• 42 •

It was World Cup 2002 that provided the final catalyst. For some years earlier, illegalfootball betting had been steadily growing in Hong Kong as more and more topoverseas matches were screened live on local television. But the trickle turned into averitable torrent as the first World Cup finals to be staged in Asia had Hong Kong’ssports fans on the edge of their seats for a month in June and July that year. Youcould hardly walk into a bar in Hong Kong without someone, somewhere knowingwhere you could place a sneaky bet.

ast forward just 48 months to this summer’s World Cupfinals in Germany and it seems difficult to believe therewas ever a time when Hong Kong fans didn’t have a properly-run, legal channel for betting on theirfavourite team, so well entrenched has HKJC Footballnow become on the local sporting entertainment scene.

Indeed not only has the Club successfullyestablished a major new arm of its business in this short space oftime, says Head of Football Betting Colin Miles, it has actuallybecome one of the biggest football betting operators in the world,surpassing the entire market of some European countries wherefootball betting has a far longer history.

In the process of reaching this milestone, HKJC Football hasalso set new industry standards in many areas of its operation and– most important of all – made a serious dent in the business ofHong Kong’s illegal operators.

The story of how the Club launched its football bettingservices within such a short deadline is without doubt aremarkable one – and like some of the most famous stories in

ffootballing history over the years, it was a triumph achieved verymuch against the odds.

Concrete actionThe question of providing a legal football betting channel inHong Kong had been debated for some time, but after the 2002World Cup it became clear to the Government, legislators and thepublic at large that concrete action had to be taken. If nothingwere done, the illegal channels would just keep growing, bringingwith them all the social ills of unregulated gambling and costingthe community billions of dollars in potential tax revenue.

Nevertheless, it was not until 10 July 2003 that the Billlegalising football betting was finally passed in the LegislativeCouncil – just three weeks before the date HKJC Football hadtargeted to start its services, 1 August.

Moreover, launching football betting was quite literally awhole new ball game for the Club, as unlike horse race bettingwhich operates on a pari-mutuel system, whereby odds andpayouts change constantly according to the amount bet into the

We are thechampions

of theworld

• 43 •

Executive Director of Finance PaulusLee (left) and Head of FootballBetting Colin Miles discuss riskmanagement strategy in the Club’sstate-of-the-art trading room.

pool, most football betting operates on a fixed odds basis. TheClub had to set up comprehensive risk management systemsfrom scratch and recruit a new pool of staff with experience ofmanaging this complex type of operation.

By the time the licence was granted, some 4,000 new full- andpart-time staff had already been recruited and more than 10,000existing front-line staff put through intensive training, to givethem a thorough understanding of the football scene as well asfamiliarity with the new bet types and systems.

This would have been a challenging enough task at the best oftimes, but in this case the timing couldn’t have been worse: formuch of summer 2003, Hong Kong was in the grip of the SARSepidemic and many aspects of normal life had virtually ground toa halt.

“Despite all this, we managed to organise an amazing total of35,000 trainee-days between April and August,” recalls HumanResources Manager Iris Cheng. “To overcome the SARSproblem, we arranged home distance learning courses by VCD aswell as the normal classroom sessions and it all came togetherreally well. We actually won a gold award from the Hong KongManagement Association for our football training programmes.”

Even before the training began, other members of Clubmanagement had been turning their attentions to the productsand systems. “We started our preparations more than a yearbefore launch by trying to build an understanding of how otherfootball betting businesses around the world operated, and thendeveloping our own system based on best market practices andHong Kong’s own unique challenges,” explains Manager,Product & Services Development, Gilbert Cheng.

“I personally think that the system we’ve built here is the bestanywhere, and many of our industry peers around the worldseem to agree, as demonstrated by the frequent requests we getfrom fellow World Lottery Association members to come andlook at our risk management systems.”

It would probably amaze the average fan to see what actuallygoes into running a successful football betting operation. On atypical Saturday night in Hong Kong Jockey Club Headquarters,a small army of highly-trained risk management traders can be found hard at work watching live football action on one screen while constantly monitoring betting patterns on another,

Dummy text for caption: Dummy text for caption

• 44 •

Dummy text for caption

and adjusting the odds as necessary.And while Saturday nights may be the busiest, it is virtually a

24 by 7 operation, as different time zones and kick-off timesmeans that there is nearly always a match in progress somewherearound the world in one of the major competitions.

