Winfried Engelbrecht-Bresges, chairman of the Asian Racing Federation and CEO of the Hong Kong Jockey Club, called on all racing jurisdictions to take advantage of a brightening global economic outlook during a Global Wagering Leaders session focusing on current strategies and opportunities at the 37th Asian Racing Conference May 16 in Seoul.
Engelbrecht-Bresges, who is also vice-chairman of the International Federation of Horse Racing Authorities, noted that 75% of racing's income is derived from wagering, a figure that also includes commercializing intellectual property rights on racing products.
"While we have talked about our branding being less focused on gambling, which is important, we cannot escape the fact that wagering is the lifeblood of the racing industry and we have to capitalize on the positive economic climate," Engelbrecht-Bresges said. "There is a strong link between strong GDP and betting turnover growth."
Engelbrecht-Bresges noted that racing's share of global gambling turnover had fallen from 7% in 2010 to 6% in 2016. "The positive is that football betting has given us access to new customers some of whom migrate to also betting on horse racing."
He then identified five key areas of focus for horse racing as a collective industry: widening the customer base, especially with the embrace of new technologies to connect directly with customers and provide relevant offerings; developing better tote technology to support a better customer experience; advancing the development of a new tote betting protocol for commingling to leverage our strength in exotic bet types; making a concerted effort to create and protect racing's intellectual property rights both nationally and internationally; and supporting the fight against illegal and unregulated betting.
Engelbrecht-Bresges noted that global racing betting volume was flat when the topic was examined at the previous ARC in 2016 and that global GDP growth was stuck in low gear. However a generally brighter overall economic outlook through 2018 and 2019 provide racing with opportunity for growth. He reported that Hong Kong Jockey Club racing turnover had increased annually 6.5% from 2010-2017 while football betting growth was double that figure in the same time.
International simulcasting of horse racing is vital to expanding racing's fan base according to Masayuki Goto, president and CEO of the Japan Racing Association.
JRA figures on betting turnover emphasized the focus on quality, Goto said, as average handle on Japan's group 1 races totals US$160 million, about four times the amount on group 2 and group 3 races, and about 40 times the amount bet on standard non-stakes races.
Goto highlighted the changing tide in Japan, which permitted wagering on select simulcast opportunities beginning with the 2016 Prix de l'Arc de Triomphe (G1). "The races on which we will consider simulcasting are those in the World's Top 100 Group 1 Races, or others of particular international interest," he said, adding that more than 10 million viewers tuned into the live coverage from Paris during that groundbreaking event. Since then, the JRA has carried simulcasts from Dubai, Hong Kong, and America.
"We have developed our own websites with extensive content for Japanese audiences. This has also carried over to racing form guides, which are now presented in newspapers in a style familiar to traditional Japanese races," added Goto.
David Attenborough, managing director and CEO of Tabcorp, outlined how the firm has repositioned its wagering business to capitalize on the opportunities presented by the evolving fixed odds, digital and sports betting growth at the expense of traditional drivers, retail and parimutuel betting.
"It is a vibrant wagering market and core to us is our relationship with racing which represents more than 88% of our business. As with Hong Kong, sports betting is growing but that is good for racing given the younger audience it brings to the marketplace," Attenborough said. "That market place is changing and we have to adapt. We've found that digital betting growth has offset any downturn in retail sales and similarly, fixed-odds betting has offset a decline in pari-mutuel betting."
He noted Tabcorp was the biggest retailer in Australia and, underlining the inextricable link between racing and wagering, reported that Tabcorp underpinned prize money in Australia with a A$1 billion return to racing each year. "That link is also evident as most people experience racing for the first time in one of our 4,300 retail outlets and 2.3 million people bet with the TAB on Melbourne Cup day," he said.
Brant Dunshea, chief regulatory officer at the British Horseracing Authority (BHA), outlined British racing's wagering strategy during this session. He examined the changing betting landscape in Britain and what it means for the future funding of the industry. The key change is a switch from retail to digital betting along with public and government attitudes to gambling in the United Kingdom.
More than 50% of betting on British horse racing is now digital, compared to less than 30% five years ago. "The younger generation is well exposed to digital betting via football," he said, reaffirming comments made earlier by Engelbrecht-Bresges and Attenborough.
Dunshea said that the 2018 Gambling Review in Britain had focused on many areas including player protection, problem gambling, and money laundering, with a current focus on retail outlets and a push for gaming machines in betting shops to be heavily restricted. Dunshea warned that retail shop closures would likely drive a fall in media rights and levy revenues but the hope is that horse racing betting will become more important for operators.
He called on the British government to 'deliver' on its promises to support the racing industry as the industry has supported government aims for responsible gambling. "Levy reform benefits may potentially be undone in the changing landscape and the grassroots agendas and the sport's wellbeing threatened," Dunshea said. "The government has provided assurances that a revised levy will help bridge any gap."
Richard Cheung, the Hong Kong Jockey Club's executive director, customer and international business development, said Hong Kong strategy centers on sustaining turnover growth via three principal targets: micro-demographic targeting of seniors (60-plus) and females under 45; commingling partnerships and specific information dissemination to overseas customers; and leveraging new technologies to ensure a seamless customer experience.
"We have had a good run, last year turnover grew by 10% and this year we expect another 5% or 6% growth, but we do not think we can sit on our laurels. We are now planting the seeds for another good run," Cheung said. "Those racing fans who lapsed, who dropped away from the sport due to work and family commitments in middle age, with our tactics, we are seeing that some are returning now that they are retired. Not only that, the lapse rate is dropping."
He added that age-friendly facilities, bigger font types in specific publications, nostalgic marketing campaigns, and assistance to promote senior use of digital channels have all been employed.
Relative to the HKJC's focus on attracting female racegoers under 45, Cheung suggested the micro-mining of demographics has led to short-term wins.
"We have seen success with an increase in active betting accounts among young women, with a 7% growth two years ago and this year a 16% growth," Cheung said.
With regard to commingling, a topic first posited at the 31st Asian Racing Conference in Dubai in 2007, Cheung said the Club's investment in bespoke content for overseas customers is yielding strong benefits since the endeavor began in 2014.
"By the end of the 2015/16 season, we were at about US$400 million in turnover. For this season we're looking at about US$2 billion and that will continue to grow," he said.
He said emerging technology use, including leveraging artificial intelligence and the chatbot concept may not immediately result in turnover increases, but is required to meet emerging customer segment demands.
"We still need to do it. This is how future consumers, especially Generation Z, will function; we have to continue to adapt or it will be very difficult for us to stay relevant with the next generation of customers," Cheung said.
Simon Bazalgette, CEO of The Jockey Club (England), outlined the radical change to the British horse racing betting landscape with the creation of Britbet, a partnership of 55 of the country's 60 racecourses, giving it access to a yearly aggregate of 5 million on-course customers. It will compete with the privately owned Totepool which had held a pari-mutuel monopoly.
"While pool betting (pari-mutuel) accounts for just 3% of Britain's racing turnover, we hope to increase that with several initiatives including a cash-out offer on exotic bets, crowd-funded bet types, and self-service applications allowing customers to bet on their phones," Bazalgette said.