Horse racing industry to be boosted by online betting tax, says Smith

IRELAND’S equine industry will be boosted over the coming year by duty collected from online betting, according to Agriculture Minister Brendan Smith.

The changes being introduced in the Finance Bill come following an appeal to the department by Horse Racing Ireland (HRI) chief executive Brian Kavanagh, who noted that the Horse and Greyhound Racing Fund has been drastically reduced in recent years.

Decimated by duties lost to online betting, as well as by the reduction of the betting levy to 1%, the sector reacted positively to the new measure, introduced at the Irish Thoroughbred Breeders Association Annual Breeding and Racing Awards.

Mr Smith said: “The racing and bloodstock industries have not been immune from the wider economic difficulties facing the country and I appreciate the particular challenges facing your industry. As pleased as I am to have been able to secure €46 million in public funding for the horse racing industry in 2011, from the Horse and Greyhound Fund, I am even more pleased that the Government has followed through on the commitment made by An Taoiseach in May 2010 to bring other betting platforms within the tax regime.

“In his Budget 2011 speech, the Minister for Finance announced that he was making the necessary arrangements to ensure bets placed on the internet by domestic punters are subject to the same level of betting duty as applies in the high street betting shops. Provision was made in the Finance Bill, which completed its passage through the Houses of the Oireachtas today, to ensure that all bookmakers taking bets in Ireland will pay betting duty on those bets in the same way that betting shops do.

“I hope that all the relevant legislative changes, including a new Betting (Amendment) Bill, will be enacted soon after the new Dáil is convened and that, by including the high-growth areas of the betting sector, telephone, on-line betting and betting exchanges, the tax take from betting will be boosted significantly.”

Horse Racing Ireland made a submission to Government on betting legislation in October 2010, noting that betting was one of the few forms of discretionary consumption which is exempt from VAT.

For every €1,000 spent on betting, the Exchequer receives €10 in duty and no VAT. If that betting is done over the phone or on the internet, the Exchequer receives zero. Online is effectively offshore and even telephone call centres based in Ireland route their calls offshore and thus accrue no duty, noted the HRI submission.

The HRI compared this take to beer, where the Exchequer receives €240 for every €1,000 spent in combined excise and VAT, or petrol where the state receives €583 for every €1,000 spent again in combined excise and VAT.

HRI welcomed the move to deal with the anomaly in the betting industry of falling Exchequer returns in the face of a huge increase in bets being placed. In 2001, the total betting in Ireland was €1.3 billion, and it returned €68m to the Exchequer through betting duty. By 2009, betting had risen to €4.5bn and yet the return to the Exchequer had fallen to €31m.

Figures for 2011 should be markedly different.