Possible hike in betting tax may be passed on to punters

The Government is weighing an increase in betting tax that horseracing and breeding groups suggest could be passed to punters.

The news comes as an estimated 140,000 racegoers this week converge on Galway where they are expected to wager €13 million between the betting ring and tote over the course of seven days.

Senior civil servants in the Government's Tax Strategy Group are reviewing the 1 per cent duty on bookmakers' turnover and the 15 per cent levied on commission charged by betting exchanges.

The group's report shows the State body Horse Racing Ireland (HRI) wants the bookie's tax increased to 2.5 per cent and the Alliance for Racing and Breeding is seeking to have it doubled.

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They are also calling for hikes in the tax on betting exchange commission. HRI argues this could be increased to 37.5 per cent while the breeders’ alliance is calling for 23 per cent.

According to the document, both bodies suggested “that if the bookmakers’ business model did not lend itself to an increase in the 1 per cent tax on the bookmaker, then any increase might best be levied on the punter”.

Negative impact

The betting industry argued against this on the grounds that it has had a negative impact in other countries, it would increase the cost of betting and push punters towards unlicensed operators, and it would be difficult to enforce.

When the Government cut betting tax to 1 per cent of turnover from 2 per cent in 2005, it barred bookies from passing the charge on to their customers. Competition at the time had forced many of them to absorb all or part of the charge.

The Government cut the levy from 5 per cent at the start of this century, which was paid directly by punters, to its current level, in response to lobbying from the betting industry.

The tax was originally meant to ensure that racing and breeding got a share of the cash that bookmakers earn from taking bets on the sport. The money is passed back to racehorse owners in prize money and to help fund redevelopment of facilities at racetracks.

Lobby groups

Up until 2008, there was a link between the money that the Government paid to horse and greyhound racing and the tax that it collected from bookies.

Racing and breeding lobbied to have online betting included in the net, which it was when the law was changed in 2015, and to have the rate increased to at least 2 per cent.

The strategy group’s figures show the tax yielded €25.4 million in the first half of this year and €50.7 million in 2016, the first full year that online operators contributed. Bookie shops accounted for €28.1 million of last year’s total.

The betting industry told the strategy group that the current system is working well. The Irish Bookmakers’ Association and the Irish Independent Bookmaking Offices’ Association want those with turnovers of less than €2 million a year to pay lower rates.