Different patternsThe time issue also means there are very different patterns in theway that people bet. Whereas a large volume of horse race andMark Six betting is still conducted through traditional channelssuch as the Off-Course Betting Branches, a majority of footballbetting is done through the Club’s interactive services.

In addition, football betting tends to attract a different profileof customers in terms of age and profession, many of themsophisticated bettors who have all the latest hi-tech gadgets and arevery comfortable using them.

Not surprisingly, then, a lot of the Club’s efforts have beenput into developing interactive football betting services,especially the website which accounts for a significant share offootball turnover. As well as providing lists of upcoming matchesand odds, the HKJC Football website now offers comprehensivedatabanks of statistics, video clips of match highlights andfootball news from around the world.

The latest innovative addition to the website is Bet Slip, a

Chief Executive Lawrence T Wong (2nd left) admires one of the special FootballCorners set up at Off-Course Betting Branches to give customers match information.

The Club’s football training programmes for new andexisting staff were so successful that they won a GoldAward from the Hong Kong Management Association.

convenient new system that allows customers to browseinformation and place their bets on a single screen. As footballbettors often place a wide variety of bets at the same time, itmimics the growing popular e-shopping websites by providing a‘shopping cart’ facility whereby customers can select items fromdifferent sections, recheck the purchase list from time to time,and finally click to place the bets.

As well as making the betting experience more simple andconvenient, the Club is steadily rolling out new bet types – partof a carefully designed strategy to squeeze the illegal operators byplaying them at their own game or, better still, venturing intoparts of the playing field that they dare not enter.

“In the first year or so, we were really just playing catch-up,because we knew the illegals had a well-established business,”recalls Gilbert. “Football betting was also a big new challenge forus, so we wanted to take a prudent approach. Therefore westarted off with quite simple bet types like HAD, Correct Scoreand Total Goals, to give us a better understanding of marketdemand and our own capacity. We also focused initially on the best known leagues like the English, Spanish, German and Italian.”

Since then more bet types have been gradually addedlike handicap betting, which was already being widelyoffered in the illegal market, as well as more leagues andcup competitions from around the world.

One important strategic reason for widening therange of competitions was to meet customer demand formore regular daily offerings, a demand that was beingtaken up by illegal operators in the Club’s stead. “If youconcentrate on the popular European leagues, you havea mainly weekend product,” notes Colin. “In fact, oneof the reasons why illegal football betting got a strongfoothold in Hong Kong in the first place was that fanscould follow football seven days a week, with somematches covered live on TV, whereas racing was heldonly on Wednesdays and Saturdays or Sundays. So theregular bettors started to look around for other outletswhere they could bet on football matches.”

To address this demand, HKJC Football focused itsattention on adding leagues and competitions that wereplayed in different time periods over the week – forexample the European cup competitions which areplayed mostly in midweek, the Scandinavian leagueswhich play through the summer, and the Brazilian andJapanese leagues which kick off at other times of the dayor night in Hong Kong time.

By January 2004, the Club was ready to strike outinto further new territory by offering pool bettingproducts such as Double HaFu Score, which invitescustomers to guess the correct half-time and full-timescores of two designated matches, and 6HaFu, which

• 45 •

involves predicting the half- and full-time results of six. Theseinnovations ride on the huge popularity of exotic bets in HongKong, as evidenced by the Triple Trio in horse racing. “As far asI'm aware, there’s nothing comparable to these in any otherfootball betting jurisdiction around the world,” says Gilbertproudly. “They are unique Hong Kong products.”

Betting options have since been further extended with theintroduction of all-up betting across different bet types – whichapart from offering local fans the chance to win up to HK$10million on a single bet, has another important aspect to it. “Thisis where we can win back advantage from the illegal operatorsbecause they simply can’t compete on all-up bets – they don’thave a large enough pool to take the risk,” explains Gilbert. “Inaddition, if you stood to win HK$10 million, would you reallytrust an illegal operator to pay up?”

