Oireachtas Joint and Select Committees
Tuesday, 7 July 2015
Joint Oireachtas Committee on Agriculture, Food and the Marine
Horse Industry in Ireland: Discussion
2:00 pm
Andrew Doyle (Wicklow, Fine Gael)
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I wish to remind members, witnesses and those in the Visitors Gallery to turn off their mobile telephones. I welcome the representatives of Horse Sport Ireland: Professor Patrick Wall, chairman; Mr. Damian McDonald, CEO; Mr. James Kennedy, chairman of the finance committee; and Mr. Mark Bolger, finance director. I also welcome the representatives of the Irish Bookmakers' Association: Ms Sharon Byrne, chairperson and Mr. Paul Tully, director of Tully’s Bookmakers. I thank the witnesses for appearing before the joint committee today.
The committee appreciates that as one of the leading producers of thoroughbred and non-thoroughbred horses, the horse industry has a very positive impact on the economy of rural Ireland. We have taken part in the pre-legislative scrutiny process on the Horse Racing Ireland (Amendment) Bill. As part of that process we undertook to examine the wider horse industry in Ireland whereby a policy can be optimised to develop the sector in future.
This is our first meeting in that regard. Next week we will be meeting the Irish Thoroughbred Breeders Association, the Irish Horse Welfare Trust, local authority representatives and the ISPCA.
I advise witnesses that they are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or any official by name or in such a way as to make him or her identifiable.
I propose to take opening statements from Horse Sport Ireland followed by Ms Byrne from the Irish Bookmakers Association. Professor Wall will introduce his colleagues and then hand over to Mr. McDonald to make the opening statement.
Professor Patrick Wall:
I thank the Chairman, Deputies and Senators for giving us the opportunity to say a few words. Horse Sport Ireland governs non-racing sport horses. I have been the non-executive chairperson for the past two years. Mr. James Kennedy is the non-executive chairman of our finance committee and a former managing director of Bausch and Lomb. He has 20 years' experience in American multinational companies so we are lucky to have him. Mr. Mark Bolger is our financial controller on the executive staff and Mr. Damian McDonald is our CEO.
Horse Sport Ireland is different from many sporting federations in that it has 28 affiliates under its umbrella and covers a wide range of equestrian activities, from showjumping to mounted games, from polo to harness racing. In addition to the sporting element, we have maintained two stud books. We are responsible for horse registrations and we have a breeding programme to try to develop the sector. We also engage in the marketing of horses and ponies and we market Ireland as a venue for tourism and spectating. There are many opportunities in the field and we have just completed a strategy with two key stakeholders, the RDS and Teagasc. We worked on a document for 12 months, which was launched in March, and it is timely that the document is out now. The key areas we looked at included improving the herd quality, because we have the potential to produce fantastic horses on the island, and improving training and education. We focused on marketing and sales, equine tourism and recreationally focused initiatives as well as high performance issues. We worked on improving the experience of participants and developing enhanced structures to improve the health and welfare of horses by means of institutional capacity. A lot of the groundwork is done but funding all these recommendations is a big challenge for us. If we can deliver on what we have in our strategy, this sector will definitely realise its potential.
Mr. Damian McDonald:
I will give a quick overview of the value of the sport horse industry to Ireland. Figures from a UCD report of 2012 show that there were 124,000 sport horses on the island and that the sector was worth €708 million to the economy each year, supporting the equivalent of 12,500 full-time jobs. A number of people in the sector have other income but 29,000 people depend on the sector for part or all of their income, and there are 47,000 regular participants, defined as a breeder or other participant on a fortnightly basis.
Horse Sport Ireland is a relatively new body and became the national governing body for equestrian sport in 2008 as recognised by the international governing body, the FEI, the Irish Sports Council and the Olympic Council of Ireland. In 2010, we were formally recognised by Sport NI as the governing body for equestrian sport on a 32-county basis. All our equestrian teams compete on a 32-county basis. There are some issues to be tied up as regards structures but, by and large, we operate on a 32-county basis.
We brought together equestrian sport, which was previously run by the Equestrian Federation of Ireland, and sport horse breeding which was carried out by the Irish Horse Board.
We were formally allocated responsibility for maintaining the Irish horse register which incorporates the Irish sport horse and Irish draught horse stud books in July 2008. When we started out on this journey, we inherited 16 affiliates from the Equestrian Federation of Ireland but we now have 28 affiliate bodies, including the Northern Ireland Horse Board. We do all the registrations under an agreement with the Northern Ireland Horse Board for all the horses in the Irish sport horse and Irish draught horse stud books North and South, whereas previously they were done in Naas and at a location in Northern Ireland.
I have given a brief summary of our income in the form of unaltered figures for 2014. We received €1.7 million from the Department of Agriculture, Food and the Marine, €1.7 million from our own sources, €1.5 million from the Irish Sports Council and Sport Northern Ireland, and last year we got a sports capital allocation of €30,000, bringing our 2014 income to just over €5 million. We were in receipt of a significant uplift from the Department of Agriculture, Food and the Marine last year, which I will deal with later and which will be included in our 2015 income. We do not count the income earned by affiliates, which would probably be between €4 million and €5 million. Such companies include Showjumping Ireland, Eventing Ireland, the Irish Pony Club and the riding clubs.
