Racing leaders call for global commingling of parimutuel pools

CAPE TOWN, South Africa – Representatives of major racing countries pushed Wednesday for a worldwide effort by racing jurisdictions to commingle their parimutuel pools globally, a plan as long on ambition and promise as it is on problems.

Speaking at the two-hour opening session of the Asian Racing Conference, being held this year in Cape Town over the next three days, the speakers emphasized that commingling parimutuel pools across a vast number of international borders would allow the racing industry to boost its revenues by providing greater liquidity and far more betting options to existing players, while also giving the racing industry better opportunities to attract new customers.

But, as the speakers also emphasized, the difficulties in establishing day-to-day global commingling are myriad, from the politically difficult annulment of protectionist simulcast restrictions in several mammoth betting markets, to the technical hurdles inherent in the establishment of a worldwide protocol for transmitting and processing wagers from countries with significantly different wagering menus, takeout rates, and racing rules.

“Globalization is going to occur, and it has to [in racing] if we want to be competitive in a digital age,” said Alastair Warwick, chief executive of the Ascot Group. “This is what the customer wants. It’s what the customer needs.”

To be sure, a number of high-profile racing events like the Breeders’ Cup, the Royal Ascot meet, and the Dubai World Cup have taken bets for years from foreign jurisdictions, even if those agreements have limitations most often dictated by the host of the pool. The speakers on Wednesday were instead advocating for a “universal protocol” that would enable commingling on a daily basis between countries across the globe, in a dramatic expansion of the potential market for any single race at any racetrack in the world.

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To make the plan work, representatives of global racing jurisdictions would need to replace an existing protocol that provides the technical framework for international commingling with a new universal protocol leveraging new network and data-processing technologies, speakers said. The new protocol would allow for greater flexibility on merging pools in different countries than the existing protocols while also incorporating new data streams, such as racing-program information, which is currently passed between many racing jurisdictions via e-mail, the officials said.

Last year, Ascot hosted a global pool that Warwick called a “proof of concept” about the potential of a universal protocol. To create the global pool, however, Ascot had to create two hosts, Warwick said, with the Hong Kong Jockey Club performing an “odds calculation service” to create a single “virtual pool.” Still, Warwick said it resulted in massive gains in parimutuel handle, especially in exotic pools.

In Britain, and in many racing jurisdictions around the world, parimutuel wagering generally plays second fiddle to fixed odds, in contrast to the United States, where parimutuel wagering is usually the only game in town. Interestingly, several speakers, including Warwick, emphasized that the establishment of global parimutuel pools would allow racetrack operators to offer bets that aren’t available in fixed-odds marketplaces, because bookmakers do not offer high-risk, high-reward exotic bets, by and large. And that would allow racetracks to undercut competitors that they often target as contributing too little to the operating costs of the sport.

“Exotic bets is where the future is,” said George Irvine, the commingling development director at the HKJC. “Bookmakers cannot compete with us on exotic bets.”

Although the speakers emphasized the difficulty of the task, the presentations attempted to portray a global racing industry in which any race at any racetrack in the world would be available to any bettor, a seeming utopia. But the presentations also ignored an enormous problem with such a plan, in the sense that it would open up a competition between racetracks on a global scale. That could greatly impact any negotiations on a plan to develop a universal protocol, as representatives of racing countries would certainly seek to tailor the protocols to favor their own home-grown industries and the predilections of their own racing customers.

And perhaps the biggest hurdle to true globalization would be that several enormous racing and betting markets, particularly in Asia, have laws that prohibit or limit the importation of simulcast races. Those restrictions would need to be dropped in order to create a true global marketplace, requiring buy-in not just from the country’s racing industries, but also from its politicians.

Paul Cross, general manager of international business development for Australia’s TABCORP, singled out Japan, South Korea, Italy, and India when he asked the attendees of the conference to “open our minds about where global commingling can lead to and where it can end up.”

Earlier, Winfried Engelbrecht-Bresges, the chief executive of the Hong Kong Jockey Club (which currently has its own protectionist policies, but which also is gradually relaxing them) asked for South Korea and Japan to consider the “ideal” of partnering in the region to create a powerhouse commingling triangle in Southeast Asia. Japan currently limits imported simulcast races to graded or group stakes races that include horses with Japanese connections.

The effort to create a universal protocol would especially impact U.S. companies, since the technology underlying the existing protocol for commingling, ITSP, was developed and is maintained by the three bet-processing companies that are based in the United States. John Stuart, chief executive at Phumelela, a South African company that has been one of the pioneers in international commingling, said that the U.S. bet-processing companies are “basically the only companies in the marketplace,” even though officials of those companies have “acknowledged that their systems are outdated.”

Despite all the problems underlying implementation, the speakers emphasized that international simulcasting has grown in leaps and bounds since the first running of the Dubai World Cup in 1996, and that progress between individual countries in devising cross-simulcasting agreements could serve as a model to the development of the global protocol.

Andrew Harding, executive director of racing at the HKJC who served as an informal moderator of the opening panel, noted that speakers at a much earlier Asian Racing Conference had called for more cooperation between jurisdictions on international simulcasts.

“And obviously, if you look at the graphs presented here, you see the market has become enormous,” Harding said. “So if that Asian Racing Conference will be remembered for that call, I think the 2020 Asian Racing Conference may well be remembered for this call.”

The organizers of the ARC paid for the reporter to travel to South Africa and for his accommodations there.