Online betting to be taxed

handsomecake

according to budget 2011

colly_06

I am making the necessary arrangements to ensure that bets placed on the internet by domestic punters are subject to the same level of betting duty as applies in high street betting shops. Details are set out in an annex in the accompanying documentation.

dotsflan

id be surprised if the online bookmakers passed the tax onto the customer, if there able to cover it in the high street cant see why they cant for the online bets, after all they do make monumental profits over the year so i reckon they will take the 1% or 2% hit thats if it is implimented at all, going to be very hard impliment.

coughlan08

the punter wont have to take the hit.....FACT
they would face a lot of bad publicity and suffer more losses than the 1/2% that is going to be implemented in tax.
its never going to happen in this scenario anyways...

kippy

A very difficult item to actually implement and measure - I assume it will be upto the bookmaker to work out the details.

JONJO THE MISER

I think they should of put the tax to 5%, the fact is its the bookmaker that will pay not the punter.

Thomas_S_Hunterson

JONJO THE MISER wrote: »

I think they should of put the tax to 5%, the fact is its the bookmaker that will pay not the punter.

lol and where does the bookmaker get the money?

kippy

I have little sympathy for the bookie to be honest. Most make significent profit.
If the tax were 5% they could easily pass it on the customer by a slight adjustment in their odds and still end up making gazillions profit.

Pj!

JONJO THE MISER wrote: »

I think they should of put the tax to 5%, the fact is its the bookmaker that will pay not the punter.

Haha. Punter pays it mate.

dotsflan

JONJO THE MISER wrote: »

I think they should of put the tax to 5%, the fact is its the bookmaker that will pay not the punter.

sorry my bad it was never 5% but it was 2% and i remember paying it back a few years ago

dougal-maguire

kippy wrote: »

I have little sympathy for the bookie to be honest. Most make significent profit.
If the tax were 5% they could easily pass it on the customer by a slight adjustment in their odds and still end up making gazillions profit.

alot of independent bookies would close,they simply couldnt afford it.
yes,a 5% adjustment on all their odds.which is more than slight.
more tax=more small bookies closing=less competition to the bigger companies=more money for the people who already have enough.

by the way,this is based on the assumption that bookies will modify odds to allow for the tax.

kippy

dougal-maguire wrote: »

alot of independent bookies would close,they simply couldnt afford it.
yes,a 5% adjustment on all their odds.which is more than slight.
more tax=more small bookies closing=less competition to the bigger companies=more money for the people who already have enough.

by the way,this is based on the assumption that bookies will modify odds to allow for the tax.

How many small bookies have an online presence?

PCPhoto

never considered the bookies taking the hit ...or adjusting odds to cover the "tax" to the government.

I thought the bookies will just use the opportunity to tell the customers they cant cover the online tax and as a result - the government tax would be added to instore and online transactions.

Truth of the matter is the government would have a hard time finding out how many online transactions were taking place.... apart from what the bookies "declare".

kippy

PCPhoto wrote: »

Truth of the matter is the government would have a hard time finding out how many online transactions were taking place.... apart from what the bookies "declare".

Thats the crux of the matter from what I can see.

CiaranC

kippy wrote: »

How many small bookies have an online presence?

Pretty much all of them

betpack.com

Typical that they attack the one industry that is growing and providing jobs in Ireland.

dougal-maguire

kippy wrote: »

How many small bookies have an online presence?

good point,i read the title as "betting to be taxed" didnt take in the online part.

NoQuarter

dotsflan wrote: »

sorry my bad it was never 5% but it was 2% and i remember paying it back a few years ago

It was 5% a few years ago.

kippy

CiaranC wrote: »

Pretty much all of them

betpack.com

Typical that they attack the one industry that is growing and providing jobs in Ireland.

They've attacked almost every sector with much of the taxes.

Betpack isnt a small bookies with an online presence. It is a number of "smaller" bookies who set up a site together.

