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Press Release
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LC: Betting Duty (Amendment) Bill 2006
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Following is the speech by the Secretary for Home Affairs, Dr Patrick
Ho, in moving the second reading of the Betting Duty (Amendment)
Bill 2006 in the Legislative Council today (April 26):
Madam President,
I move that the Betting Duty (Amendment)
Bill 2006 be read the second time.
In 2002, the Government amended the
Gambling Ordinance to combat the unauthorised activities of offshore
bookmakers in Hong Kong. In 2003, we amended the Betting Duty Ordinance
to authorise football betting to combat illegal football gambling
in Hong Kong. Today, the Government has decided to reform the duty
system for horse race betting. This is the third time since 2002
that we have introduced major reforms to the authorised betting
system.
The main objective of the reforms
is to combat illegal horse race betting activities more effectively,
while maintaining the Government's revenue from betting at a steady
level. We propose to amend the Betting Duty Ordinance to convert
the horse race betting duty system from the current turnover-based
duty system to a new system similar to the duty system for football
betting: In other words, a system based on the net stake receipts
(that is, betting turnover minus payout). The reforms will provide
flexibility for the Hong Kong Jockey Club (HKJC) to adjust the odds
in response to the changing market conditions, thereby diverting
bettors from the illegal gambling market to the authorised channels.
We have also taken the opportunity to rationalise the regulatory
regime for horse race betting.
We briefed the Legislative Council
Panel on Home Affairs (the Panel) on the proposed reforms to the
duty system for horse race betting on May 13, 2005. We also attended
a special meeting arranged by the Panel on June 24, 2005 at which
deputations of concern groups were invited to express their views
on the proposed reforms. In October 2005, we consulted the Football
Betting and Lotteries Commission on the proposed reforms and met
with the major opposition groups.
If the proposed reforms to the duty
system for horse race betting is supported by this Council, it is
anticipated that HKJC will be able to capture part of the existing
turnover of the illegal horse race betting market by diverting the
demand back into the authorised channels.
The Bill
Let me brief Members on the contents
of the Bill.
(a) Basis of duty revenue
Firstly, under the new duty system,
which is no longer based on turnover, a single set of duty rates
will be applied to the net stake receipts (gross profits) irrespective
of bet types. A progressive marginal duty system will be adopted,
with duty to be charged at 72.5% of the net stake receipts up to
$11 billion, increasing by half a percentage point for increases
of every $1 billion in the receipts up to $15 billion, and at 75%
for the receipts exceeding $15 billion. The above rates largely
reflect the Government's share of the racing receipts vis-ˆj-vis
HKJC at present.
(b) Betting duty on overseas bets
Secondly, under the new system, there
is a discount (at no more than 50% of the lowest marginal rates
for local bets) for the betting duty charged in relation to overseas
bets designated by the Secretary for Home Affairs (i.e. qualified
bets). The discount rate may be lowered in individual jurisdictions
(for instance, for qualified bets from Macao, there will be a betting
duty discount at 40% of the lowest marginal rates, i.e. 29% of gross
profits).
(c) Guarantee of betting duty revenue
Thirdly, to ensure that the Government's
revenue from horse race betting would remain stable during the first
few years, HKJC has to guarantee that the duty payable during each
of the three years from implementation would be no less than $8
billion plus the amount of duty in respect of any qualified bets.
The $8 billion guaranteed minimum is more or less the same as the
betting duty that would have been paid by HKJC for the year 2005-06.
A review would be conducted two years after implementation of the
new duty system to see if it produces desirable results and whether
it should continue.
(d) Provision of rebates to high-value
bettors who have suffered losses
In addition to the above proposals,
we propose to allow HKJC to provide rebates to high-value bettors
who have suffered losses in order to increase its competitiveness
against illegal bookmakers.
Proposed measures to rationalise the
regulatory regime
We also propose to take the opportunity
to rationalise the regulatory regime for horse race betting in order
to bring it broadly in line with authorised football betting and
lotteries. The specific proposals are as follows -
(a) The authority to authorise the
conduct of horse race betting should be transferred from the Chief
Secretary for Administration to the Secretary for Home Affairs (SHA).
(b) There should be a general licensing
system for horse race betting whereby SHA could, by issuing a licence
to a company, authorise the company to conduct fixed odds betting
or pari-mutuel betting on the results of, or contingencies relating
to, horse races. We propose that one licence for horse race betting
should be granted only to HKJC.
(c) The functions of the existing
Football Betting and Lotteries Commission should be expanded to
include advising SHA on the regulation of the conduct of betting
on horse racing; as well as compliance with licensing conditions
by the licensee. We propose to rename it as the Betting and Lotteries
Commission (the Commission).
