Hainan horse racing seen facing multiple challenges

Friday 15th of June 2018

The Chinese government's April announcement that Hainan will “open up” as a economic hub and that horse racing, plus new forms of sports lotteries, could be part of the island's future was met with equal parts optimism and caution from within the sport of kings itself.

After all, horse racing already exists within mainland China, but much of it is disorganized and none of it features the financial lifeblood of the sport; legalized gambling.

Only in China's "special administrative regions" of Hong Kong and Macau is betting on horse racing legal.

In Hong Kong horse racing is a massive money spinner, with HK$115.8 billion ($14.7 billion) in turnover generating massive revenue for the Hong Kong government and delivering billions of dollars back to the community in charity donations.

In 2017 the HKJC paid HK$30.5 billion in tax, the most ever and up 16.9 percent on the previous year.

Racing in mainland China was once among the richest and most prestigious in the world, but that was before a communist party ban on betting on the sport in 1949.

The ruling consigned the sport to a loss-making extravagance for the wealthy elite, something akin to showjumping or equestrian sports.

Many have tried and failed to create profitable racing on the mainland since, all with the long term view that the government would loosen the ban on gambling.

The much-awaited “green light' on horse racing with gambling hasn't materialized and tracks in Guangzhou and Beijing have been built, before financially failing and falling into decay, with millions of dollars of private investment wasted.

In 2017, more than 100 horse races and exhibitions were held across China, while various horse-riding clubs recorded a total membership of over 970,000, according to the Beijing Turf & Equestrian Association.

The Hainan announcement is different to these private ventures – this time the assurance that horse racing is an approved activity comes in the iron clad form of an official central government statement and with the words of all-powerful President Xi Jingping.

Still, even if the development of Hainan includes a freedom not found on the mainland, the words horse racing and gambling are kept very separate in the statement.

Also of concern is the monumental task of starting a racing industry from scratch.

“China can do a lot of things, but it still takes time,” said Hong Kong Jockey Club CEO Winfried Engelbrecht-Bresges. “It is a big development and there is a lot to be considered, from the technology, to racing administration, tracks management and training jockeys, trainers, farriers and mafoos (horse grooms).

“Then there is veterinary science. There are still significant issues when it comes to having a capable Chinese-speaking veterinary workforce in China.”

The Jockey Club knows all too well the challenges of racing on the mainland with its own Conghua Training Centre near Guangzhou, a state-of-the-art 160-hectare facility designed to allow the expansion of Hong Kong’s horse population.

That facility has begun operation – but only after construction delays that put it nearly five years behind schedule and a recent quarantine issue that brought about a ban on horse imports from Hong Kong to Australia.

Despite its own issues, the HKJC offered to help, raising an olive branch in April after the government announcement.

“If there is a request that we could be of assistance we would definitely be able to do that,” Engelbrecht-Bresges said.

“It is possible, but to be sustainable it will take a systematic approach, and one that takes in more than Hainan.”

Engelbrecht-Bresges was referring to the disparate nature of racing administration in China, what one expert termed the “messy” situation.

There are many racetracks in China, from Chengdu, Wuhan, Tianjin and Inner Mongolia – but the question remains, “who really runs racing in mainland China?"

There are two main governing bodies, the Chinese Horse Industry Association (CHIA) – which signed a memorandum of understanding with the HKJC – and the Chinese Equine Association (CEA).

“It's a mess and they haven't got a lot of the fundamentals available to create a sustainable industry,” one source close to the Jockey Club said. “It needs everything from integrity measures to mitigate the effect of illegal gambling, horse registration, building infrastructure and training staff. The industry in China is in a very primitive form and doesn't even have the fundamentals in place."

"There are so many questions on what shape it could take. Could it be a full separate entity, like Macau or Hong Kong, or integrated into the current Chinese industry.”

Asian-based industry expert Gareth Pepper from Pepper Equine said that while it was exciting that racing was being granted a “clean slate” to start an industry, he urged caution.

“They will have to create its own identity within the framework provided by government” he said. “The Hong Kong model is great, but it only works in Hong Kong. I agree that integrity is paramount – it can takes years to build trust in your sport but it only takes one race meeting or even one incident to lose everything and bring it all undone.”

Korea is an example of a racing industry that creates revenue through big betting numbers but remains mired in mediocrity because of the sub-par quality of its horseflesh and Pepper said this should stand as a cautionary tale for new operation.

"The worry I have is that if they don't source quality horses it could hold them back,” he said. “It only takes one bad batch of poor horses and it can take a trainer six or seven years to recover. I hope they don't just get cheap and unsound horses. You need to seek the right people to get this started. They need to be careful because there are people in racing that will look at this as a money making opportunity and look for the quick buck.

They need professionals, everyone from jockeys to trainers, to broadcasters and journalists – they should go for the best, otherwise it just won't work. It is a great position to start from scratch, it's a black canvas, but you only get that opportunity once.”