Juwwi

Years ago in England it used to be 10% tax.

You had the choice of paying it up front or not paying and let them take 10% of your winnings.

dotsflan

NoQuarter wrote: »

It was 5% a few years ago.

was it? i thought so alrite but then thought i was mistaken as the government cut it from 2% to 1% in 2008.

kippy

kippy wrote: »

I have little sympathy for the bookie to be honest. Most make significent profit.
If the tax were 5% they could easily pass it on the customer by a slight adjustment in their odds and still end up making gazillions profit.

If you reckon the margin is in excess of 5% get yourself on Betfair, you'll make a fortune

MikeB94

As someone else pointed out earlier even if the bookies are covering the tax a tax increase would be bad for the punter as they just gonna figure it in the margin somehow. Now i dont know the exacts of it at the moment and if its just gonna be kept at 1% for both online and on the high street or is it going to go up to 2% as widely predicted before. I can tell you having worked for one of the major firms in Ireland up to a couple of weeks ago even if it is raised to just 2% on the high street you will see a lot of shop closures and they wont be just independents. I worked in what was a pretty busy shop with decent turnover and made a decent net profit at the end of the year but the 2% would wipe nearly 70% of that as the tax at the minute is based on turnover and not profits and is in fact a double increase in taxation. So to sum up anybody know if they actually put up the tax??:D

MikeB94

dotsflan wrote: »

was it? i thought so alrite but then thought i was mistaken as the government cut it from 2% to 1% in 2008.

It was 5% till circa 2004 but the difference for the bookies that the customer paid it and not the bookies. I still remeber paying it at 3% and i think when it went to 2% was when the bookies started to absorb it until it was cut eventually to 1%.

kippy

RoverJames wrote: »

If you reckon the margin is in excess of 5% get yourself on Betfair, you'll make a fortune

Margin on what?

Just pointing out where the bookies can and probably will pass on any taxation increases to the punter.

Betfair is better value in most cases than any "normal" bookie. Not getting your point there.
On a slanted and related note, this could cause more people who bet online to use betfair more. .............

Best tip of the day:
Buy shares in betfair.

Trampas

NoQuarter wrote: »

It was 5% a few years ago.

I remember it been 10%

CiaranC

MikeB94 wrote: »

It was 5% till circa 2004 but the difference for the bookies that the customer paid it and not the bookies. I still remeber paying it at 3% and i think when it went to 2% was when the bookies started to absorb it until it was cut eventually to 1%.

All very well when the Irish bookies had only to compete with each other. Now they have to compete with bookies online not subject to this tax, not to mention the exchanges. Disaster for the industry and for the punter.

Bluetonic

kippy wrote: »

Betfair is better value in most cases than any "normal" bookie. Not getting your point there.
On a slanted and related note, this could cause more people who bet online to use betfair more. .............

Best tip of the day:
Buy shares in betfair.

Online exchanges are NOT exempt from this new online tax.

Best tip of the day:
Make sure you read the proposal in full before commenting.

smokingman

I'd love to know how they're going to do this, especially with most of the online bookies being off shore and not subject to this jurisdiction.
Does that mean that of the major players, only Boyles and PP are going to be paying this?

JONJO THE MISER

Trampas wrote: »

I remember it been 10%

I remember it being 20% and that was not too long ago, used always have the spare 20p for £1 bet:D

kippy

Bluetonic wrote: »

Online exchanges are NOT exempt from this new online tax.

Best tip of the day:
Make sure you read the proposal in full before commenting.

Ah jaysus,
good luck with trying to collect those taxes then.

netnerd

this is very bad news for Irish jobs.

Although 1% on turnover seems low on the face of it, you must consider that other jursidictions tax on gross profit.

Across all sports, a bookmaker will expect to hold/win around 4%.

So, lets say he takes a 1000 Euro bet. He would expect to win 40 euro for every 1000 he takes.

