Budget 2012 - Death of Betfair Exchanges???

jodaw

Having a quick look at the measures mentioned in the budget speech.

Betting Duty
The Betting (Amendment) Bill is now at an advanced stage of drafting with a final draft expected from the Attorney General’s Office early in the New Year. The Bill will, inter alia, facilitate the extension of the betting duty of 1% to remote betting and the introduction of a betting intermediaries’ duty (Gross Profits Tax of 15%) to cover betting exchanges. Following publication of the Bill there is a legal requirement to notify the EU Commission 3 months in advance of enactment of the Bill. It is intended that the new taxation regime will commence from the second quarter of 2012.

Ok so let me get this straight:

A 1% tax on online bets through bookmakers. Ok i can swallow that.

But this 15% gross profit thing??? WTF??? So now any hard earned profits through a betting exchange are subject to 15% tax from government? After commission? After premium charges?

:D:D:D:D:D

The margins are so slim to make anything out of this game that this is the final nail in the coffin. Does this dumbass Noonan even have any idea that Betfair already tax their winning clients?

I fear this is the end for the exchanges. I cannot make any money with this ..

JONJO THE MISER

jodaw wrote: »

But this 15% gross profit thing??? WTF??? So now any hard earned profits through a betting exchange are subject to 15% tax from government? After commission? After premium charges?

I would assume that it would not be the punter paying gross profit but betfair and betdaq themselves from bets that are made in Ireland.

jodaw

Your explanation of the tax would make more sense and be a lot easier to implement. The previous government mentioned this in the last budget and the new shower has picked up the ball and ran with it.

So if the tax is on the Gross Profit of the exchange operations then they will be fuming. So what will be the end result for the exchange client. The exchanges will pass this on and this will be a hit to the punters bottom line. I see to options

1. Exchanges pass on the tax is some way or other. Maybe higher commissions or a charge on bets made for Ireland.

2. The exchanges pull out of Ireland and remove all associations with Ireland. Transfer clients fund to accounts in other jurisdictions and argue that Ireland cannot impose taxes on a company in another jurisdiction. With the knockon effect of more job losses here

okidoki987

There's no chance of this working, too messy.
There is little difference between Betfair/Betdaq and the bookie prices these days.

UrbanSea

But JJ,wouldn't Betfair already be liable to corporation tax? I thought this was a 15% tax on punter's profits

johnmcdnl

Just a quick question on this one - will it affect betting on Paddy Power and other normal online bookies or is it just for Betfair??

UrbanSea

Exchanges= betfair,betdaq

jodaw

johnmcdnl wrote: »

Just a quick question on this one - will it affect betting on Paddy Power and other normal online bookies or is it just for Betfair??

Online bets will now be subject to 1% duty and this may or may not be absorbed...

I find the whole 15% thing bizarre to be honest. Why would the concentrate on such a difficult to implement tax for a paltry return? I for one will stop betting if this turns out to be what i think it is, so they will get nothing from me. I suspect anyone else out there will do the same...

Anyone think the bookmakers have been pushing to getting something like this? It is poorly thought out and will yield feck all.

No detail and i think they have not got a clue TBH

All the problems we are facing and the amount of time/money figuring out how to tax a few exchange gamblers must be obscene!!! :mad::mad::mad:

UrbanSea

I take it it's been introduced to tax professional gamblers (however small that number is),who'd be paying no direct taxes but yet could be claiming welfare

okidoki987

If you are a professional gambler you pay no tax on any winnings but you don't have any Tax Free allowances either.
You are supposed to register with the Revenue as well.

UrbanSea

I never knew that

Has to be on the actual exchanges I'd say rather than the punters, trying to think how it could work on a punter............do you get an annual bill off revenue after the exchange notifies them that you made profit that year??

As mentioned, with shopping around most early Betfair prices aren't competitive, if they charge 15% tax on gross profits I'd have to go the ball ache way of using multiple bookies accounts.

UrbanSea

UrbanSea wrote: »

But JJ,wouldn't Betfair already be liable to corporation tax? I thought this was a 15% tax on punter's profits

Betfair aren't an Irish reg company though, so the Irish revenue get feck all off them. The 15% on their gross profits from Irish bets would essentially be a sort of corporation tax for them.


Seems to be aimed at the actual exchange "extending the duty to remote bookmakers and betting exchanges.", http://www.kildarestreet.com/debate/?id=2011-11-09.360.11.