As a body we interface with Government, we act as national governing body, we maintain the Irish horse register and we issue identity documents for horses, as well as stud book documents. This is an important point which I would like to stress. Our policy, which is enshrined in the new strategic plan, is for all sport horses on the island to be registered and recorded with a pedigree verified by DNA testing. One can obtain a passport for the purposes of identification for a horse but it does not record any pedigree. This scheme was put in place for a very good reason, namely, to mop up a backlog of horses in the country which were not registered, but there are some foals still being registered without a recorded pedigree. That is a huge loss to the sector if the animal goes on to be successful, because the added value for its dam line and its sire is lost. It is something we need to address and there are a number of suggestions in the strategic plan, both for the industry itself and in terms of what help we could get with legislation.
We promote the Irish equestrian industry worldwide and run high performance programmes. We now run the national equine anti-doping programme and, since 2009, all the affiliates have handed over responsibility for dope testing of horses to Horse Sport Ireland. The results come to us, we manage them and carry out all the hearings. It is an issue on which we have made a lot of progress and, touch wood, no horse ridden by an Irish rider in international competition has tested positive for any substance since 2008. It had been a huge problem up to that point and we can never be complacent about it but the maintenance of a reputation on the international stage is something on which we place a very high priority.
We run the national equestrian coaching development programme and operate an online pedigree and performance database for all the horses registered on the Irish horse register. Again, Showjumping Ireland, Eventing Ireland, the Association of Irish Riding Clubs and the international governing body provide us with a link to results in their databases, which is important in helping us give breeders and producers better information about horses.
At the London Olympic Games, equestrian sport was the only sport where Ireland won medals in the Olympic and the Paralympic Games. Cian O’Connor won a bronze medal in showjumping, our para-equestrian team won a team bronze medal and Helen Kearney won two individual medals. This is a sport at which we excel and in which we have huge potential. With further investment, we believe we can make even more progress.
Since 2008, we have introduced new high performance programmes to bring proper structures and training to our teams. The graph shows the under-age medals won by Irish equestrian teams in FEI competitions since 2006.
As the committee can see, we have had unprecedented success in 2011, 2012, 2013 and 2014. A lot of that success is down to the funding that we received from the Irish Sports Council which we appreciate. We would always like more funding, of course. The funding has allowed us to put proper structures in place. All of our teams are now run by professional managers who select the teams. We do not have voluntary selection committees and the selection process is managed. The senior team is managed by Robert Splaine and the team manager for the senior eventing team is Nick Turner. By bringing in those structures and involving proper professionals we have achieved a huge number of improvements.
We are fortunate that the Irish senior eventing team has achieved Olympic qualification for Rio. We have one last chance to qualify in show jumping at the European Championships which will be held in Aachen from 19 to 23 August. We missed qualifying by less than three penalties at the World Championships so Olympic qualification is a crucial goal for us this year. One of the Irish riders is called Bertram Allen. He is 19-years old and is ranked 7th in the world. He won the Longines Global Champions Tour competition at the weekend in Paris. He came up through the under age system and a lot of the medals won at the event were won by him. He is already a global phenomenon. There is huge potential in terms of the glory that this one rider has brought to Ireland. At the moment he is the most talked about rider in world show jumping. He is a great credit to our sport and we will hear a lot more about him.
Two years ago we opened the National Horse Sport Arena on the national sports campus. The National Sports Campus Development Authority has developed an Olympic standard arena and it has the same surface as that found in London. All high performance training for the Irish teams takes place at the venue. We work very closely with the national sports campus to utilise the facility. It is wonderful that Irish athletes can now train in a world class facility. The venue has been a big help to us. We could further develop the arena. The facilities have developed since the arena was built. The venue now has stables but there is potential for an indoor arena and more facilities which would turn it into a world class centre of excellence.
In terms of the spread of the sport, we have 28 affiliates but for the purposes of these statistics we picked out the three Olympic disciplines. Show jumping is the biggest discipline in the country. Our statistics show there were 129,540 entries in show jumping last year. The figure refers to the rounds of show jumping. The discipline has a phenomenal reach. In every village, parish and county in Ireland there are people involved in show jumping in an amateur and professional capacity. The statistics also show that more than 6,000 horses are registered to compete; in eventing there were 8,000 entries and in dressage there were 5,468 entries. The figures do not include activities carried out by the Irish Pony Club, riding clubs, hunts and several other organisations. We have mentioned trotting and polo. All of these categories are part of our organisation and they all have huge participation levels. Show jumping is a sport that people can participate in from the age of five to 85. It is also the only sport in the Olympic charter where men and women can compete on an equal basis. That is another aspect that is unique about our sport. There is very good participation in our sport by males and females.
