'It would create opportunities for illegal operators to grow' - Irish bookmakers fear potential new EU betting tax

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A proposed new three per cent tax on EU-licensed gambling operators could result in a less-competitive industry and allow the black market to flourish further, the Irish Bookmakers' Association (IBA) has warned.

According to reports, a new tax of three per cent on the net turnover of the online gambling sector is under consideration, which could generate close to €2 billion per year. It would require unanimous approval from all 27 member states, and the IBA noted that such a tax burden in a market which is already "absorbing substantial new regulatory, compliance and licensing costs" would provide illegal operators with further opportunities to expand.

The proposal, which also includes tax changes on digital services and crypto assets, is being examined by the European Commission as part of the next EU budget for 2028-2034.

Sharon Byrne, chairperson of the IBA, said: "Any additional tax burden on licensed gambling operators should be approached with caution. Licensed operators across Europe are already subject to significant taxation in their respective jurisdictions and, in many markets, are also absorbing substantial new regulatory, compliance, and licensing costs.

"A key consideration for policymakers should be the cumulative impact of additional costs on the licensed sector. Experience across Europe has shown that increasing costs on regulated operators can weaken the competitiveness of the licensed market and create opportunities for illegal operators to grow."

Sharon Byrne: Irish Bookmakers Association chair has issued warnings over new proposed EU tax

Byrne added that attention should be focused on sustaining competition and regulation rather than further tax impositions.

She said: "The priority should be to maintain a sustainable and competitive regulated market that protects consumers, supports employment and continues to generate significant tax revenues. 

"Policymakers should focus on driving consumers towards licensed providers and capturing revenues currently flowing to illegal operators, rather than imposing further burdens on businesses that already operate within a highly regulated and taxed framework."

Ireland is one of the few jurisdictions that apply betting duty as a turnover-based tax with operators paying a two per cent rate. The Tax Strategy Group, which is chaired by the department of finance, has suggested in recent years to increase this by 0.5 and one per cent, but this hasn't come to fruition in the budget.

The IBA has said in the past that such an increase would have a destructive impact on the industry in Ireland given the effect the last hike had in 2019, when it was doubled from one to two per cent. In the following four years 127 betting shops were closed.

Last month the Irish political party Social Democrats called for a huge increase in the betting duty from two to five per cent to help fund sports and culture initiatives. The party's spokesperson Aidan Farrelly said such a hike would have the potential to raise "in excess of €165 million per year to fund a programme of capital grants in sports clubs in disadvantaged areas and create a €150 Sports and Cultural Activity voucher for all children".

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