Roy, a horse racing fan for ten years and an owner of a few companies, likes to call the money won through horse racing “pocket money”. Every Wednesday and Sunday he heads out to the track to win more pocket money. Last year, he used his winnings to buy a new Mercedes SMART.
For an older generation Hong Konger like Roy, watching horse racing is typical fun. In Hong Kong films produced in the 1990s, it was common scene to see a group of people gathered around in front of a television shouting “come on, come on!” The rich treated horse racing as social events. They would rent a VIP room, drink, chat, and place bets.
But this decade saw new forms of entertainment emerge-like computer games-which attracted the attention of young consumers. Many felt that horse racing, which takes 4 or 5 hours of research before betting, was outdated. The global horse racing industry began to fall.
Jockey clubs around the world are looking for solutions to the problem of declining performance. For example, the British Jockey Club persuaded the government to reduce the betting duty, but even this can only help to maintain the organization’s performance, rather than achieve needed improvement.
The Hong Kong Jockey Club (HKJC) is no exception to the industry changes, despite the fact it’s one of the best operated jockey clubs in the world. HKJC’s betting turnover has plunged from HKD92.3 billion (US$11.8 billion) ten years ago all the way down to HKD60 billion (US$7.6 billion) in 2006.
In 2003, HKJC persuaded the Hong Kong government to issue the club a license for conducting football betting. Till 2006, its football betting turnover was KHD30.2 billion (US$3.8 billion), which made the club the biggest football betting dealer in the world and successfully reversed its downward trend in performance. For horse racing betting, HKJC is improving its betting channels and customer experience with overseas promotion through various IT facilities. Its betting turnover showed an upward trend during the most recent racing season, from July 2006 to June 2007, increasing 6% to HKD64 billion (US$8.2 billion).
As of late 2006, HKJC’s financial report indicates that the annual betting turnover was HKD100.2 billion (US$12.8 billion), a 1% increase compared with HKD98.9 (US$12.6) a year ago. It drew a beautiful smiling curve on its ten year performance chart.
In order to attract more people to participate in horse racing, HKJC developed many betting channels. Ten years ago, people had to bet at the racetrack or on the phone. Now, they have more choices. Roy can bet on his mobile phone, his desktop, or on a customer input terminal (CIT) rented from HKJC. CIT can be used to receive betting odds and place bets, supporting 3G and 3.5G. The service is available for a small deposit, with no monthly fee.
“Each betting channel needs a lot of IT investment,” says Sunny Lee, the executive director of IT at HKJC. “We are now the largest IT customer in Hong Kong, besides the Hong Kong government. Our investment in the IT sector is equal to a large listed Hong Kong company’s annual turnover.”
Sometime fans like Roy still go to the racecourse to enjoy the warm atmosphere there. At the newly built 85,000-seat Sha Tin Racecourse in the New Territories, the IT department of HKJC set up a huge screen the size of a Boeing 747, attracting the attention of tens of thousands of fans. “This is the world’s largest screen. People can watch horse racing from far away,” Lee says.
Outside the racecourse there are 107 betting centers, which have been transformed into comfortable rest areas. With lots of screens monitoring the live horse racing, fans can choose to place bets on counters or use automated betting machines. “This is a place to attract wealthy consumers,” Roy said, pointing to a luxury betting center. The IT department under Lee’s supervision is monitoring the operation of all the equipment in these centers 24/7.
Betting over the phone is still fans’ preferred betting method, and HKJC has the largest call center in Hong Kong with 4,000 seats busy on Wednesdays and Sundays, the main racing days. To reduce the pressure of concentrated betting on the system a few minutes before each match, Lee developed a backup system: an automatic response betting computer system for small bets, alongside the phone system in the call center. Customers can place a bet by pressing one key on his or her phone. With the backup system, the call center can process 5,000 calls simultaneously at peak times. Telephone betting services staff can focus on customers who place larger bets.
To attract young people, the Internet is essential. HKJC’s Chinese website has the world’s fifth largest visitor traffic of all Chinese language websites. On racing days, visitor traffic can reach more than 100 million. New fans have opened 420,000 accounts online, and most of them are young people.
1.2 million people have accounts with HKJC and are placing bets via the telephone, betting center, the Internet and mobile terminals, while many more make bets without accounts. All these bets are transported back to the system for calculations. According to Lee, the HKJC’s IT system needs to process 4,200 transactions every second. Each transaction is equal to processing 15 to 20 stock transactions simultaneously.
HKJC launched its overseas expansion six years ago. The club sold the broadcast rights to clients from more than 10 countries and regions, such as the US, Canada, Australia, Singapore, Japan and Europe, allowing people in these areas to place bets locally.
In 2007, HKJC was granted its first horse racing license in Las Vegas. The IT department and channel operators in the US finished the system integration which allows local people to place bets from the US on Hong Kong racing.
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