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ATR ad banned News


government desperately needs money, but proposals to take more from punters has left the IBA


astonished. Simon Banks reports.


The Advertising Standards Authority has upheld a complaint against an At The Races advert that proclaimed it to be ‘the UK and Ireland’s biggest racing website’ after a complaint by the Racing Post. At The Races had argued that it intended to make a comparison with only those websites that were solely dedicated to horse racing.


Bookmakers aghast at winnings tax proposals The Irish


SNAI debt levels make it vulnerable


DEBT MANAGEMENT


PADDY POWER – SO USED TO SHOCKING PEOPLE WITH PUBLICITY STUNTS LIKE ITS RECENT FAKE POPEMOBILE – HAS BEEN SHOCKED BY THE IRISH GOVERNMENT’S PLANS


I IRELAND I


rish bookmakers have reacted with horror to the latest rumour regarding


changes in betting taxation; a 2 per cent tax on winnings. Paddy Power called the idea ‘insane’ while the Irish Book- makers Association said that the measure would lead to the closure of a third of the Republic’s 1,200 remaining betting shops.


The proposal was first reported by the Irish Times on 24 September but the newspaper said that when it contacted Boylesports and Paddy Power both confirmed they were aware of it. The idea is for punters to be charged a 2 per cent deduc- tion from winning returns but given the extremely com- petitive nature of the Irish retail market, any such tax would be sure to be absorbed by operators.


IBA chair Sharon Byrne responded immediately with


a warning that the proposal would cost jobs: “The direct impact of any new taxation along the lines reported would be job losses, shop clo- sures and the migration of even more of the betting trade to overseas online and telephone betting operators. “Ireland needs jobs to rebuild our economy. Any proposal, therefore, that would lead to further job losses - in a sector that has already seen a significant decline in the last two year period - should not be pro- gressed by the government. The IBA believes that any new taxation proposals must be comprehensively stress-


ANALYSIS


Seeing as there is now a rare consensus among Irish operators that favours a turnover tax, as long as it is universally applied across all platforms and operators, the government is far more likely to adopt it and apply it to online, telephone and retail gambling than to single out the beleaguered retail sector for a self defeating tax hike. The ‘winnings tax’ idea is probably an attempt to prepare the Irish industry for a new comprehensive regime which will be unveiled before December’s budget, Ireland’s fourth in two years.


tested to ensure that they do not have a negative impact on employment.”


Byrne added that the net effect of such a tax would be negative for the Irish excheq- uer as the duty gains would be more than cancelled out by increased benefit pay- ments to those who lost their jobs.


Horse Racing Ireland chief executive Brian Kavanagh denied reports that the win- nings tax proposal emanated from a submission he made to the Department of Finance in an attempt to bridge an anticipated 30m euro (£26m) funding shortfall for the Horse and Greyhound Fund.


He did, however, claim that Ireland has the lowest level of betting tax in the EU, mainly because online betting is currently untaxed. The increasingly perilous state of Ireland’s public finances mean that there is there no guarantee that tax revenues generated by betting revenue will all be passed directly to the Horse and Greyhound Racing Fund and the only way that the sports can enjoy a level of funding similar to that of pre- vious years is for a radical overhaul of the betting tax system that increases the tax base and, subsequently tax revenues, radically.


t is all very well to be Italy’s market leader for betting, but when you have debts of 50m euro (£43.4m) and an expired line of credit, things begin to look not quite so promising, despite the gaming market booming. For historic Italian operator SNAI, it appears that its spending spree in 2007, which allowed it to acquire the lion’s share of the country’s betting outlets in the government tender process and through acquisition in the sec- ondary market, has left it in a precarious state. Unfortunately for SNAI, new outlets have largely underperformed, Italian punters’ inter- est in racing is in freefall and the horseracing ‘corner’ outlets that sell racing pools prod- ucts, for which it bought thousands of licences, have been particularly unsuccessful. What is worse for SNAI is that arch rival SISAL appears keen to take over the ailing betting business whilst banker Unicredit tires of waiting for signs that its loan of an estimated 50m euro has any prospect of being repaid. For SISAL the deal would make great sense allowing it to create an alliance to block the supremacy of Lottomatica who have made great inroads into the retail sports betting business in the last two years. Furthermore, with its Better and Totosí branded websites they have even taken top spot in the online rankings from Microgame in recent months. Although there were suggestions that


Microgame itself, along with its equity part- ners Monitor Clipper Partners and TPG Growth, could be in the running for acquiring SNAI, the rumour was promptly scotched by a company spokesperson who did, however, confirm that SISAL and its financial partners Investindustrial and Clessidra were in talks and at the stage of examining due diligence material. Immediately after the rumours were published, at the beginning of Septem- ber, SNAI’s share were up 2 per cent to 2.88 euro (£2.50), but a long way from the peak value of 30 euro (£26) when the company was first floated.


With SNAI maintaining around one third of the total betting market, and turnover exceed- ing 1bn euro (£870m) for the first nine months of the year, it does make an attractive target. With the consolidation of the Italian gaming market continuing apace, and the historic operator running out of options to solve its debt crisis it looks increasingly likely that the company will be acquired by SISAL, or perhaps even a major overseas operator that would not face the same antitrust issues over market share, in the very near future.


HQ move helps Pridmore streamline costs S


INDEPENDENT


outh east independent firm Pridmore Book- makers has moved its head offices in order to help curtail the ever growing overheads associated with running a chain of betting shops. The firm has relo- cated its HQ from Brent- wood to office space above its shop in Pitsea, Essex. “We already had an area manager in there,” owner Shaun Pridmore explained, “but it was still big enough for everyone else and the move saves us a consider-


able amount of money a year. With costs so high at the moment we are stream- lining everything as much as we possibly can and trying to get efficiencies wherever we can find them.”


The move was spurred by a review of the firm’s expenses in tough trading times. Pridmore said that while the company’s Global Draw supplied gaming machines have seen in increase in performance over the past year - the tra- ditional business has been


6 BettingBusinessInteractive • OCTOBER 2010


heading in the other direc- tion.


“The over the counter business is suffering badly,” he said. “The slippage is holding up very well, but the percentage is way down. And I’d be surprised if we won anything at all from horseracing. There’s still interest but it is very, very hard to win on. There are so many sharp players and arbers out there, you have to question how long it is going to be a product in the betting shop.”


Pridmore said that the cost of showing horserac- ing is so high compared to how much a betting shop makes from the sport that he envisages that soon some LBOs will decide to drop it. “My most profitable nights are Mondays and Tuesdays, when there is no horseracing. The nights with British horseracing we will lose money three out of four nights.”


SHAUN PRIDMORE: ‘OVER THE COUNTER BUSINESS IS SUFFERING’


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