April 29 (Bloomberg) -- 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 touched a record low of 1,796.5 to the dollar before closing at 1,789, while economic growth fell for the second straight year, to 11.7 percent in 2013.
Underscoring the challenges for the economy, Standard & Poor’s today announced it lowered Mongolia’s long-term sovereign rating to B+ from BB-, or four levels below investment grade. Standard & Poor’s cited off-budget spending, weak governance and its “weakened external and debt profiles.”
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.
The move would also seek to tap Mongolia’s centuries-old reverence for horses, which are central to the national identity. In early 12th century, the Mongol emperor Genghis Khan established the world’s largest land empire by conquering much of Eurasia on horseback. Mongolia also has a tradition of horse racing, with jockeys who are often younger than 10 years and courses on the open plains running more than 15 kilometers.
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.
“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.
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.
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 email@example.com
To contact the editors responsible for this story: John Liu at firstname.lastname@example.org Nicholas Wadhams, Frank Longid