The Republic of Ireland is expected to double the gaming tax despite cries from the industry that it will result in widespread closures and losses.
Finance Minister Pascal Donohoe’s announced that the gaming tax will double from 1 percent to 2 percent as part of the 2019 budget.
The government is expected to publish in the national budget and that the tax will bring in an additional €50 million, at least some of which would be used to treat problem gambling.
The increase came at the insistence of the Independent Alliance party, a small party within the governing coalition.
The Irish Bookmakers Association last week claimed that more than a third of the country’s 850 betting shops could close as a result and that 1,500 jobs will be threatened. Sharon Byrne, chairman of the association, said in a statement: “We estimate for a typical independent operator with a modest turnover of €2m per shop, that they are already paying six times more in tax than the profit made per year in that shop.” She added, “A 1 percent increase would wipe out any profit made in that shop and cause them to be loss making if their gross margin was to drop below 12 percent, which is highly probable.”
The businesses operate on a low margin, she said, which makes them vulnerable to small increases. She said the effect on small operators could be “catastrophic.”
Byrne estimated that 300 betting shops could close as a result of the tax hike, with “at least five people” working in each shop.
“With at least 300 to close, there are a lot of households, family businesses and people who given their whole lives to their shops are now out of a job,” she said. “It’s a major blow.”
The tax rate has been in effect for several years and is on top of normal businesses charges from the government.
The IBA estimates that 500 shops have closed in the last decade, but that the industry finally stabilized.
Some politicians have called for a ban on sports betting advertisement during live sports broadcasts to protect the integrity of the games.
Meanwhile, according to the Daily Telegraph, Paddy Power Betfair lost more than £250 million (US$330.5 million) in value after the tax hike was announced. Investec analyst Alistair Ross said the “macro outlook is darkening” for the bookie.
