Quinns take big gamble as online betting comes under pressure

Quinnbet might have to break its relatively modest marketing budget to succeed

Seán Quinn, his son Seán Quinn jnr and sons-in-law Stephen Kelly and Niall McPartland have launched their Quinnbet online betting venture at a time when the industry faces pressure on a number of fronts.

Governments are weighing tax increases that could either cut into margins or get passed on to punters, who could either cut back or walk away in response.

Earlier this month the Department of Finance's Tax Strategy Group revealed that it is reviewing the 1 per cent levied on all bookmakers' turnover. The horseracing and breeding industries want this increased to 2.5 per cent and suggest that punters could pay a portion of this if bookmakers' felt this was unsustainable.

The review came about because it is two years since the State extended the tax on online betting. The Government may not opt for a 2.5 per cent increase, but any increase at all is likely to affect business in some way, with smaller, newer, players more likely to suffer than established operations with deep pockets.

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An increase in the tax paid in Quinnbet’s other market, the UK, is also a possibility, and the two coming together could make life difficult for anyone in the start-up phase.

On top of all this is the fact that the former billionaire and his family are not the only ones who think online betting is a good place to be. Barriers to entry are low, so along with the established names, there are plenty of new arrivals.

Like Quinn, many of them have an off-the-shelf pricing and risk management technology, but investing in marketing is necessary to get themselves heard in a crowded space. Even Paddy Power Betfair, itself no stranger to marketing budgets, has commented on the disproportionate amounts that smaller players spend on this part of their businesses.

Quinnbet will spend on marketing, but has indicated that this will be modest in relative terms. It wants to draw business by offering good value. Its problem though, is how does it tell punters about this in the first place? Whatever its intentions, it might yet have no choice but to invest heavily in getting noticed.