February 21, 2020
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For Bettor Or Worse

The horses are no longer a good bet. The big money has moved to cricket. Only, the law is a hurdle.

For Bettor Or Worse

The prodigals of Mumbai’s racecourse have a simple philosophy: you have to be an ass to bet on a horse. The tax is high, the mood is not. The sun too can be cruel on a racing day. Even the event is rigged - horses are sedated to throw a race. In brief, that still shamelessly imperial place, The Royal Western India Turf Club, offers very little to a punter today. The degrees might vary, but it’s a story repeated all over the country.

Meanwhile, betting on cricket is somewhat different. It’s not legal. No tax. No sun. A phone will do. A man with a scar will come home to collect the money and later return to hand over the booty. Mobiles ensure that a bookie is untraceable. The ‘trade’ is said to be more organised than anywhere else in the world. That’s why, according to a conservative estimate, on a match day, about Rs 1,000 crore changes hands in Mumbai alone. On a racing day at the race-course, that figure is a mere crore. On a Derby day, it may touch Rs 2 crore.

Not surprisingly, attendance at the Turf club has gone down by 40 per cent over the years. Today, hardly 6,000 people turn up on a racing day. That’s why traditional punters have decided to put their money on cricket. Even the bookmakers have got the drift. From over 50 bookies sometime ago, the figure is now 37. The overheads are high for a bookie at the racecourse, he has to pay Rs 12,000 as stall fee and Rs 3,000 in salaries on a racing day. On a good day, he may make Rs 10 lakh, but for any of the big cricket bookies a good day means profits up to Rs 50 lakh. And theoretically, for the bookies even the chances of losing money in cricket are less than in racing. And then a cricket bookie has no overheads apart from embarrassingly modest mobile bills. And some of them don’t like paying even those. Says Ram Dandekar, head of the bookmakers at the Turf club, "Recently an mtnl employee was caught with Rs 42 lakh in cash. It was his commission for diverting isd calls of the bookies to mncs like Glaxo. A company like Glaxo has such a high telephone bill that this intrusion is never noticed. That’s how organised the whole thing is."

Sitting in a spacious house in south Mumbai, a bookmaker points out, "All the registered bookmakers in the race course are into betting on cricket. That’s what is sustaining them." None of the bookies Outlook got in touch with denied this. With its apparent prevalence and the money cricket betting generates, is there a case to legalise it? Says Anand Chavan, Maharashtra revenue minister, "Cricket is a sport that concerns national pride. So I don’t think betting is right. I know it still goes on, but it’s illegal and we are taking measures to curb it."

It’s a lot of money the Indian government is losing out on. During an India-Pakistan match over Rs 10,000 crore is reportedly generated in the country. At a nominal tax of 5 per cent, on a single day of cricket, the government can earn Rs 500 crore. Since betting continues on all days of international cricket - over 200 days a year - the money the government stands to make is phenomenal. And that thought might just prompt a rethink on the legal status as Chavan says, "We are looking into it."

In fact, the money generated from legalised betting will be much more than what it is now. As of now, it’s an industry operating on ‘trust’. You cannot place a bet with the bookie unless a friend vouches for you. If you don’t pay up, the man with the scar will come home with a sickle. But if betting is legalised, every bookies’ clientele will naturally increase.Says Ravi Ghai, a committee member of the Turf club, "It’s not just practical to make cricket betting legal but also possible."

But many point out that doing so may actually prove counterproductive. See what happened to racing, they say. Time was when aspiring bookmakers would pray to relevant gods to get a licence and open a stall at the racecourse. Now the Turf club has to advertise in newspapers seeking, almost begging, people to do so. The basic reason why racing has lost favour is the tax structure. Two years ago, the betting tax was 10 per cent, and as the racing lobby pressed for a reduction in the tax, the government made an announcement in ‘98. That this announcement came on All Fools Day is significant. The betting tax was hiked to 20 per cent. At the time the commission the punter paid the club was 6 per cent, which meant a total levy of 26 per cent. After many parleys, former deputy CM Gopinath Munde came to the racecourse. Standing at the stables, he gave a speech some now refer to as the Sermon from the Paddocks. At the end he’d brought down the betting tax to 10 per cent. There was much applause and neighing. But the tax came into effect on the condition that the club guarantee an amount of Rs 36 crore in the next two years to the government. So, to bolster revenues the impoverished club increased its commission from 6 per cent to 16 per cent. This meant precisely the same old total tax of 26 per cent. "The government was fooled," says a bookmaker with succinct eloquence.

Today, the club is about Rs 1 crore in the red. Concedes Cyrus Poonawal, the chairman, "We’re in no position to give Rs 18 crore to the government this year. So the betting tax is expected to go up to 15 per cent. That’ll be the death knell of racing. It’ll chase punters and bookies away. Cricket betting already makes more sense to them." Then, apart from the 26 per cent levy, profits over Rs 2,500 also face a 44 per cent tax.

Says Ram Dandekar, "Nobody gets rich in the racecourse." He knows people who come to the racecourse and wager their entire salaries. "And in the evening they ask me for change to take a bus back home. They’ll come again, punters are loyal to punting. But now they’re putting money in cricket."

There’s another reason why racing is dying in Mumbai - the breeder lobby. The rwitc is governed by breeders. Says Dandekar, "Breeders want to sell their horses, so they’ve to offer incentives. That’s why the stakes for every race have gone up. It’s a Rs 75,000 to Rs 2.5 lakh prize for a race. On a Derby day, it goes up to Rs 50-60 lakh. If there are no sponsors, the club has to shell out its own money. No wonder the club is going broke. The breeders are emptying it to suit their own interests."

Indeed, breeding horses, like cricket betting, is another area the government has failed to cash in on. A stud farm, perhaps because of the word farm, is an agricultural entity. So there is no tax. It’s said that 80 per cent of the best horses are sold in private auctions to a handful of people. The average price of a racing horse or colt is around

Rs 10 lakh and a top quality horse can fetch up to a crore. Some 4,000 colts and horses are sold every year in seven centres across the country. Thus, it’s a multicrore business and it’s completely tax-free. Even custom duties don’t apply in the import of a foreign colt that can fetch up to a crore.

The simple truth is that a lot of people are making a lot of money with the satisfaction of not sharing any of it with the government. Now, it might just be time for remedial measures.

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