Talk:Good Neighbour Policy (horse racing)

the good neighbour policy was also a term for the American promotion of positive relations w/ latin america during the 30s/40s, through institutions like the Office of Coordinator of Inter-American Affairs.. just thought i'd throw that out there -j

Removed the following :

Widely viewed as documenting an international cartel to defend the signatory jurisdictions from competition from commercial bookmakers and bet exchanges so as to maintain higher profits for themselves.

The agreement only limits the signatories themselves from competing with each other (assuming such competitions are legal). It would in no way prohibit "commercial" gambling operators to free-ride on the racing results. i.e. the agreement itself could in no way limit "supply" - an essential feature of cartels.

The main force in "fighting" illegal gambling is legislation and enforcement. The situation can be considered government granted monopolies in respective states, rather than an international cartel. In any case this is widely considered as legitimate crack-down of illegal activities which caused social and law-and-order problems.

-Hlaw 05:30, 6 Jan 2004 (UTC)

The agreement states that the signing jurisdictions will not provide betting on horse racing to residents of other signatory jurisdictions without the permission of that signatory jurisdiction, nor solicit, market or advertise betting without prior authorisation from that other signatory jurisdiction. Consequently both competition and supply is reduced. Clearly this is documenting the creation of a cartel, although the statement in the article is simply that it is "widely viewed as documenting an international cartel".

-Critic 15 Jan 2004

Why the agreement does not fall within the usual meaning of Cartel

The aim of the Policy is to combat illegal gambling, by ensuring that the racing authorities would not illegally solicit bets from the citizens of each others' countries.

In this case, as mentioned above, a bookmakers can operate by "free-riding" on the outcome of the races held by a racing authority. Racings are held openly, and therefore the racing authorities cannot in any way "limit" the supply of information to these bookmaker.

Furthermore, the barrier of entry for bookmaking is low - a company equiped with computers, web page/telephone line and a bank account can already take bets and distribute dividends (in fact a number of illegal bookmakers operates like this).

The market thus has a low barrier of entry, and dependent only on unlimited and free "supply" (of racing outcome). No agreements between racing authorities could therefore limit the supply or competition, or raise the barrier of entry. The Good Neighbour agreement by itself therefore cannot create a virtual monopoly. It could only potentially eliminate a limited number of players from illegal competition (the racing authorities themselves in each other's territories). The monopoly or regulation within the jurisdictions concerned depends entirely on the pre-existing laws and enforcement. To say that the agreement is documenting an international cartel would be extending the meaning of cartel to far.

(Other than that, a number of other usual features of cartel, such as mutual agreements on price fixing, is also missing in the Good Neighbour Policy agreements.)

Google test

To test the claim that the agreement is widely viewed as cartel, a search can be done on Google with the words "cartel", "good neighbour policy" and "jockey".

All results are articles from wikipedia as edited by Critic.

I have left the pages of Good Neighbour Policy and cartel as they are but unless the claim could be further substantiated it should be removed. In any case the stated objective of the Policy should be added back.

-Hlaw 06:47, 16 Jan 2004 (UTC)

Comment

Hlaw's view is that the product that the racing bodies supply is "racing outcomes". This may be true for those who pay a nominal amount of money to attend a racecourse. But there is a strong argument that in an economic sense, the primary product that the racing bodies supply is "betting opportunities". It is through betting that money changes hands between the customers and the racing bodies. It is clear that without the government-granted monopoly status, these racing bodies would face competition from numerous competitors who would supply more betting opportunities and charge lower prices (by returning >95% of turnover in dividends back to the bettors rather than the 70% to 80% that most Policy signatories do).

The European Union defines cartel as:

Arrangement(s) between competing firms designed to limit or eliminate competition between them, with the objective of increasing prices and profits of the participating companies and without producing any objective countervailing benefits. In practice, this is generally done by fixing prices, limiting output, sharing markets, allocating customers or territories, bid rigging or a combination of these. Cartels are harmful to consumers and society as a whole due to the fact that the participating companies charge higher prices (and earn higher profits) than in a competitive market.

Dictionary.com definitions of cartel include:

• A combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members.

• A group of parties, factions, or nations united in a common cause; a bloc.

• A consortium of companies formed to limit competition; "they set up the trust in the hope of gaining a monopoly"

Clearly the Policy documents an agreement regarding the sharing of market and allocating customers to territories. Output (of betting product) is also limited by the agreement because for example, customers in Hong Kong are unable to bet on JRA races in Japan and conversely customers in Japan are unable to bet on HKJC races in Hong Kong. The supply of betting opportunities is diminished. The agreement also limits the marketing and advertising of each signatory's betting product in the other countries. For all these reasons, the view that the Policy documents a cartel is a sustainable one.

It is not true that offshore bookmakers are illegal in all the signatory countries. Indeed, betting with offshore bookmakers was perfectly legal in Hong Kong until May 2002 when the Gambling (Amendment) Bill 2002 was introduced days before the commencement of the World Cup. Furthermore, for decades the HKJC actively solicited customers from all over the world until around the year 2000 when it realised that it could not continue to do so without being seen as have double standards. It even went so far as to provide hand held betting computers with instructions on how to use them from outside Hong Kong.

A Google search on "good neighbour policy racing" mostly links to press releases by the signatories to the Policy and so the Google test is not a valid method of determining the general opinion. There is very little on the public record regarding this.

Nevertheless, in light of this discussion, further edits have been made to the article.

-Critic 16 Jan 2004