It would make laying on Betfair fairly unattractive really whatever about punting.

UrbanSea

That's right James, hadn't thought it through.

Conceptually if any Irish chap places €100 on a 6.0 shot Betfair take €5 off the layer if it loses and €25 off the Irish chap if it wins, would the Revenue folk here want 15% of the €5 if the horse lost? That would be essentially taxing a lay bet that was made by possibly a non Irish person. I imagine they would, but if the horse won would the revenue folk want 15% of the €25?

Presumably it will be on the stake?

In November I think I staked about €500 on Betfair, 15% of 5% of that is €3.75. Now, if that's the way it will be implemented it works out less than the 1% on over the counter bets here, even if Betfair passed that charge onto me I wouldn't be overly bothered.

Seems a lot of work though for little enough revenue for the revenue folks, admittedly all they are trying to do is reclaim the revenue lost by folks' moving to online gambling. They are, I expect just trying to get the revenue stream back up to €70 ish million per annum.

Dodge

It won't work like that at all.

They'll look at all comission taken by betfair from Irish customers and take 15% of that

Betfair will declare x amount and Revenue will be ahppy enough not have to chase them that they won't mind if its a little out (and will talk up the possibility of audits and spot checks).

The possibility of betfair upping their commission for Irish customers is a possibility, but it may be easier to simply absorb it

RoverJames

RoverJames wrote: »

...................... but if the horse won would the revenue folk want 15% of the €25?

Presumably it will be on the stake?

In November I think I staked about €500 on Betfair, 15% of 5% of that is €3.75. Now, if that's the way it will be implemented it works out less than the 1% on over the counter bets here, even if Betfair passed that charge onto me I wouldn't be overly bothered. .....................

Dodge wrote: »

It won't work like that at all.

They'll look at all comission taken by betfair from Irish customers and take 15% of that

.....................

You're correct no doubt, I'll have a look at my November stats later and see how 15% of the commission would work out as opposed to 15% of the commission on the stake amount

RoverJames

RoverJames wrote: »

November concludes on a positive note + €438.64...................

RoverJames wrote: »

You're correct no doubt, I'll have a look at my November stats later and see how 15% of the commission would work out as opposed to 15% of the commission on the stake amount

mmmm

In November I staked €483.85, as above the profit was €438.64, however I won €479.17 so the Betfair folks received €40.53 commission. 15% of that is €6.08.

If I had no winners though but still staked €483.85 would the revenue folks here get nothing?

The Irish Riddler

The Irish revenue cant audit Betfair however they are a publicy traded company so the figure they give will be about right.

The margins are small for Betfair also. I doubt they will just absorb it.

Betdaq, an Irish owned and registered company that is trying to gain market share with lower commissions will get shafted.

This is not good for anybody but the bookies.

I would like to see the revenues projections for this tax.

J-Fit

Far too messy to implement in my view. From what I understand, the exchange will absorb it. If they try to implement it, it will be not only a waste of resources but a huge threat to jobs in the betting exchange industry in this country (why would the average punter bet with them anymore if they pay 15%?) which isn't insignificantly small. And for those who genuinely are making money off the exchanges, there is no easier tax to avoid if you are even a little imaginative! Yes avoid, not evade!

J-Fit

An article not quite a year old but seems to shed light on the issue.

Under the new legislation, they will be required to pay 15% of their gross profits from Irish-based bettors. Betfair seem to be happy enough with the new proposal so, if 15% of their gross profits from Irish bettors amounts to more than 10% of their gross profits on Irish racing, you can be sure that it doesn’t amount to much more.

How will betting operators based in Gibraltar, with no physical presence in Ireland, be convinced that it is in their interest, that it makes good business sense, to pay a licence fee and a percentage of their turnover from Irish customers? Perhaps most will be voluntarily compliant, but you can be certain that all will not. What sanctions will be used against them if they choose not to comply?

http://donnmcclean.com/2011/01/25/betting-tax-2/

The Irish Riddler

Foreign companies not paying tax is basically the reason Americans can't play real money poker or bet on sports online these days. UIGEA.

Dodge

The Irish Riddler wrote: »

Foreign companies not paying tax is basically the reason Americans can't play real money poker or bet on sports online these days. UIGEA.

Thats not true. Its a hugely politically issue.

The Irish Riddler

Its about as political as America choosing the liberate countries with large oil reserves.

Its all about the money otherwise they wouldn't allow any land based casinos/horse racing betting.