Wednesday, September 28, 2022

Politics rein in KRA progress

Korea’s horse racing industry, considered the sleeping giant of Asia, has not been immune from the turmoil sweeping through the country’s political and business classes, with modernization plans in the balance after the Korean Racing Authority chairman was removed from office.

It’s just the latest setback for the sport, which has been beset by political obstacles. Exorbitant taxes, uncompetitive take out rates, a unionized labor force at its training centers and vociferous anti-gambling lobbyists determined to shut down off-track betting centers are all perennial problems for the government-controlled Korean Racing Authority.

One insider put it this way, "The best thing about the KRA is that it is government controlled, and the worst thing about it? That it is government controlled."

Yet in the last 12 months nobody could have predicted the fallout that can come from being so inextricably linked to the fortunes of government.

When Park Geun-hye was named Korean President in 2013 she installed supporter Hyun Myung-kwan as KRA chairman. Hyun brought with him business acumen, as a former chairman of Samsung C&T, and fresh thoughts on how the sport should be promoted.

He had big, new ideas on marketing, which is highly restricted in Korea and internationalization of racing was on the agenda, with ambitious plans for a turf track at Seoul within two years.

The new initiatives were set around the idea of pushing racing as a sport to take the emphasis off gambling.

A horse theme park, Whinny World, was even built on Seoul's spacious infield and the racecourse re-branded to "Let's Run Park."

It all looked and sounded on the up for the KRA until Park was impeached in December 2016 after an investigation. The KRA chairman was also caught in the net, with Hyun found to have offered favors for Park's alleged confidante Choi Soon-Sil.

No charges were laid, but the KRA was directed to find a new chairman, with Lee Yang-ho – more of a bureaucrat than businessman - installed as new boss.

It wasn't as if Hyun's tenure was a failure as he started the ball rolling on a number of projects. As well as the push towards internationalization, there was the installation of one of the world's largest big screens, a 128 meter-long monitor on the Seoul infield, an increased focus on customer service, development of a mobile betting app and the abolishment of a counter-productive limit on how much owners could pay for overseas-bred horses.

Still, the nature of his dismissal was obviously a shock and not only do many of the lofty targets he set remain unfulfilled; the same obstacles stand in the way of progress.

Even the seemingly innocent Whinny World is closed, having lost money after opening, pending an examination. Despite the difficulties, the new chairman is putting a positive spin on the new political landscape.

“I admit we are in very difficult situation," Lee told the assembled press before this year's Korea Autumn Racing Festival "But the new president has a more lenient policy on gambling, and is part of a more progressive party, so with those types of characteristics of the new president, I feel there could be policy changes in racing and the gambling industry."

"I can’t guarantee anything, but I can talk to the new president and the new parliament and ministry, to try and make them in favor of racing."

“It is a very restrictive, especially on the betting side, our betting limit is only around US$100,” he said. “We are not allowed to accept bets online, and the bet types are already listed in law, not the KRA rules, so we lack flexibility in creating new bet types or increasing the bet limit. We are trying to explain our situation to the political parties and talking to the ministry about how we can develop, so we can contribute more to Korea.

But with development of new bet types, there isn’t that much resistance, so maybe we can speak to the government about that.”

Internet betting is also banned and takes out rates of 28 percent on most bet types are not only a severe hindrance to turnover, but also an obvious spur for illegal markets.

Most experts conservatively estimate Korea's illegal market at a staggering six times the legal hold.

In April 2018, Seoul will host the Asian Racing Conference, with the Asian Racing Federation's newly formed Anti-Illegal Gambling Taskforce to present reports on illegal gambling in each of the 32 jurisdictions.

Officials will be hoping some evidence from the ARF can help make a case to government for more lenient policies.

Explaining to a traditionally conservative government the counter-intuitive idea that loosening restrictions actually results in less illegal gambling can be a hard sell. And unfortunately for KRA officials, valuable energy is spent putting out spot fires brought about by the strong anti-gambling groups.

In Yongsan, one of the KRA's off track betting centers was closed after being picketed by locals.

There are still around 30 OTBs but community group pressure has forced the KRA to vastly reduce their capacity, with the government ordering that 50 percent of turnover must be bet on racecourses.

This edict has brought about plans for the construction of a new racetrack for thoroughbred racing at Yeongcheon, near Daegu, to go with the tracks at Seoul and Busan.

The main thrust of the KRA's campaign to shrug off the stigma associated with gambling in the country is to build the profile of the sport internationally.

This year's Autumn Racing Carnival was considered a success, ­even if the dominance of the Japanese horses that swept to the two features may have left some a little worried it would stir the anti-Japanese sentiment still prevalent in the country.

“We want to continue improvement and we want to consolidate our position as a significant player on the global racing scene,” Lee said. “In 2016 the first Korea Cup was a great success and earlier this year, a Korean horse won at the Dubai World Cup Carnival, despite the fact this was just the second year a Korean horse had competed in Dubai.”

And that turf track may yet be built – something that would facilitate greater competition and international recognition, but it won't be installed in 2019 as hoped, with an experimental strip of grass as far as that grand scheme has progressed.

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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