QuestionsQuestions (Republic Act No. 11649)
The franchise authorizes Hapi Jockey Club, Inc. (and its successors/assignees) to construct, operate, and maintain race tracks for horse racing in Batangas, Laguna, and Cavite; establish branches for booking purposes anywhere in the country; hold or conduct horse races with betting (on results) directly or through mechanical/electrical/computerized totalizators; and do all acts necessary to give effect to these privileges, subject to the Constitution and applicable laws.
Horse races are under the supervision and regulation of the Philippine Racing Commission (PHILRACOM). Betting supervision is also under the Games and Amusements Board (GAB), consistent with RA 309, as amended. PHILRACOM enforces laws/rules for racing including safety, scheduling, prizes, and security; GAB supervises and regulates betting and auditors/inspectors for dividends computation and wager distribution.
Only the franchise grantee, its duly authorized agencies, or licensees may offer, take, or arrange bets for races conducted by the grantee. No other entity/person may offer, take, or arrange bets on any horse participating in the same race, or maintain/use a totalizator or other betting device/system within the grantee’s premises or outside the place/enclosure/track in the course of races conducted by the grantee.
Violators face a fine of not less than ₱20,000.00 but not more than ₱100,000.00 and/or imprisonment of not more than six (6) months, at the court’s discretion. If the offender is a corporation/partnership/association, criminal liability devolves upon its president, managing partner, or manager responsible for the violation.
The grantee is authorized to provide/operate various devices and facilities including photo patrol/cameras, automatic starter, electrical/electronic/computerized totalizators, photo finish devices, ticket sale machines (including off-track), tattoo branding facilities, drug testing facilities/laboratories/instruments, weighing machines/devices for measurement of horses, telecommunications/broadcast equipment for betting/racing info, continuous and back-up power supply, and other facilities ensuring clean/honest racing and betting.
If the grantee fails to provide and install any of the listed equipment/facilities within three (3) years, PHILRACOM shall forthwith suspend and prohibit the holding of races until such time as the required equipment/facilities are provided and installed.
GAB assigns auditors and inspectors to supervise and regulate placing of bets, proper computation of dividends, and distribution of wager funds. PHILRACOM enforces racing laws/rules and frames/schedules races, ensures construction/safety, allocates prizes, and provides security under the applicable PHILRACOM charter.
The grantee must publish and display prominently and in appropriate places the terms and conditions regarding the sale of betting tickets.
82% is distributed as dividends among holders of winning tickets; 8.5% is set aside for payment of stakes/prizes for win, place, show horses and authorized jockey bonuses; 0.5% is set aside for PHILRACOM (but if pari-nutuel races, this becomes the GAB share to be shared equally with the Jockeys and Horse Trainers’ Injury/Disability/Death Compensation Fund); and 0.5% is set aside for drug testing facilities and rehabilitation of racing facilities.
Breakage refers to receipts corresponding to fractions of less than ₱0.10 eliminated from dividends paid to winning tickets. It is allocated as follows: 50% to PHILRACOM for additional prizes for PHILRACOM-sponsored races and capital outlays/expenditures for National Stud Farm horse breeding activities; 25% to the city/municipal hospitals where the race track is located; and 25% to augment funding for drug rehabilitation centers under RA 9165.
The grantee may hold horse races on at least two (2) days during the week as determined by PHILRACOM, and on all Saturdays, Sundays, and official holidays (except official holidays where law expressly prohibits races). It may also conduct races on the eve of any public holiday to start not earlier than 5:30 PM, but not exceeding five (5) days per year.
Documentary stamp tax: ₱0.10 per horse race ticket; if ticket cost exceeds ₱1.00, an additional ₱0.10 for every ₱1.00 or fractional part; for double forecast/quinella and trifecta bets, ₱0.05 per ₱1.00 worth of ticket. Franchise tax: equivalent to 25% of gross earnings from horse races authorized under the franchise (equating to 8.5% of total wager funds/gross receipts from betting during the racing days), allocated among national government (5%), province/city/municipality where track is located (5%), municipal hospital (7%), Philippine Anti-Tuberculosis Society (6%), and White Cross (2%). Taxes are paid monthly and generally in lieu of other taxes except income tax.
A winner pays 10% of winnings/dividends (based on actual amount paid for a winning ticket after deducting ticket cost). For double forecast/quinella and trifecta bets, the tax is 4%. Winnings from winning race horses are taxed at 10% of the prize. Winnings of ₱10,000.00 or less are exempt. The operator/manager/person in charge must withhold the tax from dividends/prize and remit it to the BIR within 20 days from deduction/withholding, with a true and correct return.
The franchise lasts 25 years from the effectivity of the Act unless sooner cancelled. It is deemed ipso facto revoked if the grantee fails to: (a) commence operations within 3 years from approval of its operating permit by PHILRACOM; (b) commence operations within 5 years from effectivity of the Act; or (c) continuously operate for 2 years.
The grantee cannot sell, lease, transfer, grant usufruct of, or assign the franchise/rights, nor merge, nor transfer controlling interest without prior approval of Congress. It must inform Congress within 60 days after completion of such transaction. Failure to report results in ipso facto revocation. Any entity receiving the franchise must be bound by the same conditions, terms, restrictions, and limitations of the Act.
The grantee must submit an annual report to Congress through the House Committee on Legislative Franchises and the Senate Committee on Public Services on or before April 30 each year, including compliance status, operations update, audited financial statements, latest General Information Sheet (if applicable), and PHILRACOM and GAB certifications on permits/operations. Congress issues a reportorial compliance certificate required before PHILRACOM/GAB accept any permit/certificate application. Failure to submit the annual report incurs a fine of ₱500 per working day of noncompliance, collectible by PHILRACOM and remitted to the Bureau of Treasury.