The Irish minister for sport, Martin Cullen, is unlikely to be the most popular politician with Internet gambling companies in the country following his threats to ban internet betting in Ireland if bookmakers don't cough up more money to the Exchequer to aid the controversial Horse and Greyhound Racing Fund, reports the newspaper Independent.ie.
Cullen wants to reduce government contributions to the fund by just over Euro 1.5 million for this year, despite widespread predictions that it was facing a major cut in the face of the country's worsening economic situation.
Addressing an Oireachtas committee. Cullen said that government financial support for the fund was coming to an end, and he expected Irish online bookmakers and offshore gamblers 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 asserted. "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, said that a levy of 0.5 percent on Internet gambling would yield over Euro 100 million, adding: "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 [Internet gambling]. 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 Euro 1.5 billion and Euro 1.7 billion of Irish money a year is wagered outside the country in telephone and Internet betting, reports Independent.
Cullen believes that a tax on that should pay for Irish horse and dog racing, yet only a small proportion of the significant amounts wagered through the Internet and telephone betting is actually gambled on Irish races.
Irish horse racing accounts for just 16 percent of the turnover of Ireland's largest bookmaker, 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 obviously the government's plan has the support of the horse racing and greyhound industries in the country.
"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, if Cullen persists in his threats, it could backfire. Internet bookmakers fear such government moves will lead to severe job losses.
"Ours isn't an Irish business, it's an international business," a Paddy Power spokesman told Independent this weekend. "By the end of this year, 80 percent of our Internet customers will be from overseas. Therefore, a tax on this is effectively a tax on Irish jobs for very little return." And he pointed to a common failing with tax revenue overestimates bandied about by politicians: "...only Euro 5 million would be raised by taxing Irish-located telephone betting businesses such as Paddy Power and Boyles.
"And by the way, HRI is already way overfunded in comparison to other countries," the spokesman added. "What exactly has happened to the Euro 545 million in direct grants they have received over the past eight years?"
By the end of this year, that figure will have risen to over Euro 600 million as the Sunday Independent revealed that the Irish government intends to make Euro 68.128 million 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.
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 - typically to wealthy horse owners, many of them outside the country.
Independent.ie points out that in 2007, almost one-third of overall prize money in Flat racing ended up in the hands of a mere eight owners. These included the 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 Euro 1 million, was another tax exile, JP McManus.
Although the horse and greyhound racing fund has been reduced by almost 10 percent 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 Euro 60 million.