Paddy Power to take £20m tax hit as Irish gambling tax doubles
IBA warns of up to 1,500 job losses following introduction of “regressive” tax
Irish bookmaker Paddy Power has confirmed an expected tax hit of more than £20m per annum, following the Irish government’s decision to increase the gambling tax from January 2019.
In the Irish parliament yesterday, the government confirmed that the gambling tax would double from its current 1% of turnover to 2%, applying to all retail, online and telephone sportsbooks and from 15% to 25% of betting exchange commissions from Irish customers.
According to Irish finance minister Paschal Donohue, the tax rises will generate an additional €40m in tax revenues in 2019 and €52m in 2020, with the bulk of the money being used to fund problem gambling treatment in Ireland.
Paddy Power Betfair’s shares are down more than 5% since the announcement.
Irish Bookmakers Association (IBA) chair Sharon Bryne said the government “had just signed P45s for over 1,500 jobs in the independent bookmaking sector.”
Bryne added: “It is the final blow for a sector of the industry that had already been in steep decline. Only 200 Independent shops survived the recession, with 450 closed over the last 8 years. Increasing the betting tax to 2% makes the majority of these remaining shops unviable, forces long-standing family businesses into liquidation and creates totally unnecessary job losses across the country.”
The IBA also claimed the proponents of the tax increase “have failed to either consult with or understand our industry and have shown complete disregard for the holistic nature of this issue by not factoring in the new costs and reducing revenue in the form of declining PRSI, VAT and ultimately turnover tax associated with these closures.”
Responding to minister Donohue’s budget speech, Sinn Fein TD Pearse Doherty predicted the impact of the rise on the industry, saying: “Big operators will absorb the increases, while high street betting offices are put to the wall. What should have been done is an increase to 3%, paid for by punter – that’s how you ensure big operators can’t put the small independents to the wall.”
Alan Heuston, partner and head of betting and gaming at Irish law firm McCann Fitzgerald, believes that these tax rises could drive customers to black market operators who operate remotely and do not pay the existing 1% rate of tax. Heuston added: “Customers are sensitive to pricing, so if black market operators can offer more attractive prices, it would be a natural attraction.”