Tuesday, April 29, 2014

Mongolia Will Propose Gambling on Horse Racing to Tap China

Mongolia’s government will propose laws to set up a professional horse-racing league and legalize betting to compete for the Chinese gambling market.

The government may approach the Hong Kong Jockey Club with a proposal to have jockeys and horses race in Mongolia when they’re not competing in the former British colony, Culture Minister Oyungerel Tsedevdamba said in an e-mail. The Hong Kong horse racing season runs from early September to mid-July.

“Our priority is to make the legal environment for a jockey club operation so that we can have a market share” of the Asian jockey business, Oyungerel said, adding that she hopes to submit the draft in parliament within three months. “Our law is heavily based on Hong Kong Jockey Club rules.”

Legalized gambling would help diversify Mongolia’s resource-reliant economy as prices for commodities such as copper and coal languish at multiyear lows. The Mongolian tugrik fell to a record low of 1,796.5 to the dollar today, while economic growth fell for the second straight year, to 11.7 percent in 2013.

Wagering on horses might give Mongolia access to a piece of the Chinese gambling market that’s made Macau the world’s biggest gambling hub. Revenue in Macau, the only place in China with legalized casino gambling, will double by 2018, according to Aaron Fischer, an analyst with Hong Kong-based brokerage CLSA.

Asked about the Mongolian idea, Hong Kong Jockey Club spokesman Andy Clifton said in an e-mail jockeys are given a “short break” between mid-July and September.

New Season

“During the off-season, horses and jockeys remain in training for the majority of time to be ready for the start of the new season,” Clifton said.

In its latest annual report for the 2012-2013 season, the Hong Kong Jockey Club said racing, the Mark Six Lottery and football betting amounted to HK$152 billion ($19.6 billion), resulting in revenue for the Jockey Club of HK$27.2 billion.

A law to allow betting would mark the first time Mongolia allowed gambling since a Macau-operated casino closed in 1999 and three lawmakers were convicted of helping rig the tender to build it in exchange for gifts including cash and vehicles.

“Mongolia is developing,” said Jan Wigsten, founder of Nomadic Journeys, an Ulaanbaatar-based tour company. “It is normalizing in the global sense and the institutions are becoming stronger, which is necessary with gambling.”

The government is seeking to build a horse-racing track near the site where the country is building a new airport, 54 kilometers (33.6 miles) south of the capital Ulaanbaatar. Oyungerel said more than 50 horse trainers from Mongolia will visit Hong Kong to study the business.
More Legislation

Oyungerel said one law to legalize online gambling and lotteries and a second law to allow horse betting and jockey clubs are in draft form. After the first two drafts are submitted to parliament, the government will decide if more legislation is needed, including a bill to allow casinos, said Oyungerel.

Mongolia has its own tradition of horse racing. Courses are set on the open plains and run more than 15 kilometers, and many jockeys are children under 10 years old. Oyungerel represents a district of Ulaanbaatar that’s home to many young jockeys, she said.

“I see their future in the horse business and I would like to provide a viable business for today’s horse boys,” she said.

To contact the reporter on this story: Michael Kohn in Ulaanbaatar at mkohn5@bloomberg.net

To contact the editors responsible for this story: John Liu at jliu42@bloomberg.net Nicholas Wadhams, Frank Longid

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