Inside Asian Gaming

INSIDE ASIAN GAMING | September 2010 26 Asian Gaming 50 – 2010 18 (-) Tom Hall Vice Chairman AsianLogic services cover the development, operation, management and marketing of online casinos (including live video streaming of casino gaming via secure studios in the Philippines). It also facilitates online poker, multiplayer P2P (peer-to-peer) games and Asian games, and online and land-based sports betting. In February 2008, ALOG announced it had acquired the land-based franchise for the Asian Poker Tour from a Singapore company. The APT main events in Macau, Manila and beyond attract top professionals as well as amateurs qualifying via online games provided by the APT’s satellite partners. 17 (14) Winfried Engelbrecht-Bresges CEO Hong Kong Jockey Club Hong Kong Jockey Club’s gross revenue from soccer betting has risen more than tenfold since it first introduced the product range in 2003. In 2008-09, it brought in HK$35.1 billion (US$4.52 billion). That’s impressive for a single betting product stream targeted at a purely domestic market of around 5.5 million Hong Kong adults. Indeed, it compares favourably with the US$15.4 billion generated by games of fortune in Macau in 2009 by 21.7 million visitors. That wasn’t, however, enough to prevent Hong Kong’s leading English-language daily newspaper, The South China Morning Post , calling in mid-July for a ‘debate’ on ending the legal betting monopoly enjoyed in Hong Kong by the HKJC. The paper was reacting to a more than fourfold increase in the betting stakes reportedly flowing into the accounts of unauthorisedbookmakersservingcustomers in Hong Kong and Southern China during World Cup 2010, compared to the previous tournament held in 2006. There are few more ardent or eloquent advocates for reform and innovation in state monopoly betting industries than Winfried Engelbrecht-Bresges, the Chief Executive of the HKJC. But there is only so much he can say and do on those topics without risking losing the confidence of his political bosses, the Hong Kong lawmakers. The territory’s Jockey Club was born of political necessity—the need to raise public money to pay for housing for an influx of refugees frommainland China to Hong Kong in the early 1950s. It continues to survive out of political necessity—the need to give the city’s inhabitants an outlet for their gambling passions in a legally controllable and taxable way. As such, HKJC is unlikely ever to be given a totally free hand in the way it conducts its business. That will make it hard, if not impossible, to offer players the kinds of terms provided by unlicensed online or telephone bookmakers who have few of the overheads, in particular tax and community contributions, faced by the HKJC. Even if Hong Kong were to deregulate its betting market and introduce legal competition to the Jockey Club, the legal competition would still have taxes or other forms of levy imposed on its gross turnover. Mr Engelbrecht-Bresges and others within the JockeyClubhierarchyhaveargued publicly and privately that the issue is not whether private gambling franchises should be allowed as alternatives to the HKJC, but that the Club itself should be allowed to pursue a more aggressive commercial policy. That’s in terms of reducing the tax levied on the bets, increasing the maximum daily dividends allowed, widening the range of betting products offered and developing the way products are delivered to customers. All these suggested initiatives are designed to fend off the competitive threat from unauthorised bookmakers. Tax is levied at 50% of net stake receipts for HKJC soccer betting and the Club also gives some of its operational surplus to community causes. The unauthorised bookmakers—provided they have a sufficiently large prize pool—can potentially offer bigger individual dividends than the HK$10 million (US$1.29 million) per account per betting day allowed by HKJC. Illegal bookies also reportedly offer punters credit for gambling—something which, for regulatory and ethical reasons, the HKJC simply cannot do. In 2008-09, HKJC football betting contributed more (HK$370 million) to community causes via the HKJC Charities Trust than the core horse racing product (HK$110 million). That was linked to structural issues, as large amounts of income fromhorse racingwere reinvested in facilities for equestrian sport in Hong Kong before, during and after the Beijing Olympics in 2008 (the equestrian events of the games were hosted in Hong Kong). Tom Hall is a founder of AsianLogic (ALOG) one of the largest online casino businesses in the region. At the time of going to press, that growth was due to continue through acquisition of another large Asian online gaming brand. Mr Hall is recognised as one of the world’s leading experts on interactive gaming, with a particular focus on Asia Pacific markets. He speaks regularly on the subject at gaming conferences and investor forums. Mr Hall started ALOG in 2002 with fellow directors Chris Parker and Kan Tang. ALOG was one of the pioneers of online gaming and betting in Asia. The company’s