On the international stage we have 548 FEI registered riders who represent Ireland in international competitions. In 2014, they represented Ireland in 27 countries. The phrase that we often use to describe our riders is that they are ambassadors first and sportspeople second. The level of exposure and media coverage they bring to Ireland is phenomenal. In fact, they probably get more media coverage abroad than they do in Ireland. We believe there is great potential to exploit such media coverage in terms of selling and marketing Ireland abroad.
I will next discuss the breeding side. Members should be able to see on their screens the Irish horse register's foal registration figures. The key message to take from the data is that the number of foals produced in Ireland peaked in 2008 and the number has dropped from a peak of circa 10,000 foals down to under 6,000 foals. The number has held reasonably well in the past four years but there was a substantial reduction from 2008 to 2011. There was an oversupply problem in the sport horse sector in Ireland and in the thoroughbred sector as well.
There has been a significant reduction in the supply of horses. That will help to address some of the problems, including some of the welfare problems that have presented the Irish horse sector in a bad light. There have been some improvements but more improvements must be made. With the reduction in the supply of foals that should be a help in terms of increasing the value of animals, so that we do not end up in a situation where we have a great many animals with no value, a recipe for problems.
We have issues with our rankings on the breeding side. The red line tracks the event horses. We have been top of the world every year since 2004 to 2014, with the exception of two years in that period. That is a significant selling point for Ireland. We are the foremost producer of three day event horses in the world, despite the fact that we are a small country relative to some of the other countries that are trying to produce horses.
However, the picture is not as positive for show jumping and there are issues which we have been addressing in our new strategy. There are further recommendations in the new strategy on how we address this problem. The Irish sport horse stud book shows that we are in the 12th rank for producing show jumping horses. That must be addressed. There have been some very positive signs in terms of the performances of our young horses at the world championships in recent years. That measures the six top horses from the studbook each year. They tend to be aged between 12 years and 15 years. Our hope is that the next generation of five, six, seven and eight year old horses will be better. If we implement this strategy we would hope the next generation again, will be better again if we can improve our breeding strategies for show jumping horses.
The chairman has mentioned the industry's strategic plan - Reaching New Heights. We may have circulated a copy to the members but I can recirculate a full copy of the document after the meeting. The document was launched earlier in March of this year. Professor Pat Wall has already touched on the main themes, improving herd quality, which is to improve the breeding of our horses, improved education and training structures, marketing and sales capacity, increasing participation, improving horse health and welfare and improving institutional capacity. As the chairman said it took about a year to develop this strategy, the Minister for Agriculture, Food and the Marine, Deputy Coveney took a particular interest in it and attended a number of the regional meetings. He increased the allocation to Horse Sport Ireland in 2015 by €600,000. We have utilised that funding in three key ways - first, as prize money, which we have distributed to an innovation fund for innovative classes around the country, for young horse classes, for mare classes and for foal classes. We have a new foal championship which will commence in the coming weeks and will take place in five regions. The Northern Ireland Horse Board has funded a regional qualifier event in Northern Ireland. One of the challenges we have as a sector is that while on the sports side there is funding coming from Northern Ireland, on the breeding side, there is no funding from the Northern Ireland Government. While we operate on a Thirty-two county basis, the funding is all provided by the Government in the Republic. That is a point the Minister, Deputy Coveney has been making, to try to draw in some additional funding from Northern Ireland for the breeding side. As of yet, that has not been successful. That is a key issue that needs to be addressed. I know there are similar issues on the racing side.
We have set up a new international marketing division within Horse Sport Ireland and we ran a new series called Jumping in the City, under which we brought show jumping to greyhound stadiums. We had one event in Cork, one in Limerick with the final one in Shelbourne Park. The goal of that initiative was to try to increase the profile of our sport and by bringing show jumping to the city to try to get new people to come and look at it. Our new international marketing director, Ms Elaine Hatton, joins us from Irish Thoroughbred Marketing and has been in situ for approximately one month. That is an exciting development for us. Irish Thoroughbred Marketing has been very successful in marketing the Irish Thoroughbred on the international stage and basically we are trying to replicate that by having a sport horse marketing operation within Horse Sport Ireland, which Ms Hatton is heading up.
When she is settled in, I sure she will be happy to come and give an update on how we are doing in international markets and outline what her strategies will be. She is developing a programme in that regard.
The Jumping in the City series was one of the initiatives we funded from the extra resources received from the Department of Agriculture, Food and the Marine. It was very successful in that there were huge crowds in each of the stadiums. Obviously, there are lessons to be learned from it for next year. On 21 July we will make a presentation to the board on the outcome of the series to see how we can proceed. It involved good collaboration with the Irish Greyhound Board and it has great potential to continue with it. We hope we have demonstrated, as an organisation and an industry, that we have delivered real value for the extra €600,000 provided. The sector is still dependent on voluntary effort, but we can leverage a good deal. Even for an event such as Jumping in the City a huge amount of the work that goes into it is done by people on a voluntary basis. The same applies to shows all around the country. There are 159 shows run all around Ireland, largely and almost exclusively through voluntary effort.
