Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute to the debate. The key element of this legislation is the provision to extend the applicability of the 1% betting duty applied in betting shops to telephone and Internet bets. This is very much an overdue piece of legislation as the Finance Act 2011 provided for to the extension of the betting duty subject to an appropriate licensing mechanism being put in place.

It has taken an inordinate length of time to achieve this. In the intervening three years, upwards of €4 billion in bets placed remotely have escaped the 1% betting duty, resulting in a loss to the Exchequer of some €40 million. At a time when the public finances are so stretched, we must question the reason for this extensive delay. Yesterday, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, launched a glossy public service reform plan and progress report. Given the amount of tax forgone as a result of the failure to put a new licensing regime in place, it is reasonable that we ask whether there was a justifiable cause for the delay that has occurred. Does the Minister, Deputy Noonan, expect the licensing process to be up and running this year and revenue to accrue to the State in 2014? If so, how does he propose to spend it?

Betting duty is a key source of funding for the horse and greyhound racing industry, but its relative importance in supporting the sector has declined in recent years. This occurred as recession took its toll on the overall level of betting and as technological and social developments resulted in more bets being placed remotely. It is very significant that betting duty now accounts for only half of the entire allocation to the horse and greyhound racing fund. It is understandable that the State would seek to support the horse industry as it is a vital source of employment. The Irish greyhound industry is by far and away ahead of its United Kingdom counterpart. Its success would not have been possible without the fixed 20% allocation from the horse and greyhound racing fund on an annual basis.

Separate entirely from the 6,000 or so people employed in the betting industry, it is estimated that in 2009 some 15,000 were employed in the thoroughbred industry in Ireland. This is a vital source of badly needed jobs, particularly in rural Ireland. It is important that the Minister for Agriculture, Food and the Marine should provide an update as to his future plans for the horse and greyhound racing fund. The amount of money allocated to the industry has fallen from a peak of €73 million in 2007 to €54 million this year. Is it the intention of Government that all or part of the approximate additional €14 million that will be raised as a result of this measure will accrue to the industry, or will the Minister for Finance reduce the Exchequer's contribution accordingly? Most people would agree that, in so far as is possible, the industry should be self-financing, particularly in these straitened times. If the current level of funding under the horse and greyhound racing fund is to be maintained, there will be a continuing need for a subvention of approximately €15 million from the central Exchequer.

In the context of future financial planning and the need for certainty, the Government must answer certain questions.

The Minister does not appear to intend to take up the suggestion contained in the Indecon report of 2012 whereby the tax on betting would be increased by effective 2%, possibly by means of a 1% deduction from winning bets in addition to the 1% betting duty. Such a move could certainly have secured the funding model for the horse and greyhound industry for the years ahead. I would like the Minister to outline his views on the merits of increasing betting duty at this time. I am conscious that he must take account of the need to protect jobs in the domestic betting industry. In this regard and in welcoming the extension of the levy to online activity, I wish to sound a note of caution. There must be a level playing pitch for all operators, regardless of the level of duty applied. We refer a great deal to attracting foreign direct investment, and rightly so, but we sometimes fail to give adequate support to domestic companies. Within the betting and gaming industry we have two major domestic success stories, namely, Paddy Power and Boylesports. Paddy Power has grown to be a multinational in its own right, with over 2,000 employees in Ireland and a large and growing business overseas. In fact, two thirds of the company's profits are generated outside Ireland. In 2010 it paid €42 million in taxes to the Irish Exchequer, nearly half of which originated from business overseas. This amount to which I refer was more than the entire take from betting duty. The company's advertising model is certainly quirky and may overstep the mark occasionally. Arguably, it did so in the context of one recent campaign but in putting in place a tax regime for online betting we should be careful to ensure that compliant Irish-based companies will not be placed at a disadvantage relative to non-Irish operators.

I have no doubt that long-established foreign-owned bookmakers will be keen to fully comply with the legislation, when enacted. However, there is a danger that certain online operators might seek to circumvent the obligation to pay the duty and thereby gain an advantage over their rivals. I hope the regime that is being put in place will be sufficiently strong to prevent this from occurring. I ask the Minister, his officials and the Revenue to be alert to any potential leakage of financial proceeds offshore in this manner and to examine the possibility of putting in place measures to prevent anyone trying to circumvent the legislation. Other countries have strict controls in respect of online gambling and these prevent certain operators from entering the market. The US, despite being a generally deregulated economy, places severe restriction on Internet gambling. France effectively has a state monopoly. The authorities in both countries are of the view that such measures are in their national interest. We should not be afraid to revisit the legislation should loopholes emerge when it is implemented.

The advent of betting exchanges was one of the most significant changes in the betting industry in the past ten years or so. In view of the fact that they have essentially been able to bet among themselves - this is facilitated by means of an exchange - punters have been able to cut out the traditional bookmaker and potentially obtain better odds for themselves. However, this is not without risk. Punters often complain that it is very difficult to back a winner and that giving people the chance to make money by betting on a horse, team or player to lose considerably increases the scope for unscrupulous individuals to make substantial sums of money. It is interesting to note that a midweek race at an English track involving prize money of as little as £2,000 can sometimes generate bets of over £1 million on the exchanges. The fact that it is a great deal easier to pick a loser rather than a winner is self evident. In that context, there have been a number of high profile cases whereby people with inside information that a fancied horse would not be trying too hard to win a particular race made huge sums of money from placing their bets accordingly. This is a potentially huge threat to the integrity of the racing industry worldwide. There have also been reports of betting syndicates making enormous sums of money from insider knowledge relating to snooker and football.

