Cullen threatens US-style ban on internet gambling
Sunday April 05 2009
Minister for Sport Martin Cullen has threatened to ban internet betting in Ireland if bookmakers here don't cough up more money to the Exchequer for the controversial Horse and Greyhound Racing Fund.
Tuesday's emergency budget will confirm that the Fund will be reduced by just over €1.5m for this year, despite widespread predictions that it was facing a major cut in the face of the country's worsening economic situation.
However, the Minister claimed last week that Government funding was drawing to a close and said that Irish bookmakers and offshore gamblers would have to pick up the bill for the horse racing industry in the future.
"It is not sustainable to continue to support this fund from the Exchequer," Cullen told an Oireachtas committee last week. "The big players will need to come to the plate. A view will need to be formed about internet and offshore betting. I will use whatever legal levers are available to me to get at that funding in terms of trying to get some tax out of it."
The Minister, who said that a levy of 0.5 per cent on internet gambling would yield over €100m, added: "The reality is that most betting is now offshore. There are choices to be made, and I am making it clear to the industry that we will make those choices. The ultimate choice would be to ban it. That approach has been taken in America and perhaps it will be taken in other countries as well. However, I do not want to go down that road. I believe there is a means of taking action."
Industry estimates suggest that between €1.5bn and €1.7bn of Irish money a year is wagered outside this country in telephone and internet betting. Cullen believes that a tax on all of that gambling should pay for Irish horse and dog racing, yet only a small proportion of that money is actually gambled on Irish races. Irish horse racing accounts for just 16 per cent of the turnover of Ireland's largest bookmakers, Paddy Power. In contrast, betting on cross-channel racing accounts for almost half the firm's business.
Ireland's decision to give all its betting tax receipts to just two sports is in stark contrast to the regimes in the UK and Australia. But the Government's plan has the support of the horse racing and greyhound industries here.
"I employ 100 people and I can't get off the merry-go-round," said leading trainer Jim Bolger. "Ten of my employees are people that came back to me in the last six months that used to be with me years ago. They went off working on the building sites and such places and they had been made redundant."
However, bookmakers fear the move will lead to severe job losses. "Ours isn't an Irish business, it's an international business," said Paddy Power yesterday. "By the end of this year, 80 per cent of our internet customers will be from overseas. Therefore, a tax on this is effectively a tax on Irish jobs for very little return -- only €5m would be raised by taxing Irish-located telephone betting businesses (Paddy Power, Boyles etc).
"And by the way, HRI is already way overfunded in comparison to other countries. What exactly has happened to the €545m in direct grants they have received over the past eight years?"
By the end of this year, that figure will have risen to over €600m as the Sunday Independent can reveal that the Government intends to make €68.128m available to the Horse and Greyhound Racing Fund.
The new figure, down marginally on the original €69.7m in the Estimates, was passed after a proposal to that effect by Minister Cullen was given the green light at last Thursday's joint committee meeting.
And that's good news for a number of extremely wealthy tax exiles and foreign citizens who are among the biggest winners of prize money in Irish racing. Minster Cullen told the committee that the cash injection was needed to preserve jobs in the industry but the most recent figures available, seen by the Sunday Independent, show that over half of Horse Racing Ireland's expenditure goes on prize money.
In 2007, almost one-third of overall prize money in Flat racing ended up in the hands of a mere eight owners. These included Mrs John Magnier, wife of tax exile John Magnier, the Aga Khan, the Maktoums, Derrick Smith, a former director of Ladbrokes based in Barbados, and Michael Tabor, a former London bookie now enjoying tax exile status in Monaco. The highest earning National Hunt owner, with over €1m, was another tax exile, JP McManus.
Although the fund has been reduced by almost 10 per cent in the last 12 months, it makes up a third of the country's total sports budget, up from one quarter in 2008, because of cuts in other areas. The Sports Capital Programme, which since its inception eight years ago, has aided 6,700 projects across the country, has been axed. And the Irish Sports Council, which funds 63 different sporting bodies, 33 local sports partnerships and all our elite athletes, will receive less than €60m.
See Page 16
- EAMONN SWEENEY
