Irish industry under threat as gambling tax set to double
Paschal Donohoe, the Irish finance minister, has announced that gambling turnover tax is set to rise from 1% to 2% for online and retail bets starting next year. Gambling exchange levies will rise from 15% to 25%.
The value of Irish bookmaker Paddy Power Betfair dropped by £250m immediately after the news yesterday, with shares falling 5%. Paddy Power Betfair expects that its annual betting bill will increase by almost £20m.
The move comes as no shock to industry figures and stakeholders, who warned of job losses and shop closures should the tax be doubled. Initial measures to increase gambling turnover tax began earlier this year and were included in the 2019 budget by a cross-party group of Irish MPs.
Government expects to raise around €50m extra each year, which could be put towards problem gambling initiatives in the country, although it is possible this would all go straight to the exchequer.
However, The Irish Bookmakers Association (IBA) questioned the validity of raising this figure, arguing that the tax will immediately put independent operators out of business. The IBA stated that up to 1,500 jobs would be lost and 300 shops would be forced to close.
In a statement, the IBA said that the government has:
Just signed P45s for over 1,500 jobs in the independent bookmaking sector. It is extremely disappointing that the Government conceded to this demand by politicians who never engaged with the industry or understood the profound effect a turnover tax can have on so many jobs.– Statement, Irish Bookmakers Association
Questions remain over how effective the tax hike will be, but there are also lingering questions about timing. The long-outdated Gambling Control Bill is currently being redrafted and the regulatory framework in the country is clearly in need of being modernised.
The number of licensed operators in Ireland has fallen significantly in the last ten years. While that is in part down to rising property costs, with competition hotting up and margins ever thinner, a tax hike will make things even more difficult for retail operators.
The tax hike is a double edged sword for these small and medium retail operators, who account for more than half the sector in Ireland. Consumers may head immediately to the black market or unlicensed operators who don’t pay the tax. But even those who would rather not play with unlicensed operators may be forced to, as the tax hike forces the closure of local retail operators.