Time for domestic football to benefit from a slice of betting tax cake

One of the more interesting ideas to come out of a public meeting organised by the politician Aodhán Ó Ríordáin, and attended by Niall Quinn, the other week was to divert some of the money raised for the Horse and Greyhound Racing Fund to the improvement of the game here.

Around €65 million is currently paid annually by the Government into the fund with roughly three-quarters of the total generated in recent years by the 1 per cent tax levied on most forms of betting.

In the last budget this was doubled to two per cent, a move that prompted the bookmakers, in a PR campaign the evidence of which was obvious across the media, to predict that the number of betting shops, and jobs in them, would be severely hit.

It has also been claimed the move would have a negative effect on the racing industry which is, inevitably, closely tied up with gambling but it is worth noting that in its submission to the Government of May 2017 the Alliance for Racing and Breeding (ARB) is pretty positive about what was just a proposal back then and Horse Racing Ireland welcomed the move when it happened.

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In the ARB submission, put together by Colm McCarthy and Associates, it is pointed out that betting is exempt from the VAT that applies to most other forms of consumer spending and also escapes the more punitive taxes applied to other “sinful” expenditures like alcohol and cigarettes. Ultimately, it is argued, even “a doubling of the rate to 2 per cent would still leave the rate in Ireland comfortably below the rates prevailing elsewhere and larger increases could be contemplated”.

The bookies, needless to say, were outraged by even the two per cent and while the Government decided to press ahead it with the increase, it also agreed to monitor the impact so as to assess whether the consequences were quite as dramatic as was being suggested by the industry.

Certainly, the decline in betting shop numbers over the past 20 years suggests that the economics of that end of the business have changed but with spectacular growth of internet betting obviously a huge factor in all of this.

Betting shops might well be regarded as just one more victim of 21st century online living but the biggest players in the market have done much to ensure they are safely insulated.

Paddy Power’s results for 2017, for instance, show total online revenues for Britain and Ireland at just over €1 billion with retail revenues actually up more than 10 per cent but still only slightly more than a third of that total at €383 million.

Gaming machines

On average, each shop generates a profit of about €115,000 although across the two jurisdictions around €120 million, a third of combined betting shop turnover, is generated by gaming machines, a form of gambling that has come under renewed scrutiny and will be subject to changes in UK legislation in April that will hopefully impact very substantially on returns.

Anyway, the point is in the case of Paddy Power, at least, a company with a higher profile and far greater economies of scale than most of its rivals in the Irish retail sector, the long-term future of the shops may well have a question mark hanging over them.

But there appears to be bigger issues involved than a tax that, the firm itself has estimated, would have cost it some €20 million across all platforms had it been applied in the 12 months to the end of last June.

That equates to a little less than five per cent of combined operating profits across Britain and Ireland (€380 million) or around six times what the then outgoing CEO Breon Corcoran bagged in salary, pension contributions and bonuses (€3.65 million) in 2017.

It is not, in any case, hard to see why the money is so deeply appreciated by the racing industry. As far back as 2005, Tony Fahey and Liam Delaney estimated in a paper for the ESRI the €54.68 million then given equated to a subsidy of €38 for each of the 1.43 million race goers who attended meetings up and down the country.

Alternatively, it amounted to a subsidy of €179,000 per meeting or some €7,100 "per job in the sector". The authors put that number, which specifically relates to racing and includes providers of ancillary services and part-time workers, at 7,500; Deloitte has put the number in the wider equestrian industry, including breeding, at twice that number.

By 2017 the grant had increased by some €10 million but the numbers attending meeting was down by 150,000 suggesting that the “per head” figure would now be just over €50.

All of which sort of came to mind when my colleague, Brian O’Connor, suggested in these pages a couple of weeks ago that perhaps the League of Ireland should simply see its survival as an achievement and stop allowing itself to get carried away with any grander notions.

Now I would be the first to admit the league and its constituent clubs have shot themselves in the collective foot enough times to justify those without an actual grá for the whole enterprise viewing it all with a great deal of scepticism.

But I wonder what a new generation of supporter-owned and largely better run clubs might be able to achieve if every punter through the turnstile came with an extra €50 from the Government.

Better coaching

More generally, I just wonder what the league could collectively manage if it was properly funded by people who genuinely believed in its potential. Structures could easily be put in place to ensure that the money is spent for the purposes intended but clubs could put themselves at the heart of the communities in which they operate, often some of the country’s most deprived and poorly resourced.

They could bring far more and better coaching to schools and smaller clubs, develop facilities, expand existing crime prevention schemes, more effectively attract those young people whose first crack at adult life has not gone so well back into education or training.

In short, bring the world’s most popular sport into their, our, communities creating jobs in coaching, education and administration along the way.

The doubling of the betting tax is expected to bring in an additional €52 million and the rationale used to be that the money all went to racing because that’s what the bets were on, but this has changed substantially.

In Britain, Gambling Commission statistics suggest that football now attracts significantly more bets than racing and though the situation may lag someway behind here, the general shift is undeniable.

Nobody wants to threaten a single one of those jobs in horse racing or related sectors, so, hey, leave racing with its base amount and just give the rest to football or to each sport according to the amounts wagered on them.

Even give it to a broader fund aimed at promoting sport in disadvantaged areas; the ones most likely to be adversely affected by both problem gambling and any future loss of jobs in betting shops.

And in the process maybe give Irish football the opportunity do more than just survive; equip them to excel and start to provide significant numbers of jobs in the way our equestrian industry has been helped to for years . . . through public money, subsidies and tax breaks.