The online bookmaker Sportsbet shared its confidence that it would be able to remain strong and face the new betting taxed which the Australian Government imposes on iGaming operators. The measure was implemented by the authorities after the profits generated by online gambling websites increased by over 40% in 2017.
The two Australian states that have seen the largest online gambling participation and profits – New South Wales and Victoria – are expected to provide more details about the implementation of the new betting taxes over the weeks to come. This would be the first time when gambling operators would be taxed based on where bets are placed rather than where their licenses are granted.
Currently, South Australia has already seen a 15% point-of-consumption tax being implemented, while Queensland and Western Australia are to follow suit. The new taxes have been unveiled primarily in response to the long-running concerns that online gambling operators are not equally taxed as the retail gambling companies in Australia.
The increased taxes that are being imposed across the Australian states have raised the concerns of some online betting companies such as Sportsbet, CrownBet and Ladbrokes. The latter operate in the country but are licensed in the Northern Territory as it is a jurisdiction offering lower taxes, so they have protested against the new taxes being imposed. On the other hand, some Australian authorities that actually rely on the financial contributions made by these operators.
In order not to fend off operators, some racing authorities have expressed criticism against the 15% point-of-consumption tax, calling it too high and explaining that it would endanger the long-term sustainability of iGaming operators.
Sportsbet Generates Strong Profit and Revenue Growth
Yesterday night, Paddy Power Betfair, which is the parent company of Sportsbet, revealed that its Australian brand would be able to handle the new taxes thanks to its strong profit and revenue growth. According to a report issued by the Ireland-based bookmaker, the underlying earnings before interest and tax had increased by 42%, reaching AU$246 million in 2017.
According to Sportsbet’s parent company, point-of-consumption taxes are “payable” in South Australia. Paddy Power Betfair confirmed that Western Australia had already announced such a tax, and the rest of the states in the country were expected to do the same over the upcoming months.
At the time when Paddy Power Betfair revealed its full-year results, it became clear that the Australian business of the company had performed particularly well. The truth is that Sportsbet has managed to become the biggest online gambling operator on the territory of Australia. According to a recent research conducted by Macquarie investment bank, the Australian iGaming business of Paddy Power Betfair may be the only corporate bookmaker that would be able to generate a profit in case that a nation-wide 15% digital betting tax is implemented.
As mentioned above, the operator has already been paying the 15% tax in South Australia since 2017. The amount paid by Sportsbet under the tax represents 7% of the company’s revenue, but the brand has said that it was “payable”.