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Market Focus : Japan Keeps Eye on Horse Racing Prize : With big money at stake, a very tight rein is held on foreign-born horses. U.S. breeders want that changed.


TOKYO — The trumpets blare, and the horses spring out of their gates. The Nippon Derby is on.

Astrogate, offspring of the legendary American racehorse Secretariat, soon falls behind. Mihono Bourbon, however, is the real favorite. A crowd of 162,647, packed in and around the grandstand like commuters on a rush-hour train, roar their approval as he pulls away from the pack for an easy win.

So, Mihono Bourbon's owner gets the $1.3-million purse, the biggest of the year. But is Mihono Bourbon the fastest horse in Japan? Well, not necessarily. He's just the fastest horse that has been born, raised and trained in Japan.

Here's the rub. In an effort to nurture a domestic horse-breeding and racing business, Japan has barred foreign-born horses from the Nippon Derby and all but a few hundred of the 28,000 horse races held in Japan each year. And even those select few must be reared and trained in Japan--or their race options are down to two per year.

"Unless Japan has a strong breeding industry, it can never be a premier horse-racing nation," insists Yoshitaka Kitahara, general manager of the racing department at the Japan Racing Assn., by way of justifying the restrictions. His quasi-governmental organization runs Japan's most important races, subsidizes Japanese horse ranches and channels $1 billion in gambling earnings into the Japanese Treasury each year.

But Americans are calling foul at being excluded from the increasingly profitable Japanese horse-racing business. The unfairness of Japan's policy became particularly apparent June 6 when A.P. Indy, an American horse owned by Japanese developer Tomonori Tsurumaki, won the prestigious Belmont Stakes in Belmont, N.Y.

The market in Japan is enormous because the Japanese are avid gamblers. They plunked down $32 billion at the racetrack last year, about double the annual take for legal betting in the United States. At the Nippon Derby alone, Japanese bet a record $371 million on their favorite horses. Of course, those sums don't include illegal off-track betting, which flourishes here as in the United States.

Although young people and women have recently joined the traditional blue-collar customers at Japanese racetracks, the sport still lacks the snob appeal that exists elsewhere.

You won't find couples dressed in their Sunday best here, sipping mint juleps, as you might find in Kentucky. The floor is littered with old lunch boxes and tip sheets. The crowds are so thick, most observers have to be satisfied with watching the action on TV sets posted around the grounds or on a giant electronic movie screen in the middle of the racetrack.

And there are some odd practices. One veteran advised a visitor against betting on Astrogate in last month's Nippon Derby because the jockey was young and would be under instructions to lose in order not to upset the strict, age-based hierarchy among jockeys.

Japanese officials say the races attract so many loyal fans because of the deep roots the business has put down in numerous small horse-breeding ranches throughout the northern island of Hokkaido.

The Japanese government nurtures the business with much the same policies as it uses to promote computers. First, there is a classification scheme that treats horses by the degree to which they are "Japan-ized."

Horses born and trained overseas are allowed to participate in just two races a year and only by invitation. The Japan Cup, the key "international" race, usually takes place in November and is invariably won by a foreign horse.

Horses born overseas but "naturalized" by being raised and trained in Japan are allowed to race in about 30% of the 3,389 thoroughbred races operated by the Japan Racing Assn. Only 114 of the 6,074 horses registered to race in that association's 10 racetracks fit into that category.

In the classics, including the Nippon Derby, only horses born, raised and trained in Japan are permitted to race. And foreign horses are completely excluded from the 24,612 races managed by the Japan Regional Horseracing Assn.

There is also a unique system of awards to promote Japanese breeders. In addition to the purse for the owner of the winning horse, money goes to the ranch that bred the winning horse and to the owner of the winning horse's mother.

Thus, the ranch that raised Mihono Bourbon will receive $52,000. The horse's owner will also get a newly instituted award for winning with a Japanese-born horse. There is another award category for owners of winning horses fathered by a Japanese horse.

The Japan Racing Assn. also buys the winner of the Japan Derby each year and lets Japanese breeders use the horse at no cost for breeding new generations of Japanese horses.

As if that weren't enough encouragement for Japanese breeders, they are also protected by a $31,000 tariff on every horse imported into Japan.

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