We can give good value for money with an increased investment in the sector. We are aware that the thoroughbred sector receives in excess of €45 million each year; the greyhound sector, circa €12 million, while we receive €3 million. Our argument is that in our sector we have more horses and more people and that we make a major contribution to social capital all around the country. With further investment the sector could deliver much more. We have many more initiatives, some of which are outlined in the strategy, that we would like to implement. For many reasons, for a long period the sector was not as well organised and we fell behind in the funding stakes. That there is no betting is a fair point, but given the amount of money contributed by the Government, even excluding betting tax revenue, a case can be made for an increased allocation.
We are delighted to have an opportunity to outline what the sector does and to take whatever questions committee members may have. I have covered the sector briefly. If anybody wants to receive more detailed information, we will be happy to provide it. I again thank the committee for giving us the opportunity to make this presentation.
Andrew Doyle (Wicklow, Fine Gael)
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I invite Ms Byrne to make her presentation, following which we will have questions which will be grouped. Perhaps questioners might concentrate on one subject first, to be followed by a second. Is that agreed? Agreed.
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.
Éamon Ó Cuív (Galway West, Fianna Fail)
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I am pleased we had the two submissions. They were very useful. Before we ask specific questions, we must stand back and say we are in a country that has a reputation for horses. We have the land, climate and, perhaps more important, the reputation and human capital in general to make a success of this industry. It is all very intelligent to talk about attracting foreign direct investment and multinationals, as we often do, but it is equally important to consider all the natural industries we could have, or already have that could be a lot bigger and ask how we could develop and exploit them.
How does one develop the horse racing industry, from the very top to the very bottom without distinction, exploiting each sector for its potential? Rather than seeing the various elements as rivals, they should be regarded as complementary products and as part of a totality. In other words, one should sell this island as being the horse island and one of the premier places in the world for horses, be they sport horses, thoroughbred horses or horses of any other kind.
I have a technical question before I ask more generally about where we go from here.
The Irish Sports Council and Sport Northern Ireland give Horse Sport Ireland €1,531,005. How much of that comes from our brethren in the northern part of the country? Could its Department of Culture, Arts and Leisure be persuaded to come up to the plate a little bit better than it has? There seem to be many rows about UK Exchequer funding up there.
If the strategic plan were implemented fully, what would the country benefit economically from it? What annual investment is needed to implement the strategic plan? I accept the points about the social return, such as volunteerism and the enjoyment gained from equestrian sports, but it is the economic return on which we want to focus. How many jobs will be created by developing a much better domestic and international equestrian product? We need to know how important this industry could be to the country. How much do horse-related activities contribute to tourism? How many people come to Ireland to pursue horse-related tourism activities? How important are special and indigenous breeds, such as Connemara ponies and the Irish Draught, to highlighting the Irish horse as a unique product and how does this contribute to the industry?
Denis Landy (Labour)
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I welcome both delegations. While there is much tidying up still to be done in the industry, I commend Horse Sport Ireland on the excellent work it has done so far.
Why has Ireland dipped in international show-jumping rankings over the past ten years? Horse Sport Ireland stated in its report that it was addressing this. What does this entail? In recent years, we have seen some fantastic under age talent emerge in show-jumping.
I am lucky to know some of them. We need to address how we can support young talented riders and to harness, no pun intended, their talent.
I am aware of the difficulties that our young rising talented riders face. Somebody riding a horse worth €100,000 may be competing against a rider on a horse worth €10,000. The person riding the €10,000 horse might be better than the other competitor but he or she does not have the same quality animal. Sometimes that talent is lost to the industry when he or she is frustrated by the effort to get to the top.
I acknowledge there are some bursaries but I would like to see more money being invested in bursaries and support for young talent.
I welcome the efforts that Horse Sport Ireland is making on registering horses. Will the witnesses provide more detailed information on DNA? Is it the aim of Horse Sport Ireland that the DNA of every horse will be traceable? When will that happen?
Chairman, are we putting questions to the Irish Bookmakers Association at this stage?
Andrew Doyle (Wicklow, Fine Gael)
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We will come back to that later
Mary Ann O'Brien (Independent)
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I thank the board of Horse Sport Ireland for their excellent presentation. Based on what has been achieved by Horse Sport Ireland I too, like Deputy Ó Cuív, would invest in it. Horse Sport Ireland has a website with a vast reach, and has brought its affiliates under one roof. As a potential investor in the company I would love to hear Horse Sport Ireland outline its vision for the future and what it could do with funding.
What worries me is the stud book and I would like to hear more about it. I attended some of the excellent evening events hosted by Horse Sport Ireland around the country. I have spoken a few times to the chairman who is very learned on the subject of the stud book. How does one get the rankings up to the level of the horses in the eventing world?
I know that Rory McIlroy has to live in America, but why does Bertram Allen have to live in Germany? Why is Cian O'Connor the only rider who can live in Ireland? Do our young riders have to live in Europe in order to compete and be in the centre of things?