If he is taxed 1% on turnover, he will pay 10 euros to the levy.

If he is taxed 10% on gross profit, he will pay 4 euros to the levy.

Jurisdictions such as Gibraltar also tax 1% on turnover, but the BIG difference is that the maximum amount a company can be taxed in a year is capped. Currently, in Gibraltar that cap is 425,000 sterling.

So, if Paddy Power's turnover is anything over 50million a year (the paddy power group turned over 2.7billion last year) then a move to Gibraltar or similar jurisdiction would be an absolute no-brainer for them.

Paddy's have already gone on record as stating that it would be an outrage if the betting tax ends up being a tax on Irish jobs - which it undoubtedly is, and that they would move offshore.

Kiss goodbye to the proposed 350 new jobs in Tallaght, I'd say.

“We will employ an additional 750 staff over the next three years and 350 jobs are earmarked for Ireland . . . However, we have felt for some time, and the Taoiseach’s comments reinforced this, that there is a risk that these jobs will have to be diverted from Ireland . . . in anticipation of a tax that gives advantage to offshore operators,” he said.

Mr Kennedy said it would be an “absolute outrage” if this was effectively a tax on Irish jobs. “We don’t have an issue paying betting tax on Irish internet betting. However, we do have a serious issue if we have to pay it solely because we employ people in Ireland.”

netnerd

"We are very disappointed with the news," said a Boylesports spokesperson. "Boylesports are registered in Ireland, we pay tax here, and what this new measure has done is put us at a huge disadvantage with our offshore competitors.

"We’re very concerned with how the government are going to regulate the offshore competitors who are not registered in Ireland. This new taxation will have a negative effect on job creation."

Read more: http://www.irishexaminer.com/home/sports-budget-chopped-by-23m-138755.html#ixzz17W0UuvGL

ArmaniJeanss

kippy wrote: »

Ah jaysus,
good luck with trying to collect those taxes then.

There'll be no problem for the government with companies like Powers/Laddies/Betfair - they will pay up the taxes on all bets from Irish customers (though whether they'll absorb it or pass it on to the customer is a different issue).

They are stock market registered companies and won't be seen to be engaging in illegalities.

Rjd2

netnerd wrote: »

this is very bad news for Irish jobs.

Although 1% on turnover seems low on the face of it, you must consider that other jursidictions tax on gross profit.

Across all sports, a bookmaker will expect to hold/win around 4%.

So, lets say he takes a 1000 Euro bet. He would expect to win 40 euro for every 1000 he takes.

If he is taxed 1% on turnover, he will pay 10 euros to the levy.

If he is taxed 10% on gross profit, he will pay 4 euros to the levy.

Jurisdictions such as Gibraltar also tax 1% on turnover, but the BIG difference is that the maximum amount a company can be taxed in a year is capped. Currently, in Gibraltar that cap is 425,000 sterling.

So, if Paddy Power's turnover is anything over 50million a year (the paddy power group turned over 2.7billion last year) then a move to Gibraltar or similar jurisdiction would be an absolute no-brainer for them.

Paddy's have already gone on record as stating that it would be an outrage if the betting tax ends up being a tax on Irish jobs - which it undoubtedly is, and that they would move offshore.

Kiss goodbye to the proposed 350 new jobs in Tallaght, I'd say.

“We will employ an additional 750 staff over the next three years and 350 jobs are earmarked for Ireland . . . However, we have felt for some time, and the Taoiseach’s comments reinforced this, that there is a risk that these jobs will have to be diverted from Ireland . . . in anticipation of a tax that gives advantage to offshore operators,” he said.

Mr Kennedy said it would be an “absolute outrage” if this was effectively a tax on Irish jobs. “We don’t have an issue paying betting tax on Irish internet betting. However, we do have a serious issue if we have to pay it solely because we employ people in Ireland.”

Agreed this is dreadful news for Irish jobs, Dundalk and Tallaght are two areas that will be seriously hurt when this comes in. Its heart breaking because its one of the few industries that is such a solid employer of Irish people.

