Games offered by bookmakers throughout the State may be illegal

Games offered by bookmakers throughout the State may be illegal, giving rise to major tax and licensing implications for the industry, an investigation by the Irish Examiner has learned.

The popular game of ‘virtual roulette’, available in all leading bookmaker shops, is not covered by the bookmaker’s licence, according to an opinion from the Revenue Commissioners.

Currently, bookmakers pay the 1% betting duty on the activity, for which operators of gaming clubs and the holders of gaming licences must pay 23% Vat on their takings.

Roulette on bookmakers’ premises is presented as ‘betting’, on the basis that a slip is required to be filled in and presented to the attendant. However, the Revenue Commissioners believes that the activity falls under the heading of ‘gaming’, as opposed to ‘betting’, and is therefore illegal.

Correspondence from the Revenue Commissioners, seen by the Irish Examiner, suggests that this could have implications for the renewal of bookmakers’ licences.

“A bookmaker cannot offer ‘gaming’ in the form of roulette, and conviction of an offence under the Gaming and Lotteries Act 1956 is one ground for the police authorities to refuse to issue a Certificate of Personal Fitness,” said a higher executive officer in the Revenue.

Sources in the gaming industry suggest that the operating of roulette by bookmakers may lead to a legal challenge on the basis that different tax regimes are being applied, which puts the holders of gaming licences at a disadvantage.

In 2011, the European Court of Justice ruled in favour of British gaming and leisure company Rank Corporation, which claimed it had been disadvantaged because some of its games were subject to a different taxation regime than others being offered by competitors.

The case was brought under an EU directive on fiscal neutrality, which states that the same taxation must apply for the same services offered to customers. As a result of the ruling, Britain’s Revenue Commissioners conceded that Rank was liable for a tax rebate, reported to run into hundreds of millions of pounds.

When contacted, a spokeswoman for the Irish Bookmakers’ Association said it was a matter for individual operators. A spokesman for Boylesport said the company would be making no comment on the matter. A spokeswoman for Paddy Power said the company did not have gaming terminals on any of its premises, but she refused to comment on the status of roulette offered in Paddy Power shops.

The Gambling Control Bill, due before the Oireachtas next year, is expected to provide a new regime for online bookmakers gambling and gaming, but as yet it is unclear how the legislature will deal with the taxation implications, and whether or not bookmakers will be permitted to offer games such as roulette and online poker.

Read Michael Clifford's in depth anlaysis of the issue here