Off-Track Betting stations hurting

On August 12, this column revealed the alarming decline in the revenues of the Philippine Racing Commission (Philracom), partly due to inaction and unprofessional behavior of its holdover board, which has resulted in investigations by the Commission on Audit (COA) and Congress. As it turns out, the circumstances are worse than previously thought.

Karera Stations Association of the Philippines (KASAPI) president Nicson Cruz, vice-president Junn Arzadon, treasurers Rudy Astorga and Remedios Dayrit and general manager Clint Cabiog urgently detailed to The STAR the long-standing sacrifice and suffering of Off-Track Betting station (OTB) operators as industry regulations were being bent to choke the revenue of their roughly 200 members, particularly in the past few years. The dramatic drop in horse racing revenues the last four years alone has made the situation dire. Reform is needed if these off-track betting stations, the lifeblood of the horse racing industry, are to survive.

To begin with, OTB station operators were contracted by the racing clubs to provide a collection and distribution for betting revenues, since the bulk of horse racing patrons do not or are not able to frequent the races in person. However, the operators bore all the risk. They found locations, paid for renovations, water, electricity, security and tellers who were technically not their employees. Thus, they have a consistent, substantial sunk cost, regardless of how badly horse racing is doing.

“We assume all the risk,” explains Cruz. “Even the betting machines we invested P100,000 per machine on from two of the three racing clubs have been deteriorating and haven’t been replaced. This makes it hard for people to place their bets. So many things negatively affect our revenues, but we are still spending so much. Nothing is being done.”

Initially, OTBs were allowed to collect one percent of revenues as their income. In recent years, the amount was inexplicably lowered to .75 percent, then one-half of one percent. This, coupled with a decline in the number of horses – and thus, big races – has made the situation perilous for KASAPI members.

“There’s no more Pick 6, for example, because there aren’t enough horses,” rues Cabiog. “Races used to have anywhere from seven to 11 horses, more races. With less races, less options to bet on, less income. But our overhead stays the same.”

Aside from these major problems, the larger concerns are the deep slide in revenues of horse racing, the departure from the business of many long-time horse owners, and the infiltration of cockfighting (sabong) into many KASAPI members. A group of them was even encouraged by a past Metro Manila mayor to form a separate group for sabong betting stations, a clear conflict or interest. Mayor Isko Moreno closed down these Off-Cockpit Betting Stations (OCBS) in Manila saying they have no national franchise from Congress. These OCBS facilities are under Manila Cockers Club, Inc., a wholly-owned subsidiary of Manila Jockey Club, Inc. (MJCI). MJCI’s legal representation have written the local chief executive to try to get the OCBS back online, arguing that they have already had permits from other local government units.

This is an unusual situation, and has conflicting intent, to say the least. An existing pipeline licensed to collect bets for horse racing is being used to collect bets for online cockfighting, the very competitor that is doing the most damage to the industry. Why would a horse racing club shoot itself in the foot, because cockfighting revenues are higher? The OTBs are now collateral damage, and nobody seems to be looking into this.

KASAPI has also reached out to Games and Amusements Board (GAB) Chairman Baham Mitra because of the permit fees they are being charged, which they consider unreasonable. OTBs pay fees for every race club for their races, and say this is too much.

“GAB is merely a collection agency. We remit the funds directly to the national government,” Mitra clarified. “Those regulations were there when we came into office. But I can make representations to the Department of Budget and Management and Commission on Audit.”

These issues and others will be brought up at the Philippine Professional Sports Summit that Mitra has called on Sept. 24 and 25. But if no one steps in to save KASAPI soon, the Off-Track Betting infrastructure could collapse, rendering a critical blow to the country’s anemic horse racing industry.