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EDITORIAL - Gallop ahead with CTL divestment

Published:Wednesday | May 16, 2012 | 12:00 AM

Arthur Williams was right. Horse racing, he argued, "is not part of the core business of government".

Yet, Jamaican governments, including the one of which Mr Williams was a member when he made that observation two years ago, have been unable to divest themselves of ownership of a big chunk of the business.

The Government owns Caymanas Track Limited (CTL), the monopoly promoter of horse racing whose net position, although projected to improve by 53 per cent this fiscal year, will still result in a loss of around $88 million. Taxpayers, of course, will have to cover that deficit, as they did -$187 million for the year just ended and the -$57 million for 2010-11.

But worse, as a business, CTL is insolvent. Based on the numbers recently sent to Parliament by the finance ministry, its liabilities, at the end of this financial year, will exceed its assets by $367 million, against the current -$259 million.

CTL's hunt for funds

Within these numbers lies the substance of the contretemps between CTL and independent bookmakers, as well as the juvenile, prankish behaviour of at least one of the industry's major stakeholders that contributed to the disbandment of last Saturday's race meet.

It has long been obvious to CTL's management that not much more can be squeezed from taxpayers. So, it has been looking elsewhere for cash, including ways to extract greater value from the product it offers. It has, for example, been increasing the fee it charges bookies for proprietary information used in their calculation of dividends and odds.

The bookmakers, however, have balked at the latest hike, from six to seven per cent of their gross sales. This fee has graduated from 3.5 per cent in 2009. The bookies claim the jump to be unaffordable, given that they already pay a government 'sin' tax of 16.5 per cent of sales. In protest, the bookies have stopped selling bets for a few racedays.

Government should step back

Given the fact that horse racing is a $5-billion business that employs hundreds of people, it is understandable that the dispute has taken up a fair bit of ministerial time in a search for solutions. Horace Dalley, the junior minister of finance and the public service, who has responsibility for the industry, has been attempting to balance CTL interests while keeping the bookmakers on board and assuaging other stakeholders who feel the bookies have too easy a ride.

That ought not to be Mr Dalley's job. His role should be ensuring that the broad environment is right for horse racing and that all players in the industry are tax compliant.

Or, as Mr Williams put it in his 2010 speech to the None Such/Horse of the Year awards in 2010, the "Government must divest CTL and get out of the running of the racetrack".

We will be reminded that the People's National Party administration, which is back in Government, came close in 2006. But that effort collapsed.

However, that can't be the end of the matter. There now needs to be an urgent, energetic push to get CTL off the books. Taxpayers can't afford it. Moreover, the Government's job in horse racing should be regulation, not managing totes.

The current situation is a recipe for the industry's stagnation. Divestment is crucial to the modernisation of horse racing in Jamaica, including the game-changing use of technology.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.