The decision of Royal Western India Turf Club to cut off signals to Bangalore Turf Club from August 27 if their demand for audit of accounts pertaining to the collections accruing on the inter-venue betting operations of its racing and the amount of Royalty paid as per the norms has upset the racing community all over India which has been passionately following racing conducted by both these clubs.

The race goers are not so much bothered about the intricacies of the issue but are upset that their sentiments have not been respected by the clubs for the patronage that they have been extending to these races. They believe that whatever differences between the clubs could be sorted out through negotiations by adopting a pragmatic approach, instead of indulging in internecine quarrels which are sure to impair the sport all over India.

The Bangalore Turf Club paid RWITC a sum of Rs 2.28 crores last year as against the Rs 53 lakhs received by the club as its share of Royalty on Bangalore races. This year, the Bangalore Turf Club has offered an increase of 40 per cent by agreeing to pay Rs 2.50 crores plus the Service Tax component. In spite of the increase with no corresponding benefit from RWITC, the communication to cut off the signals by RWITC has come as a rude shock to the BTC mandarins.

The GST which will be operational from April 1, 2017 will change the entire betting scenario, with taxation on betting becoming the same all over the country. With the impending change in sight, the turf clubs should sort out their differences and not precipitate matters at this point of time. The turf clubs should be more concerned about the impact that GST will have on the financial edifice of racing. What is surprising is that RWITC is making an issue out of Royalty when the present system itself will undergo a thorough overhaul after the introduction of GST in the next six months. There are fears that GST may spell the death knell of the sport because clubs like BTC and Mysore Race Club which run their racing entirely on the income generated through racing may face a serious crisis as they don`t have any other means of income unlike clubs like RWITC which has exploited its real estate asserts to tide for over the shortfall.

The turf clubs had an informal understanding that 23 per cent of the earnings on the tote betting should be given out as Royalty to the club on whose races the income is generated. This was the norm adopted at the turn of the century when the tote turnover between all clubs were almost identical. While the tote betting at RWITC hit a downslide because of the high taxation, BTC was able to convince the Karnataka Government for a more benign tax structure which saw betting on tote flourish enormously. Over the years, the BTC has invested time and money on building up the infrastructure and generating higher income through betting on legal channels.

The Bangalore Turf Club believes that RWITC has not properly understood the situation and has failed to appreciate the enormous effort and money spent to achieve the present level of turnover at the totes. The income on betting on racing conducted by RWITC at BTC should be computed after deducting the expenses incurred for running the operations. There are about 1200 tote employees and the club has 10 off-course betting centres. The tote employees get a daily allowance of nearly Rs 600 including gratuity, bonus, ESI and other statutory benefits. On special days and on days when dual betting is conducted, the workers have to be paid double the wages. Also the operational costs keep going up every year, in addition to the upgradation of technology. The investment on betting terminals, hardware and upgradation of software from time to time and the rent paid at off-course centres all add up make the club spend many crores on capital expenditure which has a bearing on the profits made. All this means that the actual profit made on RWITC races in much less than what is believed.

On the other hand, RWITC has made no effort to get the government to reduce the tax and promote its tote betting which has resulted in other clubs losing out on their Royalty. Even the betting conducted with the bookmakers at RWITC is not properly recorded much to the disadvantage of other clubs who should get higher Royalty from RWITC for betting conducted of the other racing centres. Even a small race club like Mysore is paying more Royalty to RWITC as compared to Royalty received by Mysore Race Club from RWITC which is located in the financial capital of India. While betting in Mysore is restricted to a small city of one million population, the income of RWITC is the combined result of operations at both Mumbai and Pune which makes the collections look ridiculous and puts RWITC efforts to question.

The Bangalore Turf Club and Hyderabad Race Club have an arrangement by which no Royalty is exchanged between the two clubs. The Bangalore Turf Club believes that a similar arrangement with RWITC could save much of the acrimony. Bangalore conducts about 52 days of racing while RWITC has about 68 days of racing. The right thing would be to ask Bangalore Turf Club to pay for the 16 extra days of racing that RWITC conducts. Such an arrangement will eliminate the vexed problem of working out the Royalty based on turnover and paying an enormous amount of service tax to the government. While RWITC continues to pay less Royalty year after year, the club expects the other clubs to pay more for the extra efforts put in to generate the additional revenue. BTC believes that fixing a consolidated amount to be paid as Royalty is the right way to go about because of the inequality in the way the tote operations are conducted by respective racing centres.

Chairman of Bangalore Turf Club A C Satish Chandra said that the decision of the RWITC to take a hard stance was unfortunate. As far as we are concerned, we will try and convince that what we have offered as Royalty which is four times higher than the one paid by RWTIC to us should be accepted. The clubs which are dependent on tote betting are running on thin financial margins. Any burden imposed because of higher demand by the other clubs would be detrimental to the sport. I sincerely hope that things would be sorted out because racing cannot afford any dispute of the nature that is confronting the sport now.

Inter-venue betting which was introduced first between BTC and RWITC in 1972 is what saved racing from extinction. The off-course betting helped the clubs financially and enabled them to tide over financial hurdles. The relationship between RWITC and BTC thus extends to 45 years and overnight such an arrangement should not be annulled on disproportionate claim on Royalty. If BTC were to pay the Royalty on the existing arrangement, the club will use all its resources and energies in collecting the revenue only for the purpose of handing it over to RWITC.

The BTC should use its considerable negotiating skills to persuade RWITC to accept its point of view and facilitate a reasonable arrangement.

The incumbent Chairman of RWITC Vivek Jain believes that the matter could be settled amicably. However, the entire Managing Committee of RWITC is said to have backed the decision to take an aggressive stand to demand higher Royalty going only by the notional figures and not by the percentage of net profit after deducting the expenses incurred in conducting the activity.

Whatever the point of view of the respective clubs, the race goers of both these centres are fervently hoping that things don`t deteriorate and a solution is found through negotiations and not be aggressive posturing. One hopes that Zavaray Poonawalla who currently heads the RWITC would take all possible measures to ensure a fair solution to the problem instead of collapsing the edifice of racing which has been painstakingly built over a long period.

What race goers want is the existing arrangement should be continued and other considerations should not derail the sport and their enthusiasm which has been largely instrumental in keeping the sport alive despite the shrinking market. Racegoers believe that RWITC is on a weak ground morally as it has not been successful in convincing the government to change the existing taxation policy regarding racing in the state of Maharashtra whereas other clubs like BTC, Mysore Race Club and HRC have been able to convince the government to reduce the tax rate to the advantage of both concerned which is what has given big boost to tote betting at their respective centres. Instead of trying to plug the loopholes in betting and generating more income, racing public believes that RIWTC is trying to bully other clubs to increase their income to benefit them!

Most quarrels amplify a misunderstanding and quarrels would not last long if only one side is at fault could not better explain the situation. The onus is on both the clubs to hammer out a solution, keeping in mind that committees have no power to override public sentiment.