The Irish government has confirmed speculative reports earlier this week (see previous reports) that it is to hike the tax rate on retail, online and telephone sportsbooks by a percentage point to 2 percent.
The Minister for Finance, Paschal Donohoe, announced in his Budget 2019 speech that the tax will be increased, prompting Paddy Power Betfair to issue a press statement noting the increase “from 1 percent to 2 percent of sports betting stakes from Irish customers and from 15 percent to 25 percent of betting exchange commissions from Irish customers.”
The gambling group did a calculation which showed that if the increased Irish rates had been applied to the group sportsbook stakes and exchange revenues in the 12 months ended 30 June 2018 it would have paid an additional GBP 20 million of betting duty…cutting earnings by around 4 percent.
Ireland is an important market for the group, delivering 9 to 10 percent of group revenue last year, according to analysts.
The group has 261 betting shops in the Republic while its Paddy Power and Betfair websites have a significant number of subscribers living in the Irish jurisdiction.
Donohoe said that the increase should raise an extra Euro 51.6 million a year in tax revenue for the government. He did not indicate whether gambling companies would be allowed pass on part or all of the increased tax to customers.
The Irish Bookmakers Association, the largest representative body of the bookmaking industry in Ireland, issued a strong statement through spokeswoman Sharon Byrne, who said:
“The entire sector is devastated, we’ve lost 450 shops in the last eight years, and now as it had just started to stabilise, this change to double the tax will wipe them out.
“At least five people work in each betting shop, and we’re estimating around 300 shop closures.
“We’re down to around 850 shops across Ireland today, and with at least 300 to close, there are a lot of households, family businesses and people who have given their whole lives to their shops are now out of a job.
“This will kill the industry, for a different type of service a localised service, they’ve just made it extinct.
“There is no preparing for this, this is the end, the end of our sector, and we’ve fought very hard to prevent his, now we’re in turmoil.”
“It hasn’t been specified how it will be implemented, but a tax on the bookmakers takes no consideration for profitability or losses, the businesses have been struggling to pay 1 percent so two will not work,” Byrne added.
Byrne suggested that closures of betting shops would increase the cost of betting and push punters towards unlicensed operators.
“A lot of smaller shops who are owned by generations of families in small towns and once that shop closes, there’s a real risk of the guy sitting in pub or internet taking on that business, with no tax, no regulation, no age checks,” she said.
Byrne said the Association would now consult with its members in an urgent emergency meeting to decide on the next move, which may include a full grass roots campaign to highlight the closures.
“We have until January 1, we will have to meet to try and correct this huge, huge mistake,” she said.
The IBA has claimed that the previous 1 percent betting duty was already one of the main causes of the more than 500 shops that have closed and the 2,500 jobs that have been lost since 1999.
Source: Reviewed Casinos