These types of bet are especially popular here, Colin adds,because customers have been used to doing the Mark Six and theTriple Trio. “Hong Kong people enjoy going after the big win fora small outlay. In other major football betting jurisdictions theretends to be a larger percentage of high rollers in the mix, as many

A Winning Line-up

Tournaments

Champion

Group Winner

Group Forecast

Top Scorer

In Play betting also offered on HAD and Correct Score

All Up betting available across all bet types

Bet Types

CorrectScore

HAD(Home/Away/

Draw)

HandicapHAD

HandicapHiLo

Total Goals

Odd/Even

First Scorer

HaFu DoubleHaFu Score

6HaFu

Mainstream

Pari-mutuel

• 46 •

bookmakers place punitive restrictions on their maximumpayouts, which adversely impacts the interest in exotic bet types.”

The latest addition to the Club’s football portfolio has been In Play betting, introduced from the start of 2005/06 season inresponse to customer demand. This explains the need to haveexperienced traders constantly monitoring every match, andadjusting the odds as necessary.

“In Play betting has proved very popular with our customers,”Gilbert says. “We are the first legal operator anywhere in Asia toprovide this product, and we can only do it because we have sucha good risk management system in place and the trading expertiseto go with it.”

Colin puts the popularity of In Play betting down to thematurity of Hong Kong bettors. “Customers bet very tacticallyhere, and if the team they’ve bet on isn’t doing well, they like tohedge their positions,” he points out, noting that Hong Kong fanscan enjoy more live matches on local television each week thanthose in most parts of Europe, even though many of the games arescreened late at night or in the early hours of the morning.

Gilbert is cautious about unveiling future roll-out strategiesbut says that the Club will always try to respond to customerdemand, and leave as few gaps as possible for the illegal operatorsto fill. He notes, though, that there is still a long battle ahead

before the illegal bookies are likely to concede defeat. “There aresome things the illegals offer that we can never do like creditbetting,” he points out, “so being competitive on odds andoffering top-class customer service is all the more important.We’re always looking at new ideas and one of our key aims is tofurther increase our provision of information, as many footballbettors now study form just as closely as horse racing fans. Bymaking sure they can find all the information they need in oneplace on our website, we can further build their brand loyalty.”

Colin adds that HKJC Football’s overall aim is to givecustomers more choice and a more interesting range of bets, andthe Club constantly monitors customer feedback from its marketresearch and focus groups to ensure that its product rangeremains competitive with the illegal market’s offerings.

“It’s important that we achieve the right balance, catering forour customers’ needs but at the same time not over-stimulatingthe market. Our rapid turnover growth indicates that ourcustomers like the range of matches and products we offer, andthat we’re doing a good job competing with the illegalbookmakers. Our prices are also as competitive as any legaloperator in the world. In fact, I think we’ve got the ideal businessmodel in place here in Hong Kong.”

On the ball (from left):Football betting teammembers Li Tak-nang (Media CommunicationsManager), Gilbert Cheng(Manager, Product &Services Development) and Edgar Ling (FootballMarketing Manager).

• 47 •

• 48 •

T

And the World Cupwinneris...Four years on from World Cup

2002, which in Hong Kong was a

victory only for the illegal bookies

who had no viable competition, the

2006 finals in Germany have seen HKJC

Football’s legal football betting channel emerge

a clear winner amongst local fans.

The Club’s total football betting turnover for

2005/06 increased nearly 17% to HK$31 billion

and a significant share of that can be attributed

to the “World Cup fever” that gripped Hong

Kong for over a month.

To enhance customers’ experience and

encourage use of the legal channel by building

brand loyalty, HKJC Football created its own

World Cup website, becoming one of the first

football websites to post a comprehensive

range of information on the finals. The start of a

100-day countdown in early March helped build

further excitement, then

in the run-up to June’s

opening matches, a

series of fun games

was organised at

Off-Course Betting

Branches and on the

website, to refresh

customers’ memories of

World Cups past.

Adrenaline, the Club’s

stylish new sports lounge at Happy

Valley Racecourse, also became a popular

venue for World Cup fans, holding party nights

for the live screening of all major matches after

a successful pilot run in early April.

In addition, In Play betting was offered for

all 64 matches in the competition.

“We’re very happy with the way things

have gone and we believe the momentum will

carry through to next season and beyond,” says

Colin Miles. ”Most importantly, I think we've

shown the market that in terms of offering

comprehensive information and an attractive,

competitive range of matches and bets, no-one

does it better than HKJC Football.”

Adrenaline

• 49 •

T

Behind every successful footballteam is a well-thought-outstrategy and an experiencedgoalkeeper, provided here byDirector of Strategic BusinessPlanning Kenneth Chen and Headof Legal Services Douglas So.