Following its Annual General Meeting (AGM) on September 5, the Hong Kong Jockey Club (HKJC) announced its results for the 2022/23 financial year ended June 30 2023.
This was a challenging year for the Club, with the first seven months dominated by the pandemic and the Club impacted by the post-pandemic economic slowdown, with macro-economic trends indicating that the business environment will continue to be very difficult.
While local turnover on Hong Kong racing was down 1.3 per cent this was offset by the Club’s successful strategy to widen its customer and revenue base by exporting its world-class racing overseas via commingling. Last season, commingling on Hong Kong racing was up three per cent to HK$25.4bn (approx. £2.6bn), comprising 19.6 per cent of total turnover on Hong Kong racing for the season. As a result, the Club’s income on wagering on Hong Kong racing for the season was up 1.5 per cent.
Leveraging the success of commingling, the Club’s world-class technology and the liquidity of its pools, the Club has launched the World Pool based on the simulcast of top overseas races. As a result, Hong Kong has become the global hub for wagering on the world’s best races. With an additional three World Pool events last season, total turnover on simulcasting and the World Pool was up 12.5 per cent, comprising 8.4 per cent of total racing turnover.
As a result, total racing turnover for the 2022/23 racing season was up 0.5 per cent to HK$141.1bn (approx. £14.3bn). Income on racing wagering for the season was up 1.8 per cent to HK$6.4bn (approx. £650m).
Football betting saw a strong performance, with turnover up 9.1 per cent to HK$156.9bn (approx. £15.9bn) in 2022/23. This was partly due to the World Cup, whose unusual timing fell into the middle of the financial year, but more to the Club’s new customer information and wagering system, which facilitated the launch of new In Play bet types to compete with the illegal market. However, while turnover was up, the Club’s income was flat at HK$9.8bn (approx. £996m) due to increased taxation in the form of Special Football Betting Duty of HK$12bn (approx. £1.2bn), which is payable over five years, with HK$0.6bn (approx. £61m) being paid in the 2022/23 financial year.
Meanwhile the Mark Six lottery, which returned to three draws per week, was up 29.2 per cent to HK$7.5bn (approx. £762m) in 2022/23.
As a result, and despite the many challenges, the Club achieved a record turnover of HK$304.8bn (approx. £31bn), which in turn enabled it to contribute a record HK$35.9bn (approx. £3.6bn) to the community. This comprised a record HK$28.6bn (approx. £2.9bn) in betting duty, profits tax and Lotteries Fund contributions and HK$7.3bn (approx. £742m) in approved charity donations – the second highest in the Club’s history.
Reflecting on the Club’s achievement, Club Chairman Michael Lee said: “I would like to express my sincere thanks to the racing community, to our members, to the HKSAR Government, to Mainland authorities, to the Club’s management and employees, and most especially to our customers. Through your support, Hong Kong racing is an example to the world of the strength and resilience of our city.”
Club CEO Winfried Engelbrecht-Bresges said: “Through resilience and agility, the Club performed extremely well during the pandemic. However, there is no question that the post-pandemic environment is proving equally challenging, with the economy likely to be highly volatile for some time to come. In these circumstances, the Club’s exceptional performance last year was only possible because of its strategy to develop world-class racing and to export it overseas via commingling as well as through the creation of the World Pool. Together with the strong performance of football betting, this enabled the Club to contribute a record HK$35.9bn to the community.”
This year the HKSAR Government introduced Special Football Betting Duty, which, requires the Club to pay HK$12bn (approx. £1.2bn) over five years on top of the substantial betting duty it is already paying. Nonetheless, the Club has undertaken to maintain its regular approved charity donations at not less than HK$4.5bn (approx. £457m) a year over the five-year duration of Special Football Betting Duty.
Given the Government’s fiscal needs, the Club understands the rationale for Special Football Betting Duty. However, the Club remains very concerned about any permanent increase in taxation, especially in the rate of betting duty, which is already far higher than in other jurisdictions. The Club pays 50 per cent on its gross margin on football, whereas Macau pays just 25 per cent. Racing betting duty, at up to 75 per cent, is almost double that of Japan, which pays 40%. Duty rates in the UK, the US and Australia are even lower.
