Ireland set to double gambling taxes

3 October 2018

Ireland is set to next week double taxes on gambling despite the country’s gambling industry predicting widespread shop closures and financial losses.

Reports suggest the government will increase the duty from 1% of turnover to 2% in next week’s Budget in a bid to secure around €50m for public spending. It has been suggested some of that money will fund problem gambling treatment.

The tax rise is seen as a victory for the Independent Alliance in its Budget negotiations with Finance Minister Paschal Donohoe (pictured).

However, the Irish Bookmakers Association has slammed the suggestion of a tax rise, claiming it will put around 35% of the country’s 850 betting shops at risk of closure, and threatens 1,500 jobs. In its Budget submission of July it said the current 1% tax was the “maximum possible with regard to the viability of many smaller operators”.

Following the reports that the Government will double gambling tax, Sharon Byrne, chair of the IBA, reiterated the organisation’s position to iGamingBusiness.com.

“We estimate for a typical independent operator with a modest turnover of €2m per shop, that they are already paying six times more in tax than the profit made per year in that shop,” the IBA said. “A 1% increase would wipe out any profit made in that shop and cause them to be loss making if their gross margin was to drop below 12%, which is highly probable.

“The business is characterised by very low margins and any change in our cost base could be catastrophic, particularly to the smaller operators.”

The current tax rate, which was introduced in 2015, is on top of standard business charges. Irish gambling companies are unable to recover VAT on purchases, while turnover is impacted by the ban on FOBTs in betting shops.

The IBA estimates that there have been around 500 betting shop cloures in the last 10 years with the loss of around 2,500 jobs. It said the market has “stabilised” of late, however “we remain extremely vulnerable to any changes in our cost base as overall staking levels remain under threat”.

While the IBA believes the changes could be “catastrophic”, the proposed tax hike is less than the 2.5% rate sought by Horse Racing Ireland last year.

In July, Irish President Michael Higgins suggested introducing a blanket ban on gambling adverts during live sport broadcasts in order to protect “integrity”.

However, Paddy Power Betfair CEO Peter Jackson criticised the plans, saying that although the bookmaker is keen to see progress on controlling problem gambling, an outright ban is not “necessarily the right answer”.