Deputy Ó Cuív asked how we become the centre of excellence for breeding horses. Do we need something similar to the National Stud to buy in the best stallions? How can we get back to being the go-to island in the world for excellence whether for show jumpers or the eventers?
Deputy Ó Cuív mentioned the Connemara ponies which are unique to us. The French invested in good horses for their riders at the junior European showjumping Championship. I made representations to this committee last year for funding for that championship but the allocation was so small it was mortifying. Yet the whole of Europe was coming to participate in it. We did very well, but the French showed us up, as they had been investing copious amounts of money for years in their horses, many of which were Irish-bred Connemara ponies. I wonder if Horse Sport Ireland has the vision and the plans to do something similar. It is a long-term project and not a quick win.
Lucinda Creighton (Dublin South East, Renua Ireland)
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I welcome the representatives from the Irish Bookmakers Association and Horse Sport Ireland. I am particularly pleased to welcome them because my father was a bookmaker for about 40 years. He had a small retail office and I worked with him at greyhound tracks and at pony racing around the country. It is an issue close to my heart. I have been involved in showjumping since I was four years old.
I congratulate Horse Sport Ireland. I think Jumping in the City was a fantastic success and I was delighted to attend the final in Shelbourne Park. This was an excellent collaboration with Bord na gCon. To give credit, where credit is due, it was a real success which I hope will be replicated in the future. I have no doubt that it will.
There has been a lot to celebrate in equestrian sports in the past few years. Bertram Allen, the name keeps coming up, is literally a 19 year old whippersnapper from Wexford who is ranked seventh place in the world.
He is largely ignored by the domestic media, which is a real shame. Bertram Allen is a role model; his work ethic and professionalism are a credit to his family. He is a credit to the work of Horse Sport Ireland and Showjumping Ireland. It is worth noting that Horse Sport Ireland's social media work is excellent because many organisations get it badly wrong. I follow its Twitter and Facebook accounts which are constantly updated.
I would like to concentrate on the owners of top level showjumping horses. The real problem is that the availability of such horses is unpredictable. We know that one of the top Irish riders who competed at the World Equestrian Games last summer had his entire string of horses pulled from him earlier this year, with just 24 hours notice. We are relying on foreign overseas investors in showjumping horses that we are expecting to bring us to the World Equestrian Games, the Olympic Games and so on. I would love to see a plan being put forward to incentivise people to invest in Irish horses on behalf of our riders. It would not be rocket science to put in place tax incentives to encourage the diaspora in London and the United States to invest in horses. Frankly, I do not care whether they are Irish bred or otherwise because the first priority is to have our riders winning on the world stage. Horse Sport Ireland should be promoting and fighting to secure the best horses and this should be included in its budget submission. This would be a win-win strategy and potentially attract investment by the Irish abroad. It is something we need to do urgently.
I welcome the Investec sponsorship deal, which represents fantastic news, about which I would love to hear more. As I understand it, the sponsorship package will cover the team competing at the RDS and the FEI European Championships in Aachen in Germany this summer, both qualifier events for the Olympic Games. Is there an expiry date on this sponsorship deal? Is Horse Sport Ireland looking at other potential sponsors? This sponsorship deal represents really good news and I am delighted to hear about it. The Holy Grail is the Olympic Games and success breeds success. That Cian O'Connor won a bronze medal in 2012 was a huge cause for celebration and he was very unlucky not to quality last summer. I am confident, however, that the showjumpting team will qualify this year and congratulate the eventers who have already qualified for the Olympic Games. That brings me back to the questions of finding quality horses and those who own them; we cannot separate the two.
The work being done to improve the breeding programme is welcome. I know that this is an issue close to the heart of Professor Patrick Wall. I hope he will be more successful at it than he was at the Jumping in the City event, but I will not go there, as I do not wish to embarrass him before the committee. I would, however, like to hear about the timeframe for the breeding programme. This ties in with some of the questions asked by Senator Mary Ann O'Brien and Deputy Éamon Ó Cuív on the five and ten year benchmark. Is there room for the Army Equitation School which has no money to buy or retain good quality Irish horses? I hope that as we improve the quality of Irish bred horses, there will be a role for the school.
These are just a few of the issues I wish to raise that are very important.
Willie Penrose (Longford-Westmeath, Labour)
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I always remember my late mother saying one never saw a poor bookmaker. However, the Irish Bookmakers Association has cried poverty. We did not realise we had so many bookmakers. Certainly, rural bookmakers who provide employment are suffering.
Tremendous progress has been made by Horse Sport Ireland. Reaching New Heights, the title of the strategy it sent us last April, was excellent. Of course, much of it is aspirational, unless it is underpinned by funding. Let us be clear on the need for funding. Very often when money is invested in an industry such as that overseen by Horse Sport Ireland, there is a negative reaction, as people think it is a waste, particularly when other bodies are competing for very scarce resources. Money invested in this sector was subject to significant criticism, but I am glad that everybody is on board, as we did try to provide some money in the past five years to ensure the industry would continue. I am delighted to see progress being made in the high performance sector.
