HONG KONG - Each day in Beijing, thousands of Chinese parade past the remains of Mao Zedong in Tiananmen Square. Many of them buy plastic flowers while waiting in line to leave at the foot of Mao’s crypt.

As soon as they file out, an attendant swoops down to retrieve the bouquets so that the authorities can sell them again to the next set of admirers.

The low-cost recycling scheme is but the smallest piece of a Chinese free-market that is booming like fireworks thanks to 1.3 billion increasingly affluent citizens.

The fear at the turn of the millennium was that the former British colony of Hong Kong would struggle under the policies of China, but now it is Hong Kong which soon will be wishing it were as prosperous as the mainland. By 2010, China will have the world’s richest economy, supplanting the United Sates and Germany in the same way it recently surpassed Japan.

Vast new market eyed
The growing wealth has not gone unnoticed among those who would love to offer games of chance to the Chinese. And horse racing companies are among those champing at the bit for China to lift its current restrictions and legalize pari-mutuel betting on the mainland.

The would-be racing magnates need look no farther than Macau, a neighboring island to Hong Kong, to see how the relaxation of rules against gambling can create untold wealth.

The leader in the high-stakes race to bring horse racing to China’s mainland appears to be  Hong Kong developer Jacky Wu.  His company, Orient Lucky Horse Group, has committed $180 million to build a horse track in Hubei province on the bet that he can convince the government there to grant him the go-ahead to conduct betting. 

Already, Orient Lucky Horse Group has completed construction of a racing strip and has conducted two non-betting horse racing festivals in Wuhan, Hubei’s capital.

Should Wu’s plan to take betting on the races fail, he’ll own the world’s most expensive equestrian center. You can look for it on television when the Olympics are held in China in 2008.

But on Sunday, as the Hong Kong Jockey Club hosted its prestigious Hong Kong Cup racing program at spectacular Sha Tin Racecourse, Wu is just one of 53,000 racing fans on hand to enjoy and wager on the international fields assembled for the four Group I turf races valued at $7.4 million.

He watches the races from a table on the very highest floor of the Clubhouse, an exclusive level reserved for the chairman and voting members of the Jockey Club, of which he is one.

Hong Kong racing seen as model
Wu considers the Hong Kong Jockey Club a model. Through the last decade, the club has donated on average $1 billion Hong Kong dollars a year to hundreds of charities and community organizations.

Along the way, its members also managed to find the money to fund the construction of an awe-inspiring $60 million retractable roof for a new paddock at Sha Tin and to build the world’s longest Diamond Vision television screen in the infield.  Now, with mainland racing on the horizon and the liberalization of Macau in full swing, the Jockey Club is working on changing the current tax laws in Hong Kong in order to be able to do more.

Born on the mainland, the 39-year-old Wu moved to Hong Kong when he was 14 and took to the racing like everyone else does in his adopted land. 

Dressed in a handsome grey suit and power yellow tie, he exudes a confidence. He speaks only Chinese, but he is accompanied by his secretary, Tiffany, who steps in to translate whenever Wu wishes to communicate in English.  From time to time, a colleague named S.C. Poon, whose title on his name card is assistant president, joins into the conversation.

“I chose Wuhan to build my racetrack because it is in the center of China, and China is sports oriented,” Wu said. “My racetrack will be the engine to develop the economic growth of sport throughout China.”

Wu skirts the prevailing talk that pari-mutuel racing on the mainland is more likely to reappear in Shanghai, which was a hotbed for racing before the revolution and where several racetracks still stand.

‘A history for horses’
“Before the changes in government in 1949, there were three racetracks in Wuhan,” he said.  “Wuhan has a culture, a history for horses.”

If Wu’s project comes to fruition, it will extend well beyond horses.

He said he plans to spend a half billion dollars developing an equestrian center, equine sports complex, restaurants and a resort hotel at his racetrack. He has managed to convince the municipal government to give him 100,000 square meters of land for his enterprise.

“Orient Lucky Horse is already recognized by the public as the number one horse racing company in China,” he contends. “We are trying to follow all the policies and have put in all the elements to push the local government and central government to grant us the betting.”

He declined to predict when the final go-ahead will be received other than to say “it will happen soon.” 

“When you are waiting for the government to decide, you don’t require them to be on a schedule,” he added cautiously.

There are several experts who agree with Wu that gambling on the mainland will be legalized soon, and that the opportunity seems too big for it to be delayed much longer. Gail Tregear, a visiting racing journalist from Australia, said the biggest problem will likely be China’s policies preventing money from flowing freely out of the country.

How to get the money out
“The investors just have to figure out how to get the money out,” she said.

At a symposium in Beijing and Macau last week, Wang Zengxian, a research fellow at Peking University, told the China News Service, “According to conservative estimates, 600 billion yuan of mainland money is invested in offshore casinos or horse racing each year.”  Wang said that if the government legalized gambling, it would be able to redirect this money into local initiatives which could then redistribute any gains from the racetracks to public welfare groups.

Jia Kang, head of the Ministry of Finance’s research institute, also has sent encouraging signals to would be gambling entrepreneurs.

“Under our market economy, we must face up to the reality of gambling and look at the issue much closer,” he said.

While Wu spoke persuasively about the anticipated success of an internationally recognized racetrack in Wuhan, Poon emphasizes an argument that Chinese authorities are likely to find more convincing.

“Mr. Wu has a dream,” he declared. “The racetrack will bring welfare and social benefits to millions of people. This isn’t about making money.”

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