Davy pares back Paddy Power profit forecasts on Australian betting tax
Earlier than expected introduction of tax likely to wipe 1.4% from firm’s earnings
Analysts had expected the tax to be introduced at the beginning of January 2019. It has been confirmed, however, that the tax is to come in three months earlier, on October 1st this year, affecting Paddy Power’s Sportsbet operation. Photograph: PA
The earlier-than-expected introduction of a tax on online betting in Queensland, Australia, is likely to wipe 1.4 per cent from Paddy Power Betfair’s earnings, according to Davy stockbrokers.
Queensland authorities had already indicated their intention to apply the 15 per cent “point-of-consumption (POC)” tax on all online gaming revenues generated within the state, which includes the city of Brisbane.
Analysts had expected the tax to be introduced at the beginning of January 2019. It has been confirmed, however, that the tax is to come in three months earlier, on October 1st this year, affecting Paddy Power’s Sportsbet operation.
Davy said the news was also “disappointing [because] there was increased hope that Queensland and New South Wales may opt for lower tax rates following Victoria’s decision last month to introduce an 8 per cent rate from the start of next year”.
In a note on Tuesday morning, the stockbroker said it had already built the effects of the tax, with an expected start date of January, into its forecasts. The earlier introduction now reduces the 2018 forecast to £471 million (€535 million).
Overall, Davy said Australian betting taxes represent a potential £57.3 million (€65.2 million) headwind for the betting group’s 2019 results. It also warned that it believes other broker’s forecasts for the company are “too high”.