Person-to-Person betting exchange Betfair has proposed to the Hong Kong Jockey Club that it be allowed to cover Hong Kong racing.
The idea was turned down by the HKJC's chief executive, Lawrence Wong, who told the South China Morning Post that he considers Betfair's exchange to constitute offshore gambling, which is illegal in Hong Kong.
"It is not in Hong Kong's interest because it channels the money away from the government's tax system," he said.
Mark Davies, the communications manager of Betfair, said his group was prepared to make an offer to the Jockey Club that would put its fee somewhere around the 10 percent of gross profit it pays in levy to the United Kingdom.
"We also said to them that pending a commercial agreement with them, we would prevent Hong Kong residents from betting on Hong Kong racing, which means that we are taking nothing out of their pool, while offering the potential to add significantly to it by internationalizing their product and allowing people abroad (to them) to bet on the racing in Hong Kong," he said.
Davies said his group has been in discussions with the HKJC on and off for some time and that they are also having talks with betting officials in Australia about the same kind of arrangement.
Wong also told the newspaper that his organization has a problem with betting exchanges because a punter can bet to lose, and in horse racing that could lead to outside factors influencing the outcome of races.
"We fundamentally object to betting exchanges because they threaten the integrity of racing," Wong said. "It provides opportunities for insiders with privileged information--such as owners, trainers and stable staff--to bet against their own horses. This poses a global threat to legal and clean racing operations."
Last summer Hong Kong's Legislative Council passed the Betting Ordinance, which bars Hong Kong residents from betting with offshore companies and prohibits those companies, which include Internet operators, from offering bets to those in the Chinese SAR.
Davies said Betfair wants to work with the gaming regulators in every jurisdiction so that P2P betting can be a benefit for the region. The last thing the company wants to do is operate offshore gaming, he said.
"Many operators look to set themselves up offshore where they don't have to pay tax or rights payments to anyone, but we believe that it is to the benefit of everyone that we work hand-in-hand with sports bodies and governments," he said.
The integrity of the sports betting exchange is all-important to keeping punters coming back and to preserving the quality of the sports events themselves, he added.
"We want to be here for the long term, not for a short period of getting whatever we can, and the best way to ensure that we are is to work with people to show the number of benefits our product can bring," he said.
Betfair will continue to try to convince the HKJC that the arrangement would be beneficial, Davies said.