Hong Kong Racing Roaring Back From Pandemic

After nearly three years of pandemic lockdowns and quarantines, the Hong Kong Jockey Club is roaring back.

After the day-to-day struggles the past few years that saw the HKJC work to keep racing going, it has used some creative interaction with government health officials to pick up where it left off on its ambitious plans for the future. The Covid measures, disruptive as they were, actually provided opportunities for the HKJC to redefine goals and shift its customer focus to better meet the new expectations of racing fans.

While the pandemic has delayed expansion plans by a year or two, the HKJC still looks forward to a new racetrack on the Chinese mainland, rebuilt stables at its Hong Kong base, and redesigned customer facilities everywhere, CEO Winfried Engelbrecht-Bresges said in a wide-ranging, hour-long interview during festivities surrounding the Dec. 11 Longines Hong Kong International Races.

Also on the radar, the CEO said, are the development of a major international equine quarantine station on the mainland and nurturing of a breeding industry in China to support increased racing. And, international racing can start preparing for standardization of wagering and betting protocols as the HKJC's World Pool initiative continues to grow.

Pandemic restrictions imposed early in 2020 were relaxed meaningfully just in time to permit some 12,000 fans to attend the International Jockey Challenge Dec. 7 at Happy Valley Racecourse and around 45,000 to return to Sha Tin for the Dec. 11 HKIR.

But to make these strides the Club first had to get through three tough years, much of that time with few or even no fans in its grandstands and a daily struggle to keep racing going while keeping essential personnel safe. Problems included how to organize daily testing and tracking of as many as 1,500 employees and how to move horses weekly between the HKJC Conghau training center on the mainland and the race tracks in Hong Kong—across a border that essentially was closed.

The key to keeping racing going, Engelbrecht-Bresges said, was cooperation with the government, which imposed lockdowns on many other areas of the Hong Kong economy but recognized the singular importance of racing to the area. Chan Kwok-ki, chief secretary for administration of the Hong Kong Special Administrative Region Government, attended the HKIR gala banquet and made that case.

"The Hong Kong Jockey Club has successfully staged this flagship event over the years," the secretary said. "This not only echoes our local saying that horse racing goes on as usual as a symbol for prosperity but also showcases to the world Hong Kong's position as a center for global racing."

HKJC chairman Michael Lee replied, "Thanks to the trust you have placed in the Club, Hong Kong has raced on throughout the pandemic. In doing so, it has become a symbol to the world of the resilience and can-do spirit of our city."

It wasn't easy. 

"We managed this very scientifically, Engelbrecht-Bresges said, "because when you continue racing, you have to be very mindful there is a health risk. ... The toughest moment is when we had to convince the government that what we do is not based on greed to continue, but that what we do is responsible.

"And we could do this. And the decisions—every night we had meetings at 10 o'clock, 12 o'clock, 2 o'clock at night. We tested and we wrote out this whole testing schedule that at the height of it we tested 1,500 people a day."

The effort paid off to the extent that racing was allowed to continue throughout lockdowns that paralyzed many other segments of Hong Kong society. But there were few, if any, fans in the stands, leading to radically new habits and expectations. Even that massive change in the racing experience, Engelbrecht-Bresges said, could be turned to an advantage.

"We have around 2.2 million people on (wagering) accounts," he said. "But the problem was that some of them forgot their account numbers. So we reactivated about 300,000 accounts where people forgot their account numbers."

Next issue: Bank transfers were taking 2 1/2 days, seriously limiting the utility of account wagering. So the HKJC signed up with a system providing instant transfers, shifting 1.1 million accounts to that platform.

Now, Engelbrecht-Bresges said, "We are the biggest merchant using the system. So that definitely helped us."

Off-track facilities, which before Covid had average race-day attendance of some 380,000 people, were off limits for much of the quarantine time, too, and the Club faced the issue that its customers without electronic withdrawal ability had no way to get cash out of their accounts. Selective reopening in low-infection areas produced long queues at those offices. So, with government approval, the tracks were opened solely for account withdrawals.

"What we did then, we had a site around the corner where you could open up a betting account or where you could activate your account if you forgot your numbers," the CEO said. "Every crisis is an opportunity. And this was a customer service. We had people who trained customers who are not very familiar with smartphones, how to use their smartphone."

Covid shutdowns also provided time to reset planning for many of the club's projects and to respond to what are certain to be changes in customer behavior after nearly three years away from the source of the action. The goal is to lure customers back to the tracks and OTBs by providing experiences beyond the traditional horse racing environment.

"Our off-track betting centers, we shift more to experience centers," Engelbrecht-Bresges said, noting an effort to attract younger players. "They are completely different ... We have some of the OTBs now that are combined with cafes, typical Hong Kong-style cafes where you can eat a little bit for lunch or breakfast or for dinner. So it is much less a transaction center than an experience center. And that works very well.

"It's an experiment, still," he said, although early data shows attendees at the new-style OTBs are more likely to open and use accounts than those frequenting the older facilities. And, recognizing that on-track attendance still is key to expanding the fan base, changes are coming at Sha Tin and Happy Valley, too.

"We will convert more of our transactional, hard-core wagering spaces more for leisure, entertainment, and customers who want not only to wager, but who will look at racing as an experience," he said.

World Pools

The HKJC was the instigator and is a key player in the World Pools, which aggregate wagering on some of the biggest events on the global calendar. While the benefits of massive, comingled wagering pools are evident for bettors, they also can be lucrative for tracks, Engelbrecht-Bresges said, citing a turnover increase at Royal Ascot from HK$619 million the year before the establishment of the World Pool, to HK$1.76 million this year. That, he said, has generated significant new revenue for Ascot itself.

He acknowledged the expansion of the World Pool will require a common platform for racing and wagering data and racing rules, which will be difficult for some jurisdictions with widely varied systems and regulatory schemes. Coordination of rules regarding the use of the whip, and enforcement of those rules, already is a particularly thorny issue.

"If you are part of the World Pool, that will be a requirement," he said.

Racing in Mainland China

Shortly before the Covid lockdowns, the HKJC reached agreement with local and national governments to expand its already massive, state-of-the-art training center at Conghua, some four hours' drive north of Hong Kong, to accommodate four race meetings annually. The expansion will include construction of an environmentally friendly grandstand seating 10,000-12,000 fans. The entire project is seen as a test that could be expanded in scope but the start date is pushed back from 2025 to 2026.

Adding races at Conghua will require an expansion of the HKJC's horse population and Engelbrecht-Bresges hopes new stock can come from more diverse jurisdictions.

Racing at Conghua, he said, can encourage the development of a nascent Chinese breeding industry as those races will give horses international ratings. And construction of another new project, an international quarantine station, fits another of the HKJC's 2030 goals.

"If you have horses bred in China who, if they are good enough, they could through this quarantine station, acquire health status and run in Hong Kong," and potentially move to other jurisdictions. He said there are no plans for wagering at Conghua. Asked if Hong Kong residents could expect to bet on the Conghua races, he quickly said, "I would not speculate on that."

HISA

Engelbrecht-Bresges, who heads several international and regional racing organizations, including the International Federation of Horseracing Authorities, said the new American regulator, the Horseracing Integrity and Safety Authority, has been in touch with the world groups to outline its plans. He noted the legal challenges currently delaying implementation.

"I am not influential in U.S. courts," he said with a laugh. "But I personally think it would be a major loss for international racing if HISA were not established."