In the digital age, the Club faces significant competition from illegal bookmakers who pay no tax, and from overseas sports betting bookmakers who operate under very low tax regimes. Illegal and overseas betting operators are already earning profits in excess of HK$15 billion (approx. £1.5bn) a year from Hong Kong customers. If betting duty rates increase the Club would face a significant decrease in income and would be less price competitive. As a result, the Club would be unable to invest for its future. Above all, it could not sustain its high level of support for Hong Kong, which over the last ten years has seen its betting duty contributions rise from HK$17.2bn (approx. £1.7bn) to HK$27.1bn (approx. £2.8bn) and its charity donations more than triple, from HK$1.95bn (approx. £198m) to HK$7.3bn (approx. £741m).
As a result of the Club’s significant increase in donations over the last ten years its Charities Trust has become one of the world’s top ten charity donors.
To maximise its impact, the Charities Trust regularly reviews its strategy, and it did so again this year, taking account of societal needs. The new triennial (2022-25) strategy has five pillars: Positive Ageing & Elderly Care; Children & Youth Development; Healthy Community; Talent & Sector Development; and Sports & Culture. The Trust will also develop sustainability as a new strategic theme given the significant impact of this global challenge.
The Charities Trust supports a wide range of needs in collaboration with the Government, NGOs and other grantee partners. Furthermore, the additional resources generated by the Club’s business results have enabled it to focus on needle-moving, high-impact initiatives. Through Trust-initiated Projects (TIPs) it pilots new service models and brings innovation to the service sector. Many TIPs are already having an impact. For example, CoolThink@JC, which promotes the digital creativity of upper primary school students has been taken up by the Education Bureau. This year the Trust launched its latest TIP – JC Volunteer Together – which promotes volunteering in the community. It also approved nine new TIPs, including a new initiative to develop primary care community pharmacy services.
One of the Trust’s major strategic projects, initiated to mark the 10th anniversary of the HKSAR, was the conservation and revitalisation of the Central Police Station compound as Tai Kwun – Centre for Heritage and Arts. This year Tai Kwun celebrated its fifth anniversary. Since opening it has become a unique public space in the heart of Hong Kong and a symbol of global best practice in heritage conservation. To date over 13 million local and international visitors have enjoyed its historic buildings and year-round programme of exhibitions, festivals and performances.
Looking forward, the Charities Trust will convene the third Philanthropy for Better Cities Forum at West Kowloon Cultural District on 11-12 September. Carrying the theme “Philanthropy for Fairer Societies”, the forum will bring together 70 distinguished speakers and 1,600 delegates from around the world and establish Hong Kong as a global thought leader in philanthropy.
The Club has successfully established Conghua Racecourse in Guangzhou as a globally recognised centre of excellence, comprising the Mainland’s first internationally recognised Equine Disease Free Zone and state-of-the-art facilities, including stables, training tracks, an international standard veterinary clinic and rehabilitation centre, and vocational training for equine industry development. Building on this success, the Club is contributing to national development through its strong support for the equine industry and horse sports in the Mainland.
Under its Racing Vision 2030, the Club’s world-class racing will soon encompass not only its two racecourses in Hong Kong but Conghua Racecourse in Guangzhou. This vision is anchored in two national policies. Firstly, the continuous development of the Guangdong-Hong Kong-Macao Greater Bay Area and secondly the National Equine Industry Development Plan (2020-2025).
In 2021, the Club signed a Framework Cooperation Agreement for the joint development of the Guangzhou-Hong Kong Racing Economic Cluster. In line with this the Club will host regular race meetings at Conghua starting from 2026. Work is in progress to expand stabling facilities and to construct an iconic grandstand.
The Club is keen to support equine sports in other parts of the Mainland. For many years it has been working with the General Administration of Sport, the Ministry of Agriculture and Rural Affairs, the Chinese Equestrian Association (CEA) and the Chinese Horse Industry Association (CHIA). This year it signed agreements to take forward its cooperation with the CEA and the CHIA.
Following its extensive support for the equestrian events of the 2008 Beijing Olympics and the 2010 Guangzhou Asian Games, the Club is also providing its world-class expertise and technical support for the equestrian events of the 19th Asian Games in Hangzhou. Hong Kong, China will field its own equestrian team, all of whom have benefited from the Club-supported Hong Kong Equestrian Performance Plan. The Club will work with the Hangzhou government to carry forward the equestrian legacy of the games.