Racing.com’s acquisition of rights to broadcast Hong Kong racing: A False Start?

By Laura Donnellan, Lecturer in Law, School of Law, University of Limerick, Ireland

 

On 1 June, racing.com broadcast its first Hong Kong race meeting from Happy Valley Racecourse. The Hong Kong racing calendar runs from September to July with the season coming to a close on the 10 July.  The 2016/17 season will commence on the 8 September.

Under the multi-year agreement, racing.com will broadcast all 83 races per season to Australian viewers on Free to Air television (which reaches 96% of the population, “Happy welcome to Hong Kong coverage”, 31 May 2016, https://www.racing.com/news/2016-05-31/happy-welcome-to-hong-kong-coverage) and online on racing.com, as well as 7live.com.au and Plus 7 digital platforms. It will not be shown on Foxtel, the pay television service, due to a contractual arrangement between Foxtel and a third party (https://www.racing.com/news/2016-05-31/happy-welcome-to-hong-kong-coverage).

The first race almost resulted in the termination of the agreement as racing.com flouted the rule that no other betting provider, other than Hong Kong racing’s commingling partner (TABCorp), could be advertised during the television event. Following tense negotiations on the 3 June, it was agreed that racing.com would continue to broadcast the Hong Kong races for the remainder of the season, albeit under revised terms which have not been published. It has tainted the relationship between the two parties and it remains to be seen if racing.com will be permitted to broadcast the 2016/17 season.

The deal with Hong Kong racing was extremely lucrative. The breach of contract could well cost racing.com billions of dollars not just in relation to Hong Kong racing but other ventures. The blatant disregard of the agreed terms could jeopardise future acquisitions of broadcasting rights in other jurisdictions and within the territories and states of Australia.

It was reported that during the current season Hong Kong racing staged ten of the world’s top 100 races (“Racing.com to broadcast Hong Kong racing”, 22nd May 2016, https://www.racing.com/news/2016-05-22/racingcom-to-broadcast-hong-kong-racing). It has attracted a number of high profile riders, many of whom travel from Australia to take part in races in Hong Kong. In the 2014/15 season, almost £90 billion (HK$108) was placed in bets (Frederik Balfour, “Hong Kong Horse Racing Is Serious Business”, http://www.bloomberg.com/news/photo-essays/2016-02-22/hong-kong-horse-racing-is-serious-business. The Hong Kong Jockey Club is the largest tax payer in Hong Kong with 72.5 cent of every HK dollar of winnings being paid in taxes.

For a newly created online platform like racing.com, the acquisition of broadcasting rights is a major coup. Racing.com is a joint venture between Seven West Media and Victoria Racing.  Seven West Media is, according to its website: “Australia’s leading multiple platform media company with a market-leading presence in broadcast television, magazine and newspaper publishing and online” (http://www.sevenwestmedia.com.au/). Victoria Racing is a public limited company by guarantee which was established under the Corporations Act 2001 (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/). Racing.com is a digital racing product that broadcasts racing on its website and is accessible from both a mobile phone and a tablet. For IPhone users, there is an app that can be downloaded from the App Store. An Android app is planned for the near future.

Prior to the creation of racing.com, Victoria Racing and Racing New South Wales (NSW) were broadcast on the TVN Channel, the Thoroughbred Vision Channel, a channel offered by a number of subscription television services including Foxtel. TVN was owned by Victoria Racing; however, a decision was made in December 2014 to wind up the company and TVN ceased broadcasting in March 2015. Racing NSW signed a 10 year agreement (reported to be worth AUS$25 million per year plus incentives) with Sky Sports (Tabcorp) (Adam Pengilly, “Sky’s Racing NSW broadcast deal puts TVN closure in focus”, The Sydney Morning Herald, 28th January 2015, http://www.smh.com.au/sport/horseracing/skys-racing-nsw-broadcast-deal-puts-tvn-closure-in-focus-20150128-12zvfl.html#ixzz4AtUpG07V).

The deal between Hong Kong Racing and racing.com has ruffled the fetlocks of other gambling providers. TABCorp, for example, one of the world’s largest entertainment gambling companies in the world. TABCorp manages the following brands in Australia: TAB.com.au, Luxbet, Sky Racing, Sky Sports Radio, Tabcorp Gaming Solutions (TGS), and Keno (https://www.tabcorp.com.au/about-us.aspx. From June 2014 to June 2015, TABCorp’s net profit after tax was AUS$334.5 million. TABCorp is the commingling partner of the Hong Kong Jockey Club, which entails its receiving “bets on Hong Kong races through its pari-mutuel channels then relaying them into our home [Hong Kong] pools” (Alan Atkin, “Ambushed: Jockey Club reviews deal after Aussie partner allows bookie promotion on live telecast”,, 3 June 2016, South China Morning Posthttp://racing.scmp.com/freeservice/news/news20160603bb.asp.).

