Tax free phone bets threaten bookies

A significant proportion of betting turnover will leave the State if the Government does not reduce or abolish the 10 per cent betting tax, according to industry representatives. The British betting firm, William Hill, advertised its new Isle-of-Man based tax-free telephone betting service in The Irish Times at the weekend. A spokesman for Paddy Power bookmakers said the development meant it would now be offering a similar service in order to avoid losing customers to William Hill.

A spokesman for the Department of Finance said the placing of bets outside the jurisdiction was against the law but admitted it was difficult to enforce such a law. He said provisions to deal with developments in technology and electronic commerce are being examined at European level.

Asked about demands for a change in betting tax, he said: "All taxes are kept under constant review but there is nothing specific happening on that."

Customers who bet in betting shops in the Republic have to pay a 10 per cent tax. Annual turnover in the industry is about £450 million.

Paddy Power has lodged an application with the Isle of Man authorities for a licence which would allow it take telephone betting from everywhere in the world apart from the Isle of Man and Britain. The Isle of Man recently reduced its betting tax from 6 per cent to 0.3 per cent.

Mr Stewart Kenny, of Paddy Power, said it originally intended seeking customers from all around the world apart from the UK, the Isle of Man and the Republic but, "with William Hill seeking some of our clients, we may have to go for the Irish market also".

He said it was not illegal for a betting organisation to take bets from Ireland. "The law against sending money out of the country to bet is unenforceable," he said. "It is a provision of the 1931 Betting Act and no-one has ever been found convicted in relation to it."

William Hill is seeking customers who will make deposits of a minimum of £500, and minimum bets of £50. Customers do not have to pay any tax as the company "absorbs" the local 0.3 per cent levy. Winnings can be left on deposit or transferred back to the customer's bank account.

A spokesman for William Hill said the Isle of Man branch offers the same odds as its regular outlets apart from "some very large soccer bets we sometimes get from the Far East and Europe".

Mr Kenny said Paddy Power bookmakers had "a large customer base in Ireland and there's no point in seeing it go to William Hill". Telephone betting already accounted for about 7 per cent of its business and Paddy Power expected this to grow to 15 or 20 per cent in the next three to four years. However, with the Isle of Man office offering tax free betting, "it will grow a lot more".

"We are reluctant to offer the service to Irish clients as we would prefer to keep the business in Ireland," he said. "But Irish business has no option but to compete."

He called on the Minister for Finance, Mr McCreevy, to consider reducing or abolishing betting tax. Such a move would mean "hundreds of millions of pounds" of betting revenue could be attracted from punters in Northern Ireland and Britain. Mr Brian O'Farrell, of the Irish Independent Betting Offices Association, which represents more than 300 of the Republic's 750 betting outlets, said tax-free offshore betting would lead to an outflow of funds from the State and would damage turnover in local outlets. "We just cannot compete," he said.

Mr O'Farrell said the association would be expecting the Minister to make some move in relation to betting tax, so as to prevent an outflow of turnover and the loss of jobs.