Gaming and gambling: When is roulette not roulette?

Bookmakers and casinos are providing virtually identical products on their premises, but turf accountants have the odds on their side, writes Special Correspondent Mick Clifford

When is roulette not roulette? When it’s played on a bookmaker’s premises, apparently.

Walk into any branch of the major bookmakers in this State and you can play roulette, but not as you know it. Instead of placing chips or cash on a particular colour and waiting for the wheel to spin, you must write your numbers on a custom-printed ‘betting slip’ and hand it over to an attendant. The wheel will then spin on a screen at an appointed time and the virtual ball will fall onto a virtual number.

This form of playing circumvents the laws on gambling and gaming.

Instead of gaming, the player is placing a bet on the roulette wheel, and is therefore gambling. Thus the activity does not require a gaming licence and is covered by a bookmaker’s licence. In terms of taxation, it attracts a 1% levy on each bet.

Compare that with roulette as it is generally known. This involves the activity taking place on a premises that is licensed to host a casino.

Crucially, the tax implications for “real” roulette are very different. Operators must pay 23% Vat on their takings, which puts them at a serious disadvantage to bookmakers.

A similar situation obtains in gaming arcades where slot machine-type activity is available. The operators, who are operating machines similar, if not identical, to the bookies’ virtual betting, are at a serious tax disadvantage. Effectively, bookmakers are offering roulette as betting rather than gaming.

The Revenue Commissioners isn’t buying it. Following a query about the activity from the Irish Examiner, a spokesperson said: “Based on the information you provided us with, the player appears to be gaming rather than placing a bet with the bookmaker.”

The question then arises as to what taxation regime the activity falls under, as bookmakers are not licensed to provide gaming.

According to the Revenue spokesperson: “If a bookmaker is in breach of the Gaming and Lotteries Act 1956, this is a matter for the Department of Justice and Equality. If and when Revenue identifies such cases, we notify An Garda Síochána.”

Games such as roulette became very popular in the last four years through online bookmaking, and betting exchange sites. A number of leading bookmarkers contacted refused to comment on the issue.

The Gaming and Leisure Association of Ireland is adamant that its members are being forced to operate a very uneven playing field. “We believe that gaming should be subject to a gross profits tax on ‘gross win’ and that this tax should apply equally to all gaming income regardless of the distribution channels used by service providers, both land-based and online,” the association’s director, David Hickson, said.

Roulette isn’t the only activity that bookmakers manage to fashion as gambling. You can bet on the outcome of the Lotto, through betting slips that look uncannily similar to lottery tickets. The player is invited to bet on the outcome of the national lottery under fixed odds. Again, this is a gambling that bears an uncanny resemblance to gaming — the game in this case being a lottery, which requires a specific licence.

While the bookmakers are being creative in the activities offered in store, the different tax treatment is, according to legal sources, “a bomb waiting to go off”.

Three years ago, the UK gambling and leisure company Rank Corporation won a case in the European Court of Justice that resulted in a major tax rebate, reported to run into hundreds of millions of pounds, being paid out by Her Majesty’s Revenue Commissioners.

The case was taken on the basis that some of its bingo games were being treated differently for taxation purposes to similar games run by other entities licensed by the state. Rank claimed that the principle of “fiscal neutrality” should apply. This principle, established in EU law, demands that “goods and services that are identical or similar shall be treated in the same way for Vat purposes”.

The 2011 European Court of Justice decision in the Rank case that “similar supplies from the point of view of the customer should be taxed in the same way”. Applying that principle to the roulette in the bookies’ issue, it would be difficult to argue that the service provided to the punter by the bookie differs from that provided in a licensed gaming house.

Much of the problems around the services offered by bookmakers can be traced to the explosion in popularity of online betting, which is not, as yet, covered by legislation. Bookmaker sites currently offer all manner of games from roulette to online poker. However, an Oireachtas committee report into gaming and gambling, published in 2008, recommends that the two activities be treated separately in legislation.

The sector is crying out for legislation, as current laws date from 1931 and 1956, and fail to take account of the development of gaming, and, in particular, the explosion in online activity. The Gambling Control Bill, now three years in gestation and due to be published next year, is expected to deal in a holistic manner with all of these matters. How exactly it will deal with what is potentially a minefield, remains to be seen.

Game on

The difference between gaming and gambling is often subjective, but in global terms, gambling involves betting on an event over which the punter has absolutely no influence, while gaming is when the punter may have an influence on the outcome.

The Oireachtas Casino committee report in 2008 outlined six forms of betting in this country that come under one or other category.

1: Casino-style table gaming, including blackjack; poker; roulette; Brit brag; kalooki; punto; etc. 2: Gaming machines; slots; fixed-odds betting terminals; automatic table games. 3: Remote gaming such as internet, interactive, and mobile gaming.4: Bingo.5: Sports and other betting.6: Lottery.

In legal terms, the only one of the six to come under gambling would be “sports and other betting”. All of the others, apart from lottery, which is subject to a separate licence, would be categorised as gaming.

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