Bookmakers describe proposed betting tax as 'illogical'

RACING NEWS:GOVERNMENT PLANS to secure income for the horse racing industry by introducing legislation this year which will tax online and telephone betting have been described as "illogical" and "artificial" by Ireland's biggest bookmaker.

Paddy Power, of Paddy Power bookmakers, said yesterday his company had no problem with paying a tax that was enforceable across the industry, but he questioned the merits of that revenue automatically going to the Irish racing industry.

“This highlights again how the link between betting and racing needs to be questioned,” he said. “I agree we should be paying tax, and if the Government then decide all that revenue should go to racing, then fine. But it shouldn’t be promised away like this with no strings attached.

“It is illogical that there is still such a link between Irish racing and betting. Just 11 per cent of our turnover is on Irish racing.

“All this is based on a time when there was nothing else to bet on except racing, before there was even an internet. This is an old-fashioned link and should be put out to pasture. It’s an artificial system,” he said.

On Thursday, Taoiseach Brian Cowen confirmed plans to tax bookmakers and internet betting companies through a licensing mechanism that will have to be met if firms want to operate in the Republic.

Outlining the decline in revenue from betting duty in recent years, which has resulted in increased direct Government subsidy to the Horse Greyhound Fund, Cowen said: “I believe that such support should continue to come from the proceeds of betting duty. All forms of betting, including betting offered over the internet, over remote platforms, or over the phone, should make a contribution. Such betting must be brought within the tax net.

“The Government will introduce legislation to ensure that overseas betting providers comply with a licensing regime that will permit them to sell their products into our jurisdiction.

“This will have the additional benefit of facilitating the extension of the tax regime for the betting industry to all those providing online and telephone betting and so underpin funding for the racing industry.”

After a couple of years of drastic funding cuts, the Taoiseach’s announcement has been warmly welcomed by racing’s ruling body, which endorsed Cowen’s view that the sport’s funding is inextricably linked with betting.

“The principle is there of a link with betting in all major racing countries and we welcome very much the Taoiseach’s statement,” said Horse Racing Ireland (HRI) chief executive Brian Kavanagh.

However, Power said that judgment would have to be reserved on whether any new legislation would be effective.

“I would be very interested to see the detail,” he said. “If this is enforceable across the boards then great: but ourselves and Boylesports are the only ones among the top 10 online providers in Ireland who are based here. If it isn’t properly enforceable, then we will be the ones paying tax and no one else. That will impact on jobs here.”

By the end of last year, HRI had received €491 million from the Horse Greyhound Racing Fund and is set to get €47 million from the fund in 2010.

Cowen, who was speaking at a function on Thursday night, said: “The Horse Greyhound Fund was established at a time when annual income from excise duty collected on off-course betting was in the region of €60 million per annum. Receipts from the excise dropped to €31 million in 2010.

“The exchequer contributed in excess of €31 million to the fund in 2009 and a further €28 million in 2010. It is obvious we need to put in place a more sustainable system of support for the industry.”