Irish bookmakers gain tax break
The Irish government has shared that bookmakers in the Republic of Ireland will receive tax rebates of up to €50,000 starting in 2020, which is because of the 2% increase in revenue tax since January 2019. This led to countrywide protests amongst betting firms. The Irish gambling industry is currently undergoing a restructuring process.
Prioritizing Protecting Local Bookmakers
The Republic of Ireland's government has released a budget plan confirming that land-based bookmakers will be freed from the 2% turnover tax from the upcoming year. This is among various tax-related policy changes in the Irish budget - including the removal of the betting tax and the betting brokerage duty in 2020. The objective behind this decision is to safeguard the country's independent bookmakers from the risk of bankruptcy.
Concretely, this implies that bookmakers won't be obligated to pay tax on their initial €50,000 in yearly profits anymore. This upper limit of €50,000 is effective in every new calendar year from now but is only applicable to land-based individual proprietorships.
Finance Minister Paschal Donohoe stated that Ireland's independent betting industry is battling a challenging struggle against larger gambling companies such as Paddy Power, Boylesports, and Ladbrokes Coral. The doubling of the tax last year made things particularly difficult for small bookmakers. The Dublin-based daily newspaper "The Irish Times" disclosed that the government's initiative to ease the burden on land-based bookmakers is subject to EU state aid law.
Donohoe disclosed to the newspaper that he revisited the tax hike once more and collaborated directly with the land-based bookmaking industry to devise an alternative scheme for independent bookmakers.
Donohoe, along with Irish Minister of State David Stanton, increased the betting tax from 1% to 2% last year. Bookmakers have to pay this tax on every wager they place. The government expects this increase to rally around €95 million more in tax income as early as 2019. This development is linked to government subsidies used to support the horse and greyhound industry. The industry is set to receive over €80 million in funding in 2020.
Possibilities of a Tax Disaster
The planned relief, while promising, might be overshadowed by some shaky predictions from politicians. At least that's what an economic study by Emeritus Professor of Economics Anthony Foley (Dublin City University or DCU) from November 2018 states. The research was commissioned by the Irish Bookmakers Association (IBA) and claims that Ireland is facing a €35 million budget deficit caused by the loss of many smaller bookmakers. Foley asserts the government gave their consent "without considering the potential negative consequences." The loss could potentially exceed the income generated.
Foley emphasizes that the long-term loss results from the loss of income tax and jobs, regarding approximately 400 closures out of 850 total Irish betting shops. Up to 2,500 employment opportunities could be at stake as well. An IBA spokesperson noted, "tens of thousands of people" would be affected.
Considering the impending crisis, bookmakers meticulously worked to evade the tax increase at the end of last year. There were widespread protests and partial closures. The IBA additionally introduced a national petition and marketing effort named "United." The entire campaign was managed by the Irish marketing firm McEnaney Media.
The anxieties of Irish bookmakers are relevant given the growing international competition. The tax relief announced can be seen as a helpful reply to these challenging circumstances. However, it remains to be seen if the government's expectations will come true, or if Foley's calculations are more accurate over time.
Introducing a New Gaming Authority
Along with all tax modifications, Ireland is also planning to create a new gaming authority. The body should be set up by mid-2020 and conclude the ongoing work on the new Gaming Control Bill. Thus, this new entity will oversee all licensing activities and set advertisement standards, customer monitoring, and customer protection measures for the entire industry. Additionally, the Gaming and Lotteries Amendment Act of 1956 has also been updated. The maximum stakes and winnings for slot machines are now €10 and €750, respectively. A new licensing system for lotteries is underway as well.
The extensive reforms for the Irish gambling sector are based on recent statistics from the Health Service Executive (HSE), a state authority responsible for providing health and social services. According to the HSE, the number of people treated for problem gambling in 2018 reached a record-breaking 257. It's consequently not surprising that the government is currently implementing significant modifications to align the industry with European standards. For the time being, it's too early to tell how these changes would unfold in the Irish market.
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Source: www.onlinecasinosdeutschland.com