Professor Wall may look young, but he and I clashed in the mid-1970s in the Ags v. Vets Duke football cup final which was not for the faint-hearted. I am delighted to see another Gaelic football man making tremendous progress in the eventing programme, Mr. Joseph Murphy, who is from my neck of the woods and comes from a great Gaelic football family. He has come within a hair's breadth of securing a medal in a very demanding area, which shows what can be done.
I take the point made by Deputy Lucinda Creighton about owners. However, while progress at the top level is important, I am more worried about owners at the lower level, as they are the ones who produce the horses. They are at the farm gate in their area, but they are not getting a look-in because at that level it is not a very lucrative or profitable enterprise. The question is how do we intervene at the non-thoroughbred level to make sure they will continue. I make a plea on their behalf in the same way Deputy Éamon Ó Cuív, rightly, makes a plea on the distinctiveness of Connemara.
We have all lauded the achievement in qualifying for the Olympic Games in Rio de Janeiro, as it gives us a great sense of national pride to see our own making such progress. However, I still worry. At one time, the racing industry was a poor man's trade, but that is no longer the case and small owners are going out of business. We cannot forget the people with one, two or three horses. They have produced some magnificent winners and if we were to go back through their pedigrees, we would see that was where part of the nucleus of the industry originated. However, despite our rush to acclaim the boys at the top - the big boys - everybody cannot be a Coolmore because that level of funding is not available for ordinary people. Horse Sport Ireland has to implement a strategy that will show a preference. Let us be clear about this: the people who are able to do it will do it, but we are losing out when it comes to people who have the potential but not the financial wherewithal to do it. There is a huge gap, some of which can be explained by the figures included in Horse Sport Ireland's presentation, for which I compliment the delegates. There is a lot of waffle, but Horse Sport Ireland has got down to brass tacks. Senator Denis Landy has noted that we have dropped in the rankings. Part of the problem in that regard is the industry is no longer profitable for some.
On the policy of having all sports horses registered and recorded, with their pedigree identified and DNA traced, that is the bedrock on which the industry will progress. What percentage of foals are being lost in the recording system in the sense that their pedigree is not recorded? Is it a significant or small number?
Horse Sport Ireland has used the additional money allocated well. I am glad that it has not all been put into one area; rather than having all its eggs in one basket, it has opted to invest in three or four areas. That is important because we must have an inclusive rather than an exclusive industry. For a while it looked as if it was moving that way.
Andrew Doyle (Wicklow, Fine Gael)
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On the issue of identity documents, reference was made to DNA. Does it include microchipping also? I know that under animal health and welfare regulations, all horses have to be microchipped once they are presented. Are all new foals microchipped automatically?
Professor Patrick Wall:
I will deal with some of the questions asked and then hand over to Mr. McDonald.
Our objective is aligned with that of Deputy Éamon Ó Cuív. We want to make Ireland the land of the horse and the go-to place for riders of all levels. Horse riding is a sport for high net worth individuals everywhere.
Just as we cannot drink all the milk or eat all the beef we produce in Ireland, we cannot ride all the horses we produce. The minor game is Ireland; the senior game is outside Ireland. Therefore, our strategy is export-led growth. We want to connect with all those people across the globe because we have special animals to offer. Some of our competitor stud books can produce elite showjumpers but they cannot do what we can do. We have an animal for all levels of riders, both horses and ponies.
The Connemara pony is an iconic brand that is known all over the world. The Connemara stud book has 18 daughter stud books which all meet every year at the Clifden show, which has phenomenal international participation and thousands of spectators. It is like the United Nations for Connemara. I think we undersell it. When we have Chinese visitors and the like here, we should give them a Connemara pony as a gift when they are going home. It is a brand.
Éamon Ó Cuív (Galway West, Fianna Fail)
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There is a precedent in that one was given to Jackie Kennedy in 1963.
Professor Patrick Wall:
That is correct. Senator Landy asked why we have dropped to 12th in the showjumping rankings. The sport of showjumping has changed and our animals have not adapted accordingly. Traditionally, we used to sell the best and breed from the rest, which was a recipe for going downhill. As Deputy Penrose said, the emphasis has to be on developing the breeders. They have to focus on the performance of the dam. The psychology that a mare was not much good of a performer but will be a great mare to breed from is what has us where we are. We have to focus on dams that have performers in their pedigree, that have performed themselves or that are breeding performers. We can do that but it is a huge educational issue. Mr. McDonald highlighted that better. Younger horses are coming along so I anticipate we will move up from that 12th position.
Senator Landy made the point about investment in young people. Any investment in the young is an investment in the future.
In response to Senator Mary Ann O'Brien, I agree Bertram Allen is a star. It is amazing he is not a household name with the non-horsey population because what he has achieved is unbelievable.
