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The Return to the Community

The Importance of the Racing Industry

The Plight of the Racing Industry

Multiplier Effects

A Different Category Altogether

A Sport with Social Involvement

A Game of Skill

An Extra Element of Skill

Recreational Benefit

Competition with Other Gambling Products

Conclusion

The Return to the Community

A long tradition exists not only for the totalizator,  but also particularly for the racing industry on which it depends. They have stood the test of time. Furthermore, they also have considerable advantages for the community that other gambling products cannot match. However, a number of these advantages are not as widely recognised as they deserve to be.

Because the SPT integrates with the totalizator, it shares these advantages, and it has a number of other advantages as well. The advantages to the community from an improvement to the racing industry depend on:

The Importance of the Racing Industry

The racing industry is a very important industry to the economy in many countries around the world. Often it is among the top three or four industries in a locality and, as such, it is a big source of employment.

It is often also an important source of funds for Governments. In Hong Kong, for example, it provides about 11% of government revenue. Of course, this tax revenue goes back into the community.

The Plight of the Racing Industry

The plight of the racing industry in many localities is well known; it has frequently been badly affected by competition as other forms of gambling have been introduced.

In addition to this direct effect, all gambling related industries are being tarnished to some extent by the introduction of other more addictive, socially isolating forms of gambling. The general community is not uncommonly becoming less tolerant of increases in these other forms of gambling, and those in the racing industry who have been looking to introduce some of these other gambling products to their racetracks in a bid for survival will find it a progressively harder strategy to implement.

However, there are a number of indications that racing can still be a very marketable product. If so, then the wagering industry has at its fingertips a powerful funding resource, especially if the SPT is introduced. That resource is wagering itself. Long neglected because of the rush to other forms of gambling, the simple fact is that wagering has considerable advantages and does not have many of the detrimental effects that others can have. Such sources of funding are becoming difficult to find. [top]

Multiplier Effects

It is believed that the positive effects of the SPT on the racing industry and the general economy will be accentuated by multiplier effects at almost every level. These effects are due to both the nature of the SPT and the nature of the racing industry. For example:

A Different Category Altogether

The cost / benefit ratio for gambling products is not a single figure but a spectrum; few people would argue with some forms of gambling such as charity lottery tickets, bingo nights and only having a bet on the biggest race of the year (e.g. the Melbourne Cup in Australia).

Furthermore, gambling will exist regardless. The real question from a moral and practical point of view is where to draw the line. A sharp distinction needs to be drawn between wagering on racing and most other forms of gambling because racing is quite different in nature. [top]

A Sport with Social Involvement

The racing of horses has long been referred to as the Sport of Kings. Little else needs to be added except to say that ownership of the animals as well as physical activity of the participants also indicate that racing is indeed a sport.

There is a considerable degree of social involvement in racing. That may occur in many different ways such as: at the racetrack (Melbourne Cup day being the best example in Australia), in syndicates (where groups of people join together to buy racing animals or to bet) or with friends at a hotel. Compare this to other forms of gambling, particularly poker machines. [top]

A Game of Skill

Wagering on racing is in a different category altogether than various other forms of gambling. While many other gambling games are purely determined by luck, betting on races is indeed a genuine game of skill.

Furthermore, when the betting system is pari-mutuel in nature, as is the case for the existing tote system and the SPT, the punter does not have to exercise his skill in a rather one-sided battle against a professional bookmaker or against the house; he only has to be somewhat more skilful than the average punter.

While, of course, wagering on races has a gambling component, one of its main attractions lies not in repetitive addictive behaviour but in being skilful enough to win at the game. Therefore, the emphasis is on a recreational use of skill. As it is more of an intellectual pursuit, it is far more likely to be an attraction for discerning consumers in search of a challenge than for those attracted by mindless gambling. Consequently, it is believed to have far more positive recreational outcomes and to be significantly less likely to be addictive and harmful. This would be especially so if industry advertising emphasised the element of skill.

The skill component is widely recognised around the world. Even in some Asian countries where other gambling is frowned upon or banned, betting on horse racing is commonly treated with much more tolerance because it is regarded as a sport which involves skill.

It has reportedly even been recognised by Senator Brian Harradine (a morals campaigner in Australia), who said: “I think there is an argument that there is a difference between wagering in a sport such as racing, where it is desirable for one to know a bit of the form, and gambling on poker machines.” [Advertiser 19 October 1999]. [top]

An Extra Element of Skill

Furthermore, providing set prices by using the SPT will add an extra element of skill to a product that already involves a high level of skill.

The increased level of skill arises because prices change during betting, sometimes quite considerably, and many trends can be discerned. By carefully watching those trends, the set price punter has the opportunity to obtain a better price than he would otherwise receive, and the opportunity to obtain a better price than the variable price punter will receive or even to obtain the best price available during betting. [top]

Recreational Benefit

While wagering has considerable recreational aspects, this does not mean that risk does not exist. However, as with many activities, the main harm is done to those who over-indulge. Considerations as to benefits and risks are a matter of balance and degree; a black and white position is not productive from a practical point of view.

Life intrinsically involves risk-taking, and wagering on races is an extension of that. Over-indulging in any aspect of life causes problems, whether that be eating, drinking alcohol, driving too fast or even exercising excessively (e.g. significantly reduced hormone levels for women).

Wagering, in particular, provides a recreational benefit. For those who spend modest amounts, it is difficult to see a big difference between those amounts and the expenditure which is almost always involved in other hobbies. Obvious examples include the cost of computers for surfing the Internet, the cost of books, or the amounts spent on sports such as motor car racing, horse riding or ten pin bowling.

Gambling is not going to go away. The challenge is to maximise the benefits and minimise the harm. One way to help achieve that is to maximise the proportion of wagering compared to other forms of gambling. [top]

Competition with Other Gambling Products

Because the SPT will make the wagering product much more attractive, it will compete more effectively with other less desirable forms of gambling and actually attract customers from them.

The SPT will also compete with bookmakers. Bookmakers often provide a much lesser rate of return on their turnover to the community via the government and the racing industry than a totalizator system does. A totalizator may return about 16% or more on turnover, which usually goes directly back into the community one way or another: recreation, employment, purchase of local equipment and animals, tax, prize-money and shareholder returns. On the other hand, the return to the community is significantly lower for bookmakers; their turnover tax can be as low as 0.5% and is not uncommonly 1.0 – 1.5%. Most of the return is to the bookmakers and therefore the benefit is narrowly confined. [top]

Conclusion

The return to the community involves a number of factors including the level of direct financial gain (profit share or risk for the racing industry, and taxation) and the value of other benefits such as recreation and employment. Balanced against these factors are the costs and risks. The result is a spectrum, not a single point. Wagering on racing in general, and particularly the SPT, are at the positive end of that spectrum.

Betting on racing via the totalisator provides a high direct financial reward. Wagering also has a significant number of other benefits given the level of skill, the recreational and social aspects and the fact that racing is often one of the top three or four industries in a given locality.

These important factors fortunately do not seem to be lost on the anti-gambling forces targeting various forms of gambling because they mainly seem to target poker machines (slots).

The SPT integrates with the normal wagering product and enhances that product. It is believed that a better and fairer wagering product will result from the use of the SPT and, if the advantages of the SPT are explained, it should not meet anything like the same degree of resistance that can confront some other forms of gambling such as poker machines. Therefore it may be of considerable benefit in boosting turnover and profitability to the very important racing industry where other strategies may be precluded. [top]