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Government resisted lobbying on betting duty but won't use the funds for problem gambling services

An extra €50 million is set to be raised from the betting duty this year, and activists are asking for even 10% of it for problem gambling.

File photo.
File photo.
Image: Shutterstock/KieferPix

DESPITE RESISTING LOBBYING from gambling firms when it came to raising tax on betting, the government will not be reinvesting money from the extra €50 million raised into problem gambling services.

Advocates for enhanced services for problem gambling say that putting even a fraction of the money into services would go some way towards helping individuals and families dealing with this issue, but the government has said the money has not been ring fenced in this way.

A spokesperson for the Department of Finance told TheJournal.ie that the extra money raised through the tax won’t be put directly into problem gambling services as “ring fencing of taxes does not generally occur in the Irish tax system”.

However, with the government set to finally move on long-awaited legislation in the coming months, an actual strategy to regulate the gambling industry and the issues around it could finally be put in place.

Gambling tax

The increase in the gambling duty from 1% to 2%, and the betting intermediary duty rise from 15% to 25%, came into effect on 1 January. 

It had fallen from 2% to 1% back in 2006, with the latest measure reversing that. Under the 1% rate, the government collected just over €50 million a year, with this expected to double to €100 million with the rate increase.

The Irish Bookmakers Association was among groups critical of the measure, saying it would disproportionately affect smaller, independent bookies and put them at risk of shedding jobs or going out of business altogether.

Minister for Finance Paschal Donohoe told the Dáil in February that it was “too early to draw any conclusions on the impact of these increases”.

Donohoe said he had sympathy for small bookmakers who may have ongoing problems competing with large retail and online bookmakers.

“However, I could not apply the increase in betting duty to some bookmakers and not others,” he said. “In any discussion on betting duty, we must acknowledge the raised public consciousness of the problem of gambling in society.

While problem gambling can result in the problem gambler – and their family – bearing the severest of economic and of course personal costs, the social costs of problem gambling can extend to their employers and to public institutions in the health, welfare and justice systems; such costs ultimately borne by taxpayers.

Donohoe even cited recent research from the UK Gambling Commission in his response in the Dáil on the social effects of gambling. At the time of his speech, there was no similar State-funded research published in Ireland. However, this week, an official report found that 0.8% of the population are problem gamblers.

Furthermore, the government has said its own bill to regulate the gambling industry and set up a dedicated control body – that was published in 2013 – is now obsolete given how technology has progressed and changed the gambling industry since then.

TheJournal.ie understands that an inter-departmental working group set up the Department of Justice has been reviewing that bill with a view to giving it the necessary updates and bringing it to the government by the end of March. 

Lobbying

Behind the scenes, it is some of the biggest gambling firms in Ireland that are making efforts to lobby the government.

In a letter sent to Donohoe prior to Budget 2019, Paddy Power Betfair CEO Peter Jackson said that the effect on jobs of any further taxation on the industry would be “particularly pronounced in the independent sector”. 

“We are deeply proud of our roots and status as one of Ireland’s largest and most successful companies,” he said, before outlining “compelling reasons” why the betting duty should remain as is.

A letter sent following the Budget announcement by Paddy Power Betfair chairman Gary McGann was far less conciliatory, as he requested an urgent meeting to discuss the tax increase.

“It is ironic that Ireland now has a low 12.5% tax regime which was primarily designed to attract foreign direct investment and at the same time has a betting tax regime significantly higher than the international average, which impacts on one of Ireland’s few successful global players,” McGann said.

This budgetary move does give the impression that Ireland is less interested in companies like PPB than it is in foreign investment. I hope you can facilitate a meeting at some stage in the coming days. 

A spokesperson at the department said that no such meeting took place. 

In a subsequent mail to Secretary General Derek Moran – the most senior civil servant at the Department of Finance – an invitation was extended to him to attend Paddy Power Chase Day at the Leopardstown races over Christmas.

A staff member on behalf of Moran replied on 21 December that he would be unable to attend. 

Lobbying was also done on behalf of the betting sector by the Irish Bookmakers Association.

In its pre-Budget submission, it outlined the effects that the increase in betting duty would have, claiming it would put hundreds of shops out of business, lead to thousands of job losses and a loss of taxation for the exchequer. 

In further lobbying after the Budget, it wrote to Oireachtas members calling for the measure to be reversed and said not doing so would have a “devastating effect on many families” through “unnecessary job losses”. 

The Irish Bookmakers Association also said the move would “reduce competition, force customers to bet with online operators, and force customers to bet with illegal operations in areas where there is no betting shop”. 

A number of bookmakers also provide funding for the Dunlewey Addiction centre, which provides a number of problem gambling services. 

Problem gambling

There hasn’t been a clear picture in Ireland of the extent of problem gambling, compared to our counterparts in the UK, until this week. 

In England, the percentage of the population believed to suffer from this is just under 1%. In Northern Ireland, it is 2.3%. 

Data from the Health Research Board this week said that 0.8% of the population in Ireland are problem gamblers, but activists say that isn’t the full story. 

Since 2015, the HSE’s stats show that over 800 people have been treated for gambling addiction but it admits its own figures don’t paint an accurate picture of the scale of gambling addiction in Ireland.

Barry Grant is CEO of Problem Gambling Ireland, which provides supports to those facing addiction. It had 60,000 unique visitors to its website last year, from all over the country.

He told TheJournal.ie that the problem here probably mirrors the Northern Irish situation more, and the government should be providing the funding to tackle it.

“It’s unbelievably frustrating,” he said. “I started this in early 2016, and the government had published the Gambling Control Bill three years previously. I thought it my naivety it would be enacted soon, and we’d have proper regulation in place now.”

In Grant’s opinion, the bigger bookies won’t be affected as much by the increase in betting duty but that it could squeeze some smaller ones who’ve already felt the weight of competition from the larger firms, as well as online gambling. 

But he is adamant that money from the tax should go into proper supports for problem gamblers.

Grant said: “Absolutely, it’s a no brainer. We’re not saying to put it all in. But 10% of that extra income from the tax would come to in and around €5 million. 

If we’re going to raise €100 million a year in betting duty, is there an argument that 5% of that goes towards people affected by problem gambling and their families. We would say so.

This sentiment is shared by Sinn Féin TD Louise O’Reilly. Commenting on the lobbying undertaken from the likes of Paddy Power Betfair, she said: “It is unfortunate, but unsurprising that large multinational gambling companies use their power to lean on the government. These companies are multi-billion euro operations, with all of that money raised off the back of ordinary people losing it.

The industry needs to pay more to reflect the potential damage it causes and some of the money raised needs to be ring-fenced specifically for problem gambling treatment. It is the local shop and its workers that we need to consider when deciding how this happens not hugely profitable companies.

Alongside the €100 million to be raised this year through the government’s increase to the betting duty, the State is also providing funding to the tune of €84 million to the horse racing and greyhound industry. 

With indications this week from the government that it was finally set to move forward with legislation, Grant said it remains essential that it takes action now to properly regulate the industry and address the issue of problem gambling.

“We’ve [as a country] no strategy around gambling addiction. But it’s never too late to do the right thing,” he said. “I worked at bars and restaurants, I never would have believed the smoking ban would have worked. And we were the first to do it.

It is possible to implement public health measures, even with something that’s as embedded into social structures as that was. 

With reporting from Christina Finn

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Sean Murray

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