Cantillon: Betting on a good row before new betting tax gets on the books

Government efforts to extend the existing 1 per cent betting levy to the online sphere are likely to take another step forward today when the Cabinet considers the legislation that will ultimately give effect to the new tax, which is thought likely to raise around €15 million a-year for State coffers. The Government has for a long time been on the receiving end of lobbying from various parties with an interest in this. On the one hand, the horse and dog racing industries, run by State organisations, have been seeking the tax and arguing they should share in the benefit as the provide bookies with their bread and butter.

The bookmakers, who will have to pay the tax, have been warning of the likely impact on their businesses, especially if their overseas rivals can get away with not paying. However, it looks like the tax is going to happen. But there are tricky aspects to the legislation. It is focused mainly on licensing. There will be three types – one to operate a bookie shop, a second for “remote” or on-line bookmaking and a third for remote betting intermediaries, which will cover betting exchanges such as Betfair and Betdaq.

The third is a new creature in Irish law. Betting exchanges provide platforms where clients can bet against each other, one offers 4/1 against a particular outcome, say the Dubs to win the All-Ireland senior hurling title, and another decides he likes those odds and takes the bet. The exchange connects them and takes a commission from the winner’s profit. Exchanges will not be subject to the 1 per cent turnover tax and will instead pay “gross profits tax”, which is really a percentage of their commission. While bookies and exchanges are in the same business, betting, they are very different creatures. Bookies offer customers the opportunity to bet against them; exchanges provide a forum for customers to bet against each other. On that basis, it makes sense they are taxed differently, but where you have two businesses in one industry and subject to the same legislation, paying different types of tax, there is a probability that one will claim it is being treated unfairly. You could lay fairly short odds it will generate a few more rows.