(d) The operational and regulatory
regime for betting on horse races should basically follow that for
football betting and lotteries. Specifically, we propose that any
licence for authorised horse race betting activities should include
a number of mandatory conditions. These conditions seek primarily
to prevent underage/excessive gambling. The conditions include:
(i) the licensee shall not accept
bets from any person under 18 years of age; nor shall it allow admission
of persons below 18 years of age to its betting premises;
(ii) the licensee shall not accept bets on credit or accept credit
cards for settlement of betting transactions;
(iii) the licensee shall not pay dividends or rebates on bets to
juveniles;
(iv) the licensee shall not advertise horse race betting on television
or on the radio from 4.30pm to 10.30pm; advertise in ways that would
exaggerate the likelihood of winning or suggest that betting on
horse races is a source of income or viable way to overcome financial
difficulties; or target those under 18 years of age in their advertisements;
and
(v) the licensee shall be required to display notices to remind
punters of the seriousness of the problem caused by excessive gambling
and provide information on services available for problem and pathological
gamblers.
(e) We also propose that the existing
Appeal Board under the Ordinance should be tasked to decide appeals
lodged by HKJC in addition to those lodged by the licensees of football
betting and lotteries.
Similar to authorised football betting
and lotteries, we also propose to provide that SHA could issue Codes
of Practice as and when appropriate. This would enable SHA to prescribe
detailed guidelines on the licensing conditions and to consult the
Commission on the contents of any Code of Practice before it is
issued.
I know that some Members and gambling
concern groups may query the need and rationale for reforms and
worry that the reforms would create new demand for horse race betting.
Some people may attribute the decline in turnover of horse race
betting to economic downturn, shift of punters' interest from horse
race betting to football betting or even the poor management of
HKJC rather than the competition from the illegal betting market.
According to a survey on Hong Kong
people's gambling activities commissioned by the Government in late
2005, the public participation rate in horse racing has declined,
but betting on horse racing is still one of the most popular gambling
activities in Hong Kong (25% public participation rate), indicating
a persistent demand. Survey results reveal that many people who
participate in illegal gambling are also engaged in betting with
HKJC. We need to put in place a proper regulatory system which would
enable authorised horse race betting to effectively retain the demand
for authorised horse race betting, and divert the demand from the
illegal into the authorised and regulated channels. I believe that
the proposals put forward by the Government today would help combat
illegal bookmaking activities on horse race betting.
Some people may think that the proposed
reforms are inconsistent with the Government's gambling policy.
For example, to allow HKJC to provide rebates may encourage gambling.
I would like to point out that the Government has not changed its
standing gambling policy, i.e. restricting gambling opportunities
to a limited number of authorised and regulated channels. The spirit
of this policy is not to encourage gambling, especially illegal
gambling. Regulation of horse race betting can help to uphold this
policy. We do not consider that the proposal of providing rebates
will encourage gambling because rebates will be available to high-value
bettors who have suffered losses only. On the contrary, the proposal
will divert illegal betting to authorised betting channels, which
will help to combat illegal betting. Provision of rebates by HKJC
will increase the risks faced by illegal bookmakers, thereby undermining
their competitiveness against HKJC. As our policy is not to encourage
gambling, we have incorporated a number of measures into the legislative
proposals, licensing system and regulatory regime to minimise the
negative impact of authorised horse race betting on the community.
I note that although the survey results
indicate that there has been a fall in the participation rate in
horse race betting among both the general population and youth,
the number of young people participating in gambling has slightly
increased. It is for this reason that we have taken the opportunity
to reform the regulatory regime of horse race betting by bringing
it broadly into line with that for authorised football betting.
As I have mentioned, we will introduce a licensing system with a
series of licensing conditions (prohibiting underage betting, credit
betting, etc.) seeking as far as practicable to minimise the adverse
impact of gambling on the community.
We will strengthen measures to prevent
and address gambling-related problems, particularly on publicity
and educational measures targeting underage persons and parents.
We are planning to launch a special publicity and education campaign
on gambling-related problems to prepare for the possible increased
demand for gambling, for example, during the World Cup in mid-2006.
We are also evaluating the effectiveness of the services provided
by the two counselling and treatment service centres for problem
and pathological gamblers with a view to mapping out the long-term
model of services. We will solicit more financial resources for
the Ping Wo Fund for these purposes as and when necessary.
I believe that the proposals put
forward by the Government today, together with the on-going enforcement
actions by the Police and the measures to prevent and ease gambling-related
problems, can effectively combat illegal gambling, divert the demand
for horse race betting into the authorised channels and alleviate
social problems arising from such activities.
For the reasons mentioned above,
I hope that Members will support and pass the Betting Duty (Amendment)
Bill 2006 as soon as possible. Thank you.
Ends/Wednesday, April 26, 2006
Issued at HKT 13:50
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