Ms Sharon Byrne:

I thank the Chairman and members for giving me the opportunity to appear before the joint committee. We are delighted to participate in its review of the horse industry in Ireland. Before commencing, I commend Horse Sport Ireland, the presentation of which was excellent. It is an untold success story and should be highly commended. It is a sector in which there are massive levels of employment, of which I was unaware. I support any proposal it brings forward.

I am chairperson of the Irish Bookmakers Association which represents all betting shops. I am accompanied by Mr. Paul Tully, a director of Tully Bookmakers which has more than 20 shops across Ireland. It is also represented at race tracks and has been one of the few bookmakers left standing at the track throughout the recession. Mr. Tully and I hope to highlight the important contribution betting shops have made in funding Horse Racing in Ireland for a long time. We also hope to highlight the severe difficulties facing betting operators and the thousands of jobs being lost.

There are 958 betting shops in Ireland, down from 1,365 in 2008, in which approximately 8,000 people are employed. A further breakdown is given on page 6 of our submission. The Indecon report published in 2012 stated there were almost 20,000 people working in the horse racing industry in Ireland, but this figure included those working in betting shops - 8,000. The importance of the employment we provide should be noted. More than 400 betting shops have closed in the past six years, with the loss of 3,000 jobs approximately. Most of the closures are of small independent operators in rural parts of Ireland. Turnover in the sector dropped from €3.5 billion in 2008 to €2.6 billion in 2014.

There is a further breakdown on page 5 of our submission. This decline continues and jobs in betting shops are being lost weekly. Retail operators are competing with online and mobile operators which can easily target our customers while inside shops. This has been a huge contributing factor to the decline in our industry. Until this year, these operators were able to trade free of betting tax.

Tax increases for our industry are frequently touted but it must be outlined how steeply the retail industry is currently taxed and how turnover is so intrinsically linked to taxation that any changes would have a severe impact on our sector. An average betting shop pays €66,500 a year in taxes. With every shop that closes, in addition to that €66,500, it would cost the Exchequer a further €95,000 in unemployment payments for the five or six staff the shop had employed. It should also be noted that the betting sector is VAT exempt. This means we cannot reclaim VAT. We pay all the other taxes every business pays as well as rates. We also pay, in addition to those taxes, a turnover tax of 1% on our entire turnover regardless of profit or loss. The rate may sound small but, when applied to a high turnover-low margin business, it is substantial. It is penal to smaller operators who struggle for turnover and margin to afford this levy.

As those present are aware, our members are the main contributors to the Horse and Greyhound Racing Fund and sponsor many meetings across the country. We pay for access to pictures and data for Irish meetings on top of the betting tax and this money is paid directly to the racetracks themselves. Many of the tracks would not be able to run many of their meetings if they were not getting these direct payments for pictures. On top of the betting duty we are paying, we are also paying approximately €30 million for the pictures. Payments for our pictures and data have risen dramatically over the past few years and the costs per shop have increased by 33.5% since 2006. Page 8 of our submission outlines how much we are paying. Each betting shop currently pays €42,000 a year for pictures for racing. That is €42,000 per shop and approximately €3,000 of that sum goes on Irish racing pictures and the rest goes on UK racing, German racing, virtual content greyhounds and data. That figure is up from €31,000 in 2006. The bulk of the increase went to racing in both the UK and Ireland.

Another factor which seriously affects the cost of the racing content is the exchange rate. We pay most of our costs via UK suppliers, particularly those for our racing pictures, which go to Horse Racing Ireland. Apart from the 30% premium on the sterling exchange rate, which has been there for quite some time now, we pay VAT at 23% on top of that, which we cannot claim back. This makes the price of racing and data very expensive.

The most important point I wish to make is on page 13 of our submission. For those who may not have a copy of it, the entire retail betting sector in 2014, which includes every betting shop in Ireland, after all taxes and expenses are paid, made a profit of €12 million to €14 million. This is not just me blowing hot air, these are published figures available online. PaddyPower, in its Irish retail sector, made €50 million according to its published plc accounts. We estimate the value of the retail estate of Boylesports is somewhere between €3 million and €5 million. That is an estimate and I cannot back up the figure categorically. Ladbrokes lost €5 million in 2014. That figure was published by the examiner and I am sure everyone here has seen the figure in the media. Independent retailers lost somewhere between €3 million and €5 million in 2014. When one combines all of those sums, the profit made for the entire 950 shops in Ireland last year was between €10 million and €12 million. That is what was made but we pay Irish racing €26 million.

Not alone does it get the €26 million from Irish shops but it also gets a further payment from UK shops. If one combines what it is getting from 9,500 shops in the United Kingdom with what it is getting from 1,000 shops in Ireland, plus picture payments and sponsorship, it gets €53 million on top of the Exchequer funding the Government pays to it each year.

Some will say the online operators are all creaming it and not paying anything. If anyone were to check our submissions over the past eight years, he or she would see we have been pressing for the online sector to be taxed for betting duty because there has been a completely unlevel playing field. The Government is introducing an arrangement in this regard this year. From 1 August, online operators must pay the same tax the betting shops are paying in respect of Irish people betting. We estimate that will bring in between €15 million and €20 million in additional betting tax, but it is not true to say that the online sector has not been contributing. It has been paying for pictures via streaming and has been paying for the data. It is already paying towards the horse racing, and the extra betting tax that is being introduced and which will go to the Exchequer should be spent by the Government as it sees fit.

In our shops, approximately 50% of our revenue in retail is from horse racing but that includes UK racing, German racing, Latin American racing and French racing. Irish racing accounts for 12% of our total turnover in our shops. With regard to the €12 million profit we made last year, 12% was from Irish racing. Therefore, we made €1.2 million in Irish betting shops from Irish horse racing last year, and we paid €26 million for it.

The retail betting sector is fully licensed and regulated. We operate our business in a socially responsible manner. We fund a charity based in Northern Ireland that provides advice and treatment for people affected by problem gambling. That centre is called the Dunlewey Centre. It is a well-recognised and highly experienced addiction service centre that provides a freephone service that is operational seven days per week. It also provides free face-to-face counselling sessions all over Ireland. The service is fully funded by most bookmakers in Ireland. The reason I included this in the submission is that at every committee meeting I have attended, problem gambling always seems to arise and people are not aware of the services that are offered. I have included information in this regard for anybody who is interested.

I appreciate the opportunity to make my points today. We will answer any questions that arise.