NBA betting's a slam dunk in war on bookies

The Hong Kong Jockey Club could cater to NBA betting if that is what authorities want, chief executive Winfried Engelbrecht-Bresges says, but this will depend on the government's decision.

Engelbrecht-Bresges said the HKJC could bring up to 60 percent of some 150,000 punters currently betting on basketball with illegal bookmakers into legal channels if basketball betting was legalized.

In an exclusive interview with The Standard, he said the illegal betting market has grown massively, especially in the last five years, due to digitalization and the rise of cryptocurrency.

It has "grown probably around 11 to 15 percent per year as people had nothing to do during Covid, and they wanted to bet on basketball," he said. "So what did they do? They opened accounts overseas or outside Hong Kong."

Engelbrecht-Bresges said around 560,000 Hong Kong punters used illegal bookmakers last year - up 5 percent year-on-year - and among them 100,000 to 150,000 bet on basketball. If officials decided to legalize basketball gambling the club might be able to attract more than half of the punters betting on illegal platforms to bet with the club.

The total illegal market on sports betting - including horse racing, football, basketball, tennis and esports - had been about HK$350 billion just from Hongkongers in the past year.

"Horse racing and football took up 75 percent of the total turnover, basketball took up 15 percent and the remainder went to other sports," he said.

Based on the figures, the total turnover in basketball could be as high as HK$52.5 billion, or one-third of the total turnover in the club's football betting in the last financial year.

Engelbrecht-Bresges added: "If football betting demand were not channeled in 2003, what would have happened? The illegal market would be completely out of control. If you see now our legalized football market is HK$150 billion it generates HK$10 billion to HK$11 billion of tax.

"Moreover, with this we could increase our contribution to the community massively, but for the illegal market they have a tax rate of zero."

But Engelbrecht-Bresges said the club is not ready to take basketball bets yet.

"This is a massive investment we have to undertake," he explained. "It is not a flip of a switch. We have to invest probably around HK$1.5 billion to HK$2.5 billion for the whole infrastructure digital system."

It would probably take around one-and-a-half years for the legislation to get through the Legislative Council, taking into consideration the legalization of football betting took the club two-and-a-half to three years, he said.

Engelbrecht-Bresges also touched on the special football betting duty of HK$2.4 billion per year that the club has to pay in the five coming financial years starting this year, which adds up to HK$12 billion.

He said the club understands that there was a need to increase government income, but the government should not increase the tax rate, as it would kill the golden goose by making it unable to compete with the illegal market.

Other than being hit by illegal bookmakers, the HKJC turnover was also affected by the economic downturn, as Engelbrecht-Bresges said the club's top customers wagered 10 to 15 percent less while the stock market dropped 20 percent.

"I would say there is even more than a correlation, but a strong link between wagering and the stock market, so that is something we have to accept," he said.

"During Covid times we had what I call a windfall profit, while people only have horse racing. We opened up around 120,000 to 130,000 new accounts. But after Covid was gone we now have revenge spending."

Although horse racing turnover has dropped Engelbrecht-Bresges does not think it is entering a crisis.

"We had the Asian economic crisis in 1998, and then in 2006 our horse racing turnover dropped to HK$59 billion and the customer base was halved to under one million. That was a crisis. Therefore we are facing economic headwinds. We have to in a way adjust our operation a bit.

"I still believe in the future and prosperity of Hong Kong. I think people have to look not only at one year but at five to 10 years. You don't manage quarterly, you manage long-term strategies - and if you believe there is growth, which I firmly believe, then you adjust everything you do along the strategies."

Although local horse racing turnover has dropped 11 percent, the club has globalized Hong Kong racing, which is shown in 25 countries.

The turnover from overseas has grown 10 to 12 percent, and Engelbrecht-Bresges is confident in the potential of the overseas market and making Hong Kong the global hub for international wagering - similar to the financial market.

michael.shum@singtaonewscorp.com