Remote betting organisations do not currently need certificates of personal fitness or bookmaking licences in order to offer Irish residents bookmaking services over the phone or via the Internet. Section 14 requires bookmakers who want to operate in Ireland remotely to apply for and receive a remote bookmakers licence. Those offering remote services that allow individuals to bet against each other must have a remote betting intermediary's licence. I welcome this provision but I want a rigorous enforcement mechanism to be put in place in parallel. The major exchanges have signed memorandums of understanding with various sporting bodies concerning the supply of information when suspicious activity takes place. This is a welcome development but it does not go far enough. There is potential for new entrants to the market operating from overseas to be less rigorous in their approach. If a particular operator is in any way seen as being lax in monitoring suspicious betting patterns, then that operator's licence should be revoked. I understand that the definition of a bookmaker could mean that some users of betting exchanges may need to apply for bookmaking licences. In using betting exchanges, it is possible for one to be the layer for multiple bets and essentially to be acting as a bookmaking business oneself. Where a person is effectively operating a business as an unlicensed bookmaker on an ongoing basis, this should be identified and he or she should be subject to the same duty as licensed bookmakers.

I wish to take this opportunity to comment on the on-course betting market in Ireland, which appears is in near terminal decline. As well as providing the bread-and-butter activity of the horse racing industry, our racecourses are a key part of our tourism offering. In recent years on-course betting has fallen by 60%. Outside of the big festival meetings, it is now almost non-existent. This is bad news not just for racecourses but also for the horse racing industry. The fall-off in on-course activity reflects both the general decline in overall betting activity but also the fact that a considerable amount of such activity has moved online, a phenomenon with which on-course bookmakers find it very difficult to compete. If the on-course industry is to survive, it will be obliged to make changes and modernise how it does business. However, we should also review how the sector is taxed and regulated. If we lose on-course bookmakers, we will have lost a considerable element of the colour that makes Irish racing unique. I ask the Minister to consult his colleague, the Minister for Agriculture, Food and the Marine, in order to see what can be done before the on-course betting market is wiped out altogether.

This afternoon the Chief Whip published the legislative programme for the spring-summer session. I am deeply disappointed that the publication of the gambling control Bill has been pushed back to 2015. It is entirely possible that this legislation will not be enacted before the end of next year. While the regulation of gambling from a consumer protection point of view is not covered in the Bill before the House, it is disappointing that the Government has put gambling control on the long finger. While it will be collecting additional revenue this year and next from taxes on betting, it is failing in its duty to people who are vulnerable to problem gambling in the context of putting in place a proper legislative regime which provides the necessary protections. The societal consequences of gambling form a major part of the debate on this matter, particularly in the context of those who become so addicted to this activity that they often prioritise it above the need to meet essential financial requirements or obligations such as making mortgage repayments, paying day-to-day bills, etc. This is a problem and the sooner we acknowledge that fact the better. The Government should afford equal priority to the gambling control legislation and the Bill which is before the House. I would like the former to be brought forward as quickly as possible.

When the legislation to which I refer eventually comes before the House, I will be arguing that there is a need for tighter controls in the area of online gambling in particular. While responsible gambling is an enjoyable leisure activity for most punters, considerable numbers of individuals proceed to form an addiction. In the case of online betting, it is easy for this to be hidden from family and friends. It is simple to download an app to one's mobile phone in order that one can gamble at any hour of the day or night, unbeknownst to one's wife or partner. By engaging in such activity, one could be placing the financial future of one's family in jeopardy. There is a need for an honest debate on this matter. There is also a need for legislation of a particular kind to combat this problem, which is prevalent here and further afield. Anyone who watches an English Premier League soccer match or any other major sporting event on television or elsewhere is literally bombarded with the option to bet on all sorts of outcomes. This appears to be the predominant method of advertising used during the coverage of sporting events on television. I suggest that there is a need to introduce controls whereby a person opening a betting account would be required to specify the maximum loss he or she is willing to incur on a daily, weekly or monthly basis.

This is currently carried out on an opt-in basis and we need to review it. I would like to see a limit on the number of deposits a person can make with a personal debit or credit card over a determined time period.

The Bill provides for a potentially significant expansion of betting shop opening hours, about which I have reservations. It is true that people can bet around the clock by using a smart phone or iPad but I am unsure whether the extension of betting office opening hours will do anything positive for society in general. I am not sure there was much appetite among bookmakers for extending the opening hours but we need to hear their views. It is likely to increase costs for independent operators and make it more difficult for them to compete against the larger multiples.

I welcome the Bill, which is overdue. The additional revenue it will collect will be welcome. I have some reservations as outlined and I look forward to Committee Stage which will provide an opportunity to table amendments and to have a more detailed discussion on individual sections of the Bill.

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