Betting law to get a revamp in 2Q13

A flat betting duty rate of 72.5% is proposed.

According to a release, the Government plans to introduce the Betting Duty (Amendment) Bill into the Legislative Council in the second quarter, so an arrangement under a new taxation structure can become effective from the next racing season.

Speaking at a press briefing today, Permanent Secretary for Home Affairs Raymond Young said under prevailing racing industry practices, a horse race conductor may manage a local betting pool as a separate pool. If local and non-local betting pools are amalgamated, they are managed as a commingled pool. Participating jurisdictions then follow the same dividend distribution rates for the type of bet concerned.

Mr Young said this reduces the possibility of illegal bookmakers taking advantage of arbitrage of odds differences, and discourages off-shore and illegal bookmaking activities. Bets in a commingled pool are typically larger than in a separate pool, offering bettors more stable odds.

The Hong Kong Jockey Club also proposes adjusting Hong Kong’s betting duty regime to align with prevailing international practice - to levy betting duty only at source. The club proposes not to levy betting duty on non-local bets which are amalgamated into the commingled pool it manages.

To provide a higher degree of certainty for the club’s negotiations with its non-local partners, it proposes the Government charge a flat betting duty rate of 72.5% on the net stake receipts of local bets on non-local races instead of the current progressive rates from 72.5% to 75%.

Betting duty receipts for Hong Kong bets on non-local races are expected to drop by $12 million under the arrangement.

The Government and the club have agreed in principle that a three-year guarantee is reasonable. The Government proposes a fixed sum of $175 million a year - the average of the last three years of betting duty receipts from Hong Kong bets on non-local races the club simulcasts.