I reckon once January rolls around, every section of both Powers and Boyles will lay people off.

They could move I suppose but I reckon both owners would prefer to stay in Ireland.


I work for one ( I won't say which) so yeah this is going to be a very worrying time for me and many others sadly.:(

Happy Christmas Indeed!

ArmaniJeanss

netnerd wrote: »

“We will employ an additional 750 staff over the next three years and 350 jobs are earmarked for Ireland . . . However, we have felt for some time, and the Taoiseach’s comments reinforced this, that there is a risk that these jobs will have to be diverted from Ireland . . . in anticipation of a tax that gives advantage to offshore operators,” he said.

Mr Kennedy said it would be an “absolute outrage” if this was effectively a tax on Irish jobs. “We don’t have an issue paying betting tax on Irish internet betting. However, we do have a serious issue if we have to pay it solely because we employ people in Ireland.”

Its worth pointing out that the above quote from NedNerds post is something said by PP in May of this year, and should not be taken as a reaction by PaddyPowers to yesterdays announcements.

One very important line by Patrick Kennedy was ommitted by Netnerd.

http://www.irishtimes.com/newspaper/finance/2010/0519/1224270653195.html

BOOKMAKER PADDY Power has said 350 jobs earmarked for Ireland could be lost if the Government does not find a way to apply an online betting tax to its offshore competitors.

It appears from what Brian Lenihan said yesterday that what Mr Kennedy demanded is exactly what the government propose - e.g. the tax is to be applied on all bets that originate in Ireland, not just those with Irish operators.

Verance

CiaranC wrote: »

All very well when the Irish bookies had only to compete with each other. Now they have to compete with bookies online not subject to this tax, not to mention the exchanges. Disaster for the industry and for the punter.

It's not only Irish companies, it's all companies who strike bets with Irish customers. It's an effort to force all these companies registered in Gibraltar and such to make a contribution. Details haven't been released yet though??

kippy

What is the taxation structure of these bookies themselves?
Do they have to pay the 12.5% corpo tax rate that all the multinationals pay on their profits because they can avail of Irish taxation in a positive way?

Remember, from what I can tell this 1% tax only applies to bets made from residents of the republic.
Surely a move to another country would include a hit to their top end profits tax which may or may not offset the 1% gambling tax on Irish residents.

CiaranC

Verance wrote: »

It's not only Irish companies, it's all companies who strike bets with Irish customers. It's an effort to force all these companies registered in Gibraltar and such to make a contribution. Details haven't been released yet though??

How do they propose to enforce this tariff on companies from countries outside the jurisdiction?

Is there an example of something like this already in place elsewhere? Is it the norm?

cson

kippy wrote: »

I have little sympathy for the bookie to be honest. Most make significent profit.
If the tax were 5% they could easily pass it on the customer by a slight adjustment in their odds and still end up making gazillions profit.

Industry standard Gross Profit is 13%. That's Gross so you have to take expenses out of that after which a net margin of 5% would be doing very well. Up the tax to 5% and well; any small to medium guys are out the game straight away. Far from gazillions of profits.

JONJO THE MISER wrote: »

I think they should of put the tax to 5%, the fact is its the bookmaker that will pay not the punter.

There is an understanding between the associated Bookmakers in the country and the Minister for Finance that the cost will be absorbed by the Bookmakers themselves - this is why it's 1%. If it were 5% it would be passed onto the punter as it was a few short years ago.

kippy wrote: »

What is the taxation structure of these bookies themselves?
Do they have to pay the 12.5% corpo tax rate that all the multinationals pay on their profits because they can avail of Irish taxation in a positive way?

Remember, from what I can tell this 1% tax only applies to bets made from residents of the republic.
Surely a move to another country would include a hit to their top end profits tax which may or may not offset the 1% gambling tax on Irish residents.

