Betfair licence shift 'won't hit jobs plan'
Tax move to Gibraltar won't affect office and data centre
Published 13/03/2011 | 05:00
The move by Betfair, the online betting exchange to transfer its operating licence to Gibraltar will not affect the company's planned expansion in Ireland where it will employ more than 100 staff in the next few months, the company has told the Sunday Independent.
However, moving the firm's licence from the UK to tax-friendly Gibraltar will save Betfair more than stg£10m (€11.6m) in tax and has sounded a warning to the new Government that hi-tech companies can evacuate overnight from high-tax locations.
Betfair profits increased across all of its divisions last year and its retail operation in Ireland increased profits by 8pc. The company's new Dublin offices and data centres in Ireland are gearing up for Cheltenham this week.
They expect to deal with more than 50,000 bets by telephone during the festival, which has less Irish interest than usual -- though Ryanair boss Michael O'Leary does have a phenomenally high 37 entries.
Dublin is a hub for telephone betting with customers from about 20 countries using the service.
During Cheltenham, the exchange will process more than five million transactions a day while the Betfair website will receive more than seven billion page requests.
Betfair are broadly positive about the proposals for the taxation of online and telephone betting contained in the 2011 Finance Bill, a spokesman told the Sunday Independent.
"Betfair's new Dublin office is now fully operational and, in parallel with this, we are keen to be licensed and to contribute to the Irish economy in a fair and sustainable manner," a spokesman added.
This December, bookmakers taking bets from Ireland will pay 1pc duty on those bets -- in the same way betting shops currently do. Exchanges will also be subject to tax, but the calculation of the tax will differ from bookmakers. In January's Finance Bill, the position on taxation of betting exchanges was clarified.
"In view of the different business model adopted by betting exchanges, a betting intermediary duty will apply at the rate of 15 per cent on the commission they charge or receive from persons in the State. It is planned that the necessary regulatory changes will be provided for through separate legislation amending the Betting Act 1931."
The issue of taxation of gambling is a vexed one. In New South Wales in Australia, Sportsbet, which was last year purchased by Paddy Power and Betfair, was yesterday granted leave to appeal to the High Court Racing NSW's bid to charge a 1.5 per cent turnover tax. The betting operators are pushing for a tax based on gross profit.
Overall, Paddy Power has had a spectacularly profitable year, although as much as 64pc of the company's profits are now generated outside of Ireland -- up from just 12pc seven years ago.
Paddy Power now generates nearly 75pc of its profits from internet users and expects the proportion of its profits derived from online services to continue to grow.
Chief executive Patrick Kennedy said that, excluding operations in Australia, €112m, or 11pc, of its sportsbook stakes last year had been generated from customers using their mobile phones.
The amounts staked at its 207 Irish retail outlets last year fell 4pc to €908.4m, while operating profit rose 8pc to €17.6m.
Overall operating profit at Paddy Power rose 56per cent to €103.8m last year