It is the first venture outside Australia for racing.com, and, by bringing more racing to Australian viewers, it is likely that the number of bets will increase; this should also benefit TABCorp (John Stensholt, “Seven and Racing Victoria shake up horse racing with Hong Kong deal”, 22 May 2016, Australian Financial Review, http://www.afr.com/business/sport/seven-and-racing-victoria-shake-up-horse-racing-with-hong-kong-deal-20160520-gozn04).

Sky’s position in Australia is somewhat precarious as racing.com may well acquire rights of other races in Australia. In 2011, Sky signed a three-year deal (with a three-year right of renewal which was exercised in 2014) with Thoroughbred Racing South Australia (TRSA) to broadcast its 178 thoroughbred races that take place every year (http://webcache.googleusercontent.com/search?q=cache:lQoAM9LmItQJ:www.theracessa.com.au/thoroughbred_racing_sa/media_releases/articles/sky_and_trsa_secure_media_rights_agreement+&cd=1&hl=en&ct=clnk&gl=ie). As the contract ends in 2017, it will be interesting to see if racing.com acquires the rights or if Sky will hold on to the contract. Currently New Zealand horse racing is broadcast by TAB Trackside, which includes two pay for television channels (Sky Digital and Vodafone New Zealand Cable) and a radio station. The TAB Channels, TAB TV and Trackside, were free to air, however, were moved to subscription based Sky with effect from the 14 April 2014 (Michael Forbes, “TAB shifts to Sky for racing coverage”, The Dominion Post, 14 January 2014, http://www.stuff.co.nz/business/money/9605830/TAB-shifts-to-Sky-for-racing-coverage).

Racing.com may decide to extend its operations to New Zealand as it has with Hong Kong.

On the 1 June, racing.com broadcast racing from Happy Valley. The broadcast included commentary with pre and post-race analysis. During the four-hour broadcast, CrownBet, owned by James Packer, was advertised throughout. CrownBet had entered into a AUS€10 million deal with racing.com to advertise its services during the live broadcast (Colin Kruger, “Racing.com battle: Big questions after James Packer’s venture falls foul of Hong Kong Jockey Club”, The Sydney Morning Herald, 7 June 2016, http://www.smh.com.au/business/cbd/racingcom-battle-big-questions-after-james-packers-venture-falls-foul-of-hong-kong-jockey-club-20160607-gpdfr7.html). The chief executive of the Hong Kong Jockey club, Richard Cheung Che-kit, voiced his disapproval of racing.com’s breach of the agreement. He was quoted as saying: “the deal with Racing.com explicitly agrees that there are to be no logos or online referrals to betting sites shown during telecasts of Hong Kong racing, other than those of our commingling partner” (http://www.smh.com.au/business/cbd/racingcom-battle-big-questions-after-james-packers-venture-falls-foul-of-hong-kong-jockey-club-20160607-gpdfr7.html). TABCorp does not offer fixed odds; while fixed odds are not illegal under the law of Hong Kong, they are frowned upon by the Hong Kong Jockey Club. Racing.com rectified the situation following fears that the agreement would be terminated as it removed all traces of CrownBet on its broadcast of racing from Sha Tin day meeting on Sunday, the 5 June.  While details of the amended agreement have been kept private, Mr Cheung issued the following statement:

“After discussions with Racing.com following their initial broadcast of Hong Kong racing, and, in the spirit of cooperation, our position of no association with fixed odds on Hong Kong racing has been clarified…Hence our races will appear across their distribution platform” (quoted by Alan Aiken, “Done deal: Hong Kong racing to continue on Australia’s Racing.com until end of season”, South China Morning Post, 4 June 2016, http://www.scmp.com/print/sport/racing/article/1964835/done-deal-hong-kong-racing-continue-australias-racingcom-until-end).

Racing.com will broadcast the remaining nine meetings of the season.

Much uncertainty surrounds the 2016/2017 season, as Hong Kong racing and racing.com will have to discuss how best to proceed with the agreement. What began as an exciting new venture may well be over before it has even started. The opportunities for racing.com within Australia and New Zealand may also be jeopardised.

 

Laura Donnellan may be contacted by e-mail at ‘laura.donnellan@ul.ie’