The Irish bookmaker Paddy Power Betfair revealed that the proposed betting tax increase could be a massive blow for the company, as it could cost it approximately €23 million on an annual basis.
The company already suffered a hit, as over £250 million was wiped off the value of the company following the announcement of the Irish Government that it plans to double betting taxes from 1% to 2%. According to estimates provided by Paddy Power Betfair, which is currently the biggest bookmaker in the region, such a step would result in increasing its annual betting duty bill by £20 million.
The Irish bookmaker explained that it would have paid an additional betting duty of £20 million (€22.8 million) in case that the tax increase had been applied to its operations in Ireland in the fiscal year which ended on June 30th 2018. Currently, the company owns a total of 261 betting shops in the country. It also has a significant number of online customers within the jurisdiction thanks to its Paddy Power and Betfair websites.
Fantastic to see support from Oisín McConville to use betting tax increase to fund addiction and education services. https://t.co/VIF5KA6wwA
— John Halligan (@JohnHalligan) September 19, 2018
For the time being, the announcement has had the largest impact on Paddy Power Betfair only, like its major competitors which operate in the region – William Hill and GVC Holdings – have a much smaller presence on the territory of Ireland, hence their losses are much smaller, too. The announced tax increase has come as the largest blow to Paddy power Betfair, which Australia-based brand Sportsbet has also suffered a decline after the latest changes of the so-called point-of-consumption tax.
Doubling Betting Tax Would “Kill the Industry”, Says IBA
About a week ago, the Minister for Finance Paschal Donohoe announced that the country’s Government planned to increase the betting tax imposed on bookmakers from January 1st. In addition, the country’s tax on the commission earned by local betting exchanges such as Paddy Power Betfair is also to increase from 15% to 25%.
According to the estimates which were primarily given by Mr. Donohoe, the tax increase is expected to raise an extra tax of more than €50 million on an annual basis.
Finance Minister Pascal Donohoe says next year we will be fully balancing our books. pic.twitter.com/7euB8r3yPb
— Kacey O'Riordan (@KaceyORiordan) October 5, 2018
At the time when the announcement was made by the Government, leaders in the Irish gambling industry warned that the tax increase would have a devastating impact on the sector.
The Irish Bookmakers Association (IBA), which currently represents more than 700 betting outlets in Ireland, made a prediction about the possible effects which the betting tax increase could have on local bookmakers. According to IBA, the Government’s decision would have almost half of the local bookmakers’ betting shops. Its Chief Executive Officer Sharon Byrne further predicted that there could be massive layoffs across the independent bookmaking sector, with approximately 1,500 that could be lost.
Ms. Byrne explained that doubling the betting duty would literally “kill the industry” and said that the Government should not have relied on the demands made by politicians who have never been engaged with the sector, and therefore could not be aware of the actual consequences such a step could have on the industry.