Horse betting, a potential business in China?

Tianjin, for instance, has invested 1.4 billion yuan ($230 million) to build an Equine Culture City, an extravagant five-year project that includes 4,000 horse stables, a clinic, 150 offices for trainers, international standard racetracks and a horse auction center, according to media reports.

Hohhot, capital of the Inner Mongolia autonomous region, last year held the first China Equestrian Cultural Festival, which was acclaimed as the first high-level international horser-acing event ever held in the Chinese mainland since the government legalized horseracing in 2008.

Although there is no imminent sign that Beijing will legalize betting on horse racing soon, the Chinese market will be an inevitable destination for French betting operators and horseracing organizers, which are facing decline domestically because of the economic crisis in Europe.

In 2012, PMU posted a net profit of 865 million euros, down by 1.3 percent on the previous year.

"Betting on horse races in France is a mature business so the capacity to expand with double-digit growth is no longer feasible," Germond said, adding that the current economic crisis in Europe has resulted in tightening the leisure budgets of its customers, given that the betting business is directly linked to the macroeconomic environment.

"Expanding the business outside France is our priority to maintain the growth of our activity and net profit," he said. Last year, PMU achieved 94 percent year-on-year international growth, which helped compensate for the slowdown at home, he said.

In 2012, PMU began to export its betting products to the United States, South Africa and Belgium, which generated an extra 112 million euros of turnover for the company, according to its financial report.

Germond said he has similar hopes for the Chinese market if the activity is legalized in the country. PMU is looking at exporting its products and services to China, which will allow Chinese punters to directly bet on French horse races in the future.

"The people of France spend more than 9 billion euros on betting on horse races a year. That's a country with only about 60 million inhabitants. You can imagine the potential will be huge for a country with a population the size of China," he said.

But Germond admitted that betting on an overnight change of heart by the Chinese government on horse-race gambling remains a long shot.

Some industry experts said legalizing betting on horse races still remains a sensitive subject in China because the government may worry about its negative effect on social stability and financial security.

"We may benefit in the future but we understand that it is not just a business decision but also a political decision for the central government," he said, noting that the first step should be building a high quality international-standard equine industry in China including breeding, training and organizing races.

France Galop, the governing body that regulates flat and jump races in France and the parent company that owns PMU, has signed an agreement on the exchange of horse-race sponsorship and the export of French horses with Chinese company Desert Star Holdings Ltd, a Hong Kong-registered investment company in the equine business and the main investor in the Tianjin horse-racing project.

"It is an opportunity for us to bring our experience and knowledge to China. The project of creating a ‘horse city' in Tianjin seems extremely attractive to us," said Bertrand Belinguier, the president of France Galop.