Punters to gamble £1bn and give Revenue big pay-day
Punters spent 35 per cent more on betting in the first six months of this year compared to the same period in 1999 and total expenditure on gambling could reach the £1 billion (€1.27 billion) mark for the year as a whole, the latest figures show.
Provisional figures for the first six months of the year show bookmakers based in the Republic generated a record £450 million in revenue and paid more than £22 million in duty to the Revenue Commissioners. This represents a 35 per cent increase in turnover on the same period for 1999 when bookies pocketed just £334 million. If the current growth rate continues total expenditure for 2000 will be close to the £1 billion mark.
A Revenue source said a combination of the booming economy, the growth in different forms of gambling and a cut in the rate of tax had spurred dramatic growth.
Several bookmakers have launched Internet betting sites in the past 12 months including O'Halloran and Paddy Power. This new channel for betting has attracted new customers to gambling such as young professionals and women.
But of more significance was the decision in July last year by the Minister for Finance to cut betting duty to 5 per cent from 10 per cent. Revenue Commissioners' figures show the betting industry gained a huge boost in the second half of 1999 following the cut in betting duty with turnover increasing some 20 per cent during this period.
This dramatic increase in turnover meant that the Revenue took in £1 million more in betting duty in 1999 compared to the previous year, despite the cut in betting duty.
Mr Stuart Kenny, managing director of the Republic's largest bookmakers, Paddy Power, said the cut in tax had been a massive boost to the industry and would prove self-financing. He said it proved that tax cuts had not hit tax returns to the Revenue and had benefited the industry and Government. However, he said further reductions in duty were required to prevent offshore bookmakers based in low tax regimes from poaching business from domestic bookies.
He said Paddy Power is planning to shift its entire Internet betting operation and possibly its telephone betting arm to Malta if there are no further tax cuts in the December budget. The company was awarded a betting licence in the low tax jurisdiction last week, he added.
It is understood the Department of Finance is currently undertaking a full review of the betting industry in light of the threat posed by offshore betting.
Bookmakers are lobbying for a cut in tax to under 1 per cent to offset the threat. That would undermine proposals to fund a merged Irish Horseracing Authority and Turf Club to run racing from collected betting taxes.