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Bookies react to Irish tax plans; Betfair talks cutting and bleeding in Arizona

TAGs: Betfair, Boylesports, exchange wagering, Ireland, Paddy Power, Television Games Network, TVG

irish-bookies-tax-betfair-bleedingIreland’s Finance Minister Michael Noonan got bookmakers’ attention on Tuesday when his Budget 2012 document confirmed that legislation to tax online bookies is coming early in the new year. While details have yet to be finalized, the plans are known to include a 1% tax on online and phone bets, a 15% charge on ‘offshore’ bookies’ commissions generated from Irish punters, plus an “intermediaries’ duty” (15% gross profits tax) on betting exchanges. Once the final draft of the Betting (Amendment) Act has been published, there will be a three-month period during which the legislation gets sent to the EU Commission for approval. Assuming it passes muster in Brussels, the taxation scheme would go into effect in Q2 2012.

Reaction from Irish bookmakers has been unanimous. A Boylesports spokesman told The Independent that the tax “must be implemented right across the industry. It cannot just hit Irish-based firms … Boylesports and Paddy Power employ thousands of people in the State so any move to tax us but not our competitors from outside would be very problematic.” In an op-ed in the Irish Sun, Paddy Power said his outfit supported the government’s plans, even though he estimates it will cost him “between €5-6m a year.” But the scheme has to be “properly policed … the Government has to make sure that bookmakers not based in Ireland are also hit.”

While Betfair faces a fresh hit to its wallet from Ireland, it’s desperately trying to give money away in America. Speaking at the University of Arizona Symposium on Racing and Gaming on Wednesday, Betfair’s US president Stephen Burn repeated his willingness to offer US racetracks and horsemen a 10% takeout, compared to the 2-5% commission Betfair applies to winning wagers at European and Australian tracks. Burn figures that’s an offer tracks can’t refuse, in that “for every dollar [Betfair] earn, the sport should earn two dollars.”

Exchange wagering legislation has been approved in both California and New Jersey, but Betfair-owned Television Games Network (TVG) has yet to reach the necessary deals with tracks and horsemen to make exchange wagering a reality. Burn says Betfair has spent $10m trying to get its US rocket off the launching pad, but tracks remain skittish over the potential hit their parimutuel betting will take if/when exchange wagering lifts off. Further complicating matters, Daily Racing Form reported that a British racing rep in attendance wanted to know why Betfair was willing to offer such a sweetheart deal to Americans, but not back home. (Burns told the questioner that Betfair’s annual Levy contribution evened things out.)

Given that this year’s conference is the third such attempt Betfair has made to woo American horsemen, Burn didn’t pull his punches. He warned that the ‘racino’ model would not save US racing. “If we depend on slot machines rather than look at ourselves for an answer, that’s a disastrous approach.” If that wasn’t direct enough, Burn said the industry couldn’t go on “pretending we’re some 19th century doctor in Europe … when the patient is dying, you need to do something other than cutting and bleeding them … Racing should recognize that there’s a train coming with relaxed legislation on online betting and racing should make sure it doesn’t get left behind.”

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