Leading Irish independent layer spells out dangers of 'unsustainable' proposed increase in betting tax

One of Ireland's leading independent bookmakers has warned of the potentially catastrophic impact of a proposed hike in betting duty that could lead to punters suffering an "inferior offering" with less competitive prices compared to other jurisdictions and could render his firm unsustainable.

Last month, the Tax Strategy Group, which is chaired by the Department of Finance, recommended a 0.5 per cent increase in betting duty for retail and online operators. Ireland is one of the few jurisdictions that apply betting duty as a turnover-based tax and the mooted increase would bring the rate up to two and a half per cent after it was increased from one to two per cent in 2019.

Anthony Kaminskas, founder of AK Bets, which recently ventured into the online realm after building up a strong betting ring presence, feels such an increase would have a disastrous impact on bookmakers and punters alike. Sharon Byrne, chairperson of the Irish Bookmakers Association, recently said the doubling of the tax rate had already led to 100 betting shop closures and 600 job losses. 

He said: "The two per cent tax has basically wiped out the independent bookmaking sector in Ireland and now they want to raise it. It sounds like a small, whole number, especially when you’re raising it by half a per cent and I remember Jim Bolger suggesting the same, but it is not as simple as that.

"Due to the turnover tax, Irish customers in general have an inferior offering on price because the two per cent doesn’t get absorbed by the bookmaker – it gets passed on to the customer. Irish bookmakers are trying to compete with other jurisdictions who don't have a turnover tax so our prices can potentially be inferior. Given it's a worldwide industry, why would punters then bet with an Irish bookmaker?"

Many firms feel it is becoming increasingly hard to compete with the black market and Kaminskas says a hike in betting duty would cause more customers to seek illegal layers. He said: "It’s making the black market look a lot more competitive as an option for customers. 

Sharon Byrne: Irish Bookmakers Association chair said doubling of tax rate had led to 100 betting shop closures and 600 job lossesCredit: Patrick McCann

"It’s very hard to compete on price with people who are doing things illegally and not contributing tax revenue to the state. The illegal market is huge, provides no tax revenue and is getting more and more people as customers are not happy having to send payslips and offer affordability information. Those customers are going further and further underground. 

"Problem gambling, as it should be, is on everyone’s agenda but if you’re offering inferior prices compared to what the true price should be, it means the customers lose quicker as you’re passing the turnover tax on to them. In my opinion, problem gambling will be exacerbated by more people going underground."

Should the revised tax be imposed, Kaminskas feels he may have no other option but to relocate his operations. He is already putting in plans should the increase render his business unviable.

He said: "I'm based in Ireland and I want to pay tax in Ireland, I want to contribute to the system here. But I’m not going to let my business be taxed into an unsustainable position. I’m going to look at where we’re based from a tax perspective rather than have legislators wipe out my business by applying regressive turnover-based tax. 

"We’re putting in contingency plans at the moment so that if this gets to an unsustainable level, we’re going to migrate and go somewhere else. I genuinely don’t want to do that. I live in Ireland, my kids live in Ireland, I want to contribute to the system but you’re not going to tax my business into unprofitability.

"I would love if lawmakers came down and saw us because we’re not a Paddy Power, BoyleSports or a big corporation. Come down and I’ll open our books. Look at our numbers and look at how unsustainable two per cent already is. People are getting out rather than getting in and this will exacerbate the problem. 

"For corporations like Flutter, Ireland is fairly insignificant and it’s a very saturated market here and in the UK. The growth areas are elsewhere. They probably don’t care that much if they are getting taxed to high heavens and there are no new entrants to the market and prices are getting less competitive – it’s probably good for them. We are going to look at other options, I could migrate somewhere else and get a licence abroad and I can trade Irish customers from there if this becomes unsustainable."

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'Shop closures and job losses' - Irish Bookmakers Association concerned about proposed betting duty increase 

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