Irish betting nerves tested by critical tax judgement

Ireland is awaiting the final review of its proposed bookmakers’ turnover tax hike which would effectively double the tax that bookmakers are obliged to pay from one to two per cent.

Numerous industry stakeholders have voiced concerns surrounding the damaging effects that the tax hike could have on the Irish gambling industry, and especially how the tax hike would affect the independent bookmaking sector.

Ireland’s Finance Minister Paschal Donohoe proposed the legislative change during the Budget 2019 speech, in which he stated: “In the area of betting, the Government’s priority has been to level the playing field by extending the tax to remote bookmakers and betting exchanges.

“This was achieved in 2015 and I believe it is time to increase the tax from 1 per cent to 2 per cent on amounts wagered in the State.

“In addition, betting duty on the commission earned by betting intermediaries or exchanges will increase from 15 per cent to 25 per cent. These increases will take effect from 1 January 2019 and will generate an additional €40 million in 2019 and €52 million in a full year.”

Following numerous calls from the Irish Bookmakers Association to review the tax, Donohoe promised that the industry impact would be reassessed at the end of 2019’s first financial quarter. However, several bookmakers are reluctant to believe that the review will take place any time soon.

Thomas Byrne, Managing Director of Bruce Betting, discussed the detrimental impact that the new tax is having on the independent Irish bookmaking scene. He commented: “Since the tax increased by 100% for bookmakers in Ireland on 1st of January, ten shops have close so far.

“I am also aware that a number of firms are waiting to see if the government deliver on their promise of a review of the situation during the first quarter of this year, with a view of going to a gross profits tax instead of a tax on turnover, before they decide what other shops have to close.”

Independent bookmakers form a significant portion of the Irish betting market, and so the doubling of the tax will hit the industry hard. Byrne continued: “This tax increase will definitely affect the number of shops left trading as it puts a large number into a nonviable position.

“It is very frustrating for us that the government has taken this decision without due consideration to the consequences, which will cause most independent shops to close with 5-6 jobs lost in each.”

The outlook for independent bookmakers arguably remains bleak at best. Pending the review, many expect the shop closures to not only continue, but escalate even further, amounting to numerous job losses and further strain placed on the industry.

Smaller bookmakers are not only having to continue competing with the larger bookmaking firms such as Paddy Power but are also struggling to survive amid government clampdowns on the industry.

Byrne concluded: “There is very little we can do to offset the increase in tax, as the market remains a very competitive place in Ireland. It is therefore very difficult to cut back on any specials or prices. The larger firms who have very profitable websites set the pace, leaving retail fighting to maintain a share of the market.

“The bookmakers are still very hopeful that the government will complete the review in the first quarter and amend the tax to a sustainable tax.

“Independents are very concerned that the review will not take place in this quarter and therefore leave them not knowing what the future holds for some of their shops.”