Higher levy could end state subsidy for tracks — but put bookies in trouble
Betting tax needs to be doubled to allow the horse racing industry to pay for itself without a state subsidy, according to industry representations made to the government.
Bookmakers are opposed to tax hikes, however, and they have warned the Department of Finance that such a move would exacerbate a serious decline in betting since the boom, and drive more of them out of business.
Recent reforms have boosted the tax take by more than €20m a year by extending it to offshore betting. This allowed the exchequer subsidy for horse and greyhound racing to be reduced to €23m last year from €37m in 2015.
An increase in the current 1% rate of betting tax will be needed, however, to eliminate the subsidy altogether, according to the Alliance for Racing and Breeding, which represents trainers, breeders and jockeys.
“The exchequer top-up to the [horse and greyhound] fund could remain around €25m per annum . . . for many years to come,” warned the alliance. “This was not the intention in 2001 when the current funding mechanism was established . . . A rate increase, even to 2%, would eliminate any need for exchequer subvention.”
Horse Racing Ireland, which runs the country’s 26 racecourses, wants an even higher tax, proposing a 2.5% rate.
“It would transfer the funding of horse racing in Ireland from all taxpayers to those that choose to have a bet, which is the system that operates in most other countries with a developed racing industry,” it said in its submission to the Department of Finance.
Bookmakers, however, are calling for tax cuts for small betting shops with a turnover of less than €2m, to allow them to compete with online betting exchanges.
“Until 2015 the retail betting sector was the sole contributor to betting tax, which put it at a severe competitive disadvantage to all other types of betting operators,” wrote the Irish Bookmakers Association.
The Irish Independent Betting Offices Association said it is “incongruous” to expect the racing industry to be funded entirely from betting tax when bookies earn only 12%-13% of their incomes from horse racing in Ireland.
Paddy Power Betfair warned that an increased betting tax would have disastrous consequences. “The existing 1% turnover tax for online and retail sports books is appropriate and should be maintained,” it said.
“Any increase would put significant pressure on both sides of the sector with the impact for retail bookmaking, which is characterised by already tight margins, being potentially more damaging.”
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