times published an excellent piece looking at the Hong Kong Jockey Club and the success of their racing operation over the past decade. [Link: The Elite Jockey Club's Winning Wager on the Future] If you've ever turned on TVG late at night on a weekend to watch coverage of racing from Japan and Hong Kong, you've no doubt noticed the strikingly large and boisterous crowds that complement the huge fields of horses. Racing in Asia is incredibly successful and follows a model quite different than what we currently see here in the U.S.

Below are a few select nuggets from the article; I won't touch on all the points because I highly recommend clicking through and reading the entire piece.

More than 14,000 people show up at every night meeting at Happy Valley Racecourse ... and attendance has risen steadily over the past five years.

...

More than 86 billion Hong Kong dollars, or $11 billion, was wagered during the 2011-12 racing season.

Let that last number sink in for a moment since Hong Kong handle essentially equals the amount of money wagered on horses in the entire United States during a year.* Hong Kong, now an administrative region of China after a long period of British control, has an approximate population of 7 million. Obviously, not all $11 billion is generated by those 7 million within Hong Kong's borders (at least that's my guess). However, because the HKJC has produced an incredibly desirable wagering product, the numbers bet into their pools are huge considering the size of the jurisdiction.

*Through the first 11 months of 2012, races in the U.S. have generated approximately $10.1 billion in handle.

Beyond the sheer size of the waging in Hong Kong is the technology that the HKJC has implemented within the sport. From the article:

• The HKJC has nine (!) HD cameras following every race from multiple angles, greatly strengthening the inquiry and objection process, as well as the visual presentation.
• "Every horse is tested for drugs before every race, and the top three finishers and the favorite are all tested again afterward."
• The HKJC publishes incredible details regarding every horse running in every race, all of which are available to the public on the HKJC website. No guessing about "unpublished works"; no guessing about veterinary history ("did Uncle Mo have surgery during the winter of 2010/2011?"). The public doesn't have to guess or wonder about basic information thereby strengthening betting confidence.
• A huge investment in mobile applications.

The ultimate question to those of us here in the U.S. should be "how in the world has the HKJC been able to achieve this kind of success?" This is just my opinion but I think there are a several factors that help racing in Hong Kong: first, the sport isn't fractured as it is in the US.

The U.S. has 50 different states all with different rules on gambling and horse racing. Depending on where you live it might be completely illegal to bet on a horse race or you might be allowed to wager from the comfort of your own home on your computer. There are massive disparities in the legality of wagering all across the country.

According to the article, the HKJC controls all the legal gambling in Hong Kong, which includes soccer and a lottery, which allows the industry to set uniform rules and regulations. Personally, I think that's an important part of their success - an ability to control the gambling product - and something that will be next to impossible in the U.S. But even if you control the product with a tight fist, you still have to get people to actually part with their money.

The U.S. has inherent geographic issues that will always present problems with uniformity and tighter overall control. The country is so large, so diverse and so spread out that it's difficult, if not impossible, to control the sport in the manner that the HKJC controls racing in their jurisdiction. However, that shouldn't prevent the industry from attempting to move in a more unified direction. The solutions and path may be different but the ultimate goal is the same.

Second, the HKJC has clearly put an emphasis on large investments in technology. While many tracks in the U.S. are moving in the right direction (namely places like Keeneland), the gain has been excruciatingly slow; heck, most tracks don't even have one HD camera, let alone nine. TVG and HRTV broadcast in SD with only hints of possible HD broadcasts in the future.

The HKJC obviously has some advantages in that it's governing a much smaller jurisdiction, but the point remains: if an industry can't keep up with cutting edge technology (or simply current standards) it risks being left behind.

I've beat the HD drum for quite some time now but it's something that bears repeating until horse racing catches up to every other sport in the United States. How many times have you been at a track and watched a race on one of the TV monitors and struggled to make out anything due to the 1980s level picture quality? This happens all over - not just at small tracks. Most of the industry is employing technology that is over 10 years behind in order to present its product to the masses. That just screams failure.

Third, freely available information regarding basic health and well-being of the animals themselves. The fact that a horse can run in the US off of "unpublished" works is absurd. The fact that a horse can have major surgery during time off and the bettors are kept in the dark is absurd. While I'll constantly believe horse racing gets a bad rap from many in terms of the integrity of the sport, there are some basic flaws that remain uncorrected year after year.

Take the questions out of the equation and let the sport stand on its own.

The Uncle Mo situation in the months leading up to the Derby was one of the more distressing in recent years. If you don't remember, people were posting pictures of Uncle Mo's legs/ankles on the internet and making claims that he had ankle surgery following his win in the Breeders' Cup Juvenile. I don't know whether that was the case or not, but without available vet reports players were left guessing. Someone can make up a story either way but unless we have information to confirm or deny allegations, we are all left in doubt.

Of course, as great as many of these improvements would be for the industry the discussion typically turns to one involving money in order to actually implement change. Investing in technology isn't free and many tracks in the U.S. can barely make ends meet on their currently limited funds. But there's also the belief that investment in the future is a necessity in order to survive; the industry can't keep kicking the can down the road hoping things will magically get better - they won't.

There are some other nice quotes in the piece from the head of the HKJC discussing their strategy to stay ahead of the competition and to provide a product that their customers demand. Their strategy is clear: don't be left in a situation where the industry is so far behind it has no hope of catching up.

The success of racing in a jurisdiction the size of Hong Kong should really cause those of us in the U.S. to take notice. Our racing industry dominates Hong Kong in terms of the number of horses, races, tracks - you name it - but is practically dead-even in terms of wagering dollars. Hell, think if New York racing could generate $11 billion in handle all on it's own? And, honestly, if Hong Kong can generate that kind of handle, there's no reason that the meets in New York, Kentucky and Southern California shouldn't double or triple those dollars. But people have to want to bet on the product. In Hong Kong, they do. In the U.S., they don't.

We can blame handle failures on poker or slot machines all we want, but competition exists in other parts of the world (the article notes strong competition from Macau). We live in a global economy and competition for gambling dollars isn't going away... ever. What Hong Kong has done is attempted to stay ahead of the competition.

The Times had another piece on shipping horse that is also an excellent read. [Link: Shipping Horses is Risky, but Hong Kong Races Prove Enticing]