We could field an Irish team with the Irish-based riders who are based on three different continents. We can definitely breed the riders so the whole challenge is to get the breeders to breed better horses. If we had all these top riders riding Irish horses, they would be a phenomenal advertisement for the country.
The point about the National Stud was raised in the discussions around the country. The National Stud is in Kildare and is focused purely on the thoroughbreds. It is nearly 800 acres and the idea that there would be one yard devoted to sport horses is not a bad idea, given it is owned by the taxpayers. Such a yard could focus on high genetic merit. There is much we could do with sport horses that we cannot do with the thoroughbreds, such as using artificial insemination and embryo transfer to make rapid genetic gain.
Deputy Creighton referred to Jumping in the City, which was an attempt to attract new audiences. We are in the entertainment business as well competing, and spectators, media coverage and sponsorship are inextricably linked. We complain if we do not get the coverage but, at many events, there are only participants. We got more than 3,500 people in Shelbourne Park to watch just 38 horses, which demonstrates the enthusiasm that exists. They were all Irish but if one thinks of the RDS and the number of international tourists, we can see the phenomenon we have. In addition, many new people came along. If we want to get new sponsors or new owners, we have to introduce them to the sport.
The tax incentives are a great idea and it would be great if we could progress that. With regard to the Army Equitation School, everyone loves to see the Army and they can relate to the Army as its members are here all the time and can go to the local shows. Unfortunately, the big money and the big competitions are abroad so, while the public know the Army people, they do not know our riders who are based abroad.
Deputy Penrose hit the nail on the head when he said that some of the strategy, which is a good strategy with good ideas, is almost like a wishlist. As the Deputy said, it is aspirational if we do not underpin it with the funding to implement it. We are not realising our full potential. We have the capacity to do far better with the sector on the breeding side, on the competition side and on the tourism side, but more seed capital is needed.
I will invite Mr. James Kennedy, our financial controller, to respond. We had some money in the innovation fund, only €100,000, to try to stimulate ideas but it was completely oversubscribed.
Mr. James Kennedy:
Yes, it was. We were absolutely amazed. We got €700,000 worth of inquiries or ideas. We could have funded each one of them and have had a return on it. Unfortunately, we were able to give out only €70,000 of the funding. Some of those events, shows and competitions, were super events throughout the country at different levels. It gave us an enthusiasm. This is not a begging bowl. It is an investment in the future and we believe we can get a return on what we are doing. A very good question from Deputy Éamon Ó Cuív is how much money we want and what would be the return. We have a lot of work to do before we can give a proper answer to that question. We have the strategy. I think we have had four months of a short trial but we see we can do things with new ideas. Our plan would be to work on that strategy for the rest of the year and come forward with a phased investment and, equally, a return. The one thing I can say from all my years in business is that it is a very exciting organisation in which to be involved and it has a huge future if we manage it correctly.
Éamon Ó Cuív (Galway West, Fianna Fail)
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As a committee we are looking at the horse industry as a potentially rich resource but the industry will not invest unless it gets a return. Can the representatives come back in due course and tell the committee that if a certain amount is invested, some return will be made directly and some indirectly? At the end of the day that is how it will have to be measured because money is scarce. I understand all the social issues and so on but let us park those for a while. If there were a straight investment, what would we get in return? With people queueing up with ideas for Government, should the industry be in that queue and can it justify the investment? Intrinsically, one would imagine it would because there are a number of natural advantages. One thing I see all the time is that the success of native industries can be attributed to a natural resource or, more important, human capital - a particular expertise or knowledge that people bring to it where there can be an international advantage. Obviously, if one could get both going together, it is likely that one could turn out a very successful industry. However, we need quantification.
Mr. James Kennedy:
We would be very happy to come back on that issue. Tied to that we are very excited about the appointment of our new executive marketing director because export has to be the way to proceed with the business. As the Chairman said we have to breed right. Through our online project, Gateway, we have already seen, with virtually no investment, that people are buying online and we can promote that concept. We have a number of ambassadors. We meet every single group that goes overseas from Horse Sport Ireland and explain the significance of what those ambassadors are doing. They are not just representing Ireland, they are helping to sell our horses. We will come back on that issue.
Éamon Ó Cuív (Galway West, Fianna Fail)
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If it were to pay pro ratafor its population, it would be a lot more.
Éamon Ó Cuív (Galway West, Fianna Fail)
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If all the funding from the Irish Sports Council, the Department of Agriculture, Food and the Marine and the Exchequer is taken into account, there is a massive difference.
Éamon Ó Cuív (Galway West, Fianna Fail)
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I attended a great horse show in the Odyssey Arena as Minister. I am not big into horses.