Bookmakers pay 12.5% Corporation Tax in addition to the 1% Levy. Remember that the 1% Levy is applied to gross revenues therefore you'll still have a tax liability if you don't make a profit.

I'm imagine the structuring will be through licensing online operations here and the tax will apply only to bets struck in the ROI - i.e. IP Address will be used.

ArmaniJeanss

CiaranC wrote: »

How do they propose to enforce this tariff on companies from countries outside the jurisdiction?

Is there an example of something like this already in place elsewhere? Is it the norm?

Surprisingly enough most companies do this voluntarily, and there are examples (Italian and French governments agreements with various poker sites for example).

The reasons are twofold - a) none of the directors would want to risk being arrested for tax evasion when their flight from Moscow to Florida lands at Shannon in bad weather and b1) the companies are plc's and must be seen to obey the law for a multitude of reasons or b2) they aren't plc's but plan on being so some day (or being taken over for millions by a big boy) and keep their nose clean.

A small minority will flout the law for the 1% edge it gives them, but that doesn't mean the law itself is wrong - e.g., we wouldn't say income tax is a silly tax just because barry the builder does nixers 24/7!

CiaranC

Thanks. I wonder is this why Australian money is kept in a separate "wallet" on the likes of Betfair? Would we be likely to see the same for Irish punters on sites now?

Bluetonic

Rjd2 wrote: »

I reckon once January rolls around, every section of both Powers and Boyles will lay people off.

I reckon you haven't got a clue.

kippy

I still havent seen the specifics of the bill however surely moving to Gibraltar or where ever WONT reduce the requirement for Irish punters to be taxed or will it?

Still not getting this as I already used an example of betfair and was told it applied to betfair as well.

KylieWyley

Surely if this is brought to fruition then the companies involved, e.g. Paddy Power, will split their companies between high street and online divisions. They will then ship their online operations to jurisdictions that are havens for online gambling, such as Panama.

Bluetonic

KylieWyley wrote: »

Surely if this is brought to fruition then the companies involved, e.g. Paddy Power, will split their companies between high street and online divisions. They will then ship their online operations to jurisdictions that are havens for online gambling, such as Panama.

That won't matter a damn, it's nothing to do with the jurisdictions, it's down to Irish Customers. It's Irish Customers bets that the tax is on, regardless of where the online company exists. The devil is in the detail of how they can impose it.

Paddy Power Online Sports Betting already runs from the IOM by the way.

Paddy Power Sportsbetting is regulated by the Isle of Man Gambling Supervision Commission under a licence issued under the Online Gambling Regulation Act 2001 on 31 August 2007

Just to clairfy, it's a 1% tax on online bets places by Irish Customers ANYWHERE.

KylieWyley

ok, so if we take it that the tax is being imposed on Irish Customers, I'm just wondering how feasible it would be to implement at the customer's end?

Log onto the site from a proxy and, hey presto, you appear to be coming from anywhere in the world. They'll hardly sift through the items on credit card bills and apply taxes post facto, would they?

cson

KylieWyley wrote: »

ok, so if we take it that the tax is being imposed on Irish Customers, I'm just wondering how feasible it would be to implement at the customer's end?

Log onto the site from a proxy and, hey presto, you appear to be coming from anywhere in the world. They'll hardly sift through the items on credit card bills and apply taxes post facto, would they?

It won't be.

As I outlined earlier a condition for the nominal rate of 1% is that it is absorbed by the Bookmakers. As far as I'm aware it's not explicit and it's more of a gentlemans agreement. In any case if a Bookmaker attempted to collect it they wouldn't be long having an empty shop.

Main aim of the levy is that it completely funds HRI and Bord na gCon without the need for further funds from the State. There's an argument it should also fund some of the Dept Sport budget as people don't just gamble on horse racing.

Nulty

Trampas wrote: »

I remember it been 10%

I read today that McCreevy brought it down from 7% so its been very high (relatively) recently