Well known bookmaker says tax hike forces him to shut shops
Tully boss warns betting duty rise to 2pc could wipe out 90pc of independent bookies and squeeze competition
One of Ireland's biggest independent bookies, Tully Bookmakers, has warned it is likely to close up to 18 shops once the increased betting tax announced in last month's Budget comes into force.
Director Paul Tully said that he expects to put all 70 staff at the chain on protective notice after Christmas, and to initiate the first closures in January.
He has written to the Competition and Consumer Protection Commission claiming that the tax increase will result in a lessening of competition in the betting sector. He has asked the Commission to raise the matter with the Department of Finance.
The betting duty will rise from 1pc to 2pc, but Mr Tully said he and other independents operate on wafer-thin margins, which will be obliterated by the increase.
The betting tax is levied on turnover, while bookmakers have been arguing for a 10pc gross profit tax on retail operations instead.
Mr Tully said that while some of his group's outlets might continue operating until after the Cheltenham racing festival next March, the likelihood at the moment is that stores will close.
He said that the gross margin is 11pc for Tully Bookmakers, but that its net profit margin is less than 1pc.
"With the extra 1pc of tax, it's going to make us totally unviable," he told the Irish Independent. "This will wipe out 90pc of the independents."
Mr Tully, whose father started the family's bookmaking business in 1975 in Co Meath, said he does not expect Finance Minister Paschal Donohoe to reverse his decision.
"I'm not optimistic," he said, adding that many of Tully's and other independents' shops are in small towns and villages where they provide employment.
He said that even the larger betting groups - including Paddy Power Betfair, Ladbrokes and Boylesports - are likely to have to reassess the viability of some outlets when the higher tax comes into effect.
Ladbrokes also plans to exit on-course bookies at race courses across Ireland, having blamed its decision on the tax increase.
Mr Tully said that examinership would also be an option for his firm, where it might be able to continue trading with four or five outlets.
Thomas Byrne, the managing director of Bruce Betting, said that he will also have to decide whether about four of the firm's 18 outlets will be able to continue trading after the tax hike comes into effect.
He said that the company paid more than five times in tax last year than it made in profits.
"It just doesn't compute that you put an entire industry on the brink at the stroke of a pen," said Mr Byrne, who added that to compensate for the tax increase he will have to generate a 15pc growth next year and make a 12pc gross margin.
"In the next 12 months, I can see hundreds of shops closing," he said.
Mr Byrne said that his shops are better able to withstand the tax increase compared to other independents.
Bruce Betting supplies odds to many other independent bookmakers and also has an online presence.
The Government expects the tax increase to raise €39.5m for the Exchequer in 2019, and €51.6m in a full year. The duty was cut to 1pc from 2pc in 2006 by then Finance Minister Brian Cowen.