Asian Racing Groups Sign Good Neighbor Policy

2 September 2003

Racing officials in Asia on Monday took another step in an ongoing effort to keep offshore bookmakers at bay.

Six members of the Asian Racing Federation (ARF) added their signatures to the Good Neighbor Policy (GNP) signed late last year by the Japan Racing Association and the Hong Kong Jockey Club.

The GNP is aimed at curtailing the rising competition from offshore bookmakers and betting exchanges, which have soared in popularity over the last two years. The agreement essentially states that signatory jurisdictions shall not provide wagering on racing to residents of other signatory jurisdictions without the permission of that signatory jurisdiction, nor solicit, market or advertise wagering without prior authorization from that other signatory jurisdiction.

The multilateral agreement was signed at Government House in Hong Kong. The new jurisdictions on board are Australia, India, Korea, New Zealand, Singapore and Turkey.

Now each member of the ARF's executive council of the ARF has formally endorsed the GNP. The agreement is intended to spur ARP member legislatures and government leaders to embrace the GNP in their laws and legislation; this would give racing officials better tools in combating unauthorized and illegal gambling companies.

Ronald Arculli, chairman of the Hong Kong Jockey Club, said something had to be done to reverse the loss in revenue for traditional racing authorities.

"The Good Neighbor Policy is an excellent proactive move ... to come one more step closer in putting up a united front to fight the potential dangers to the integrity of bona-fide betting and licensed gambling," Arculli said. "The survival of horse racing itself and its finance is threatened."

Bob Charley AO, chairman of the Australian Racing Board, said the agreement marks a change in direction for racing regulators in Asia.

"This agreement indicates the combined resolve of the signatory nations to put a stake in the ground against unlicensed and illegal gambling operators free-riding on racing's product," he said. "The path hereafter is to gain support from our respective governments because we cannot win this fight on our own. Hopefully, other racing jurisdictions will soon see the wisdom in our approach and join us in fighting this cancer on our sport."

Dr. Cyrus Poonawalla, representing the Turf Authorities of India, added, "I strongly hope that racing authorities throughout the world will immediately recognize its merit and adopt this policy as a framework for international cooperation against illegal gambling and to sustain a strong and stable growth of thoroughbred industry world wide.", the world's largest betting exchange, has been the most outspoken opponent of the new policy, which calls for participants to block betting exchanges. Mark Davies, a spokesman for the group, is disappointed with the unwillingness to regulate betting exchanges. He also doubts the agreement will have much effect on his company's operations.

"I don't expect it to have any impact on any part of our business," Davies said. "We will continue to run our business as we always have and we'll see what happens."

Australia remains the key jurisdiction for Betfair. The exchange has managed to gain a good foothold of users through word of mouth and press coverage and no public marketing. The site got national attention last spring during the Cricket World Cup. It also saw an increase in customers from India and Pakistan, both cricket hotbeds, during the tournament.

Some Australian racing officials argue that betting exchanges are prone to fixing and is sapping the racing industry of revenue. Betfair has responded to these arguments by stating its desire to be licensed and has even offered to back-pay any tax structure put in place to reflect lost revenues to racing since the group began operating in Australia. The idea has received some support, but prohibition is still the preferred approach by most.

While all indications in Asia are that racing officials will continue striving to squelch betting exchanges, Davies isn't so sure that can be accomplished.

"We exist in Australia and attract their citizens by virtue of section 8A of the Interactive Gambling Act of 2001, and unless that law is changed, I don't think a Good Neighbor Policy will change our legal position," he said. "We exist because the law says we can, not because of gentlemen's agreements."