Mr. Damian McDonald:
It was a very successful show. Just to cover the other points that, perhaps, the chairman has not covered. On the DNA side, about 15% of the foals we register do not have a defined pedigree but 85% have. The figures for older horses are the opposite. There are many more older horses registered without pedigree than there are with pedigree. Part of that is mopping up of a historical situation. All of the animals are microchipped, even those that do not have a recorded pedigree. One of the competitive advantages our stud book has since 1999 is that we have verified the parentage of all the animals in the stud book using DNA, thanks to funding from the Department of Agriculture, Food and the Marine. That is the way we have to go. Many of the competitions and initiatives we organise here would be restricted to animals with fully recorded pedigree. We need to get that message out to people that one has to record a pedigree. We need people to give us that information to build our stud book and build our breeds, otherwise we will go nowhere.
On a related point in regard to ponies, recently we got a licence from the Department of Agriculture, Food and the Marine to open a sport pony stud-book. Again, the problem with non-recorded pedigree would be even greater in ponies. The Senator made a good point when she said our ponies are still very sought after. However, many of them are leaving the country with no papers. That is an issue we have to address. We have a newly established sport pony stud book that we hope to populate in the coming years.
The issue about owners is a key point. Most of our senior show-jumping team are fuelled by foreign owners. We have appointed Tamso Doyle formerly of Horse Sport Ireland, to work with our owners. We have an owners' programme in place to better acknowledge the contribution those owners, many of whom are foreign, have made to us. The Deputy's point about looking at tax incentives to get more Irish people to invest in top horses is a good one and one that we should follow up on.
We were fortunate this year that a donor made a significant contribution towards funding our eventing team for the Olympics. That will be a big help. The Deputy mentioned the sponsorship deal from Investec announced this morning. We are delighted that a company of the standing of Investec has got involved in the Irish show-jumping team. It is a limited arrangement. It runs up until the end of this year's European championships. It is for the Dublin horse show and the European championships. We hope that this would be an introduction and that we would have a long-term relationship with Investec. The results will be crucial and hopefully we can deliver at the European championships.
Earlier there was much talk about qualifying for the Olympics. Qualifying in show-jumping for the Olympics is quite difficult because even though we are very good on the world stage, there are only three places exclusively kept for European teams. Some of the European teams won places at the world championships, which opens up a few more places. The Olympic movement operates on the principle of universality. It has places reserved for all the other continents as well. The reality is that the best teams do not necessarily get to go to the Olympics because of the regional spread. We are in Europe. It is a very competitive pool to get out of but, touch wood, if things go well on the day, we should be able to pull off a result to do it.
I think I have dealt with most of the issues. If there is anything I have left out, please prompt me and I will be happy to follow up on it afterwards.
Andrew Doyle (Wicklow, Fine Gael)
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I thank everybody for their contributions. I will go around again if there are any further questions. I think a couple have been indicated to the Irish Bookmakers Association.
Deputy Eamon Ó Cuív:
I thank the Irish Bookmakers Association for its presentation. The headline figure for turnover was €2.6 billion. The first thing that strikes me is that for every adult in the State that represents €800 in betting. There are many people like me who do not bet. For a country that people are always saying is bust, some people are betting quite an amount of money. Some of these statistics are always interesting.
Have the witnesses any figures on how much betting now takes place online as compared to through bookmakers? It is a crucial figure because there is currently a natural move to all sorts of things being done online. Nothing can be had from the Department of Agriculture these days without filling in a form online.
The witnesses talk about a decline. There was always going to be a decline from the peak, because the economy declined. It is discretionary spending and the first thing to be taken off the agenda is betting. Let us be honest. On average, the bookmaker has to win, otherwise there would be no bookmakers. That includes all the online betting operations. A friend of mine says the house always wins in the end. That is the nature of the business. Only a real expert could make a living out of betting against the shop.
I would be interested in the witnesses' views on how much of the decline, and the rise to the €3.2 billion, is due to the economy - a fair bit of it must be - and to what extent it is just a natural change. Whether people are banking, filling in forms, taxing their car or doing a million other things, there has been a move away from physically having to go somewhere to do a thing, towards to being able to do it anywhere, particularly because of these gadgets that allow people do all sorts of things where they are sitting. No matter what financial regime we had in place, some of this change was going to happen anyway.
Although bookmakers cannot claim back VAT, they are also not paying VAT. Most people who can claim back VAT wind up paying more on the sales than they do getting VAT deductions on the purchases. That is the way VAT works. If the Government brought in a 5%, 10% or 15% VAT rate, the bookmakers would wind up paying more than they would save in all the reclaims. I am not sure that argument stands up but I would be interested in the witnesses' take on it.
When we consider the history of betting duty, it was at 10% and went down to 5% in 1999. In 2002, it went down to 2% and was cut to 1% in 2006. I was there for the last two reductions although I was not in Cabinet for the first one. We brought the rate down because the market was totally distorted between online betting and the bookmakers' betting. The fear was that we were accelerating the migration to online betting and I think we had a fair point, as there was a fair amount of employment in the bookmakers' shops. Can we turn it around in the other direction? If online betting is now the favourite, would it be a good idea to have a higher online betting duty than bookmakers' duty, say, if we had 3% online and 1% in the shops? What is to say we could not reverse it in this way? What would the witnesses think of that?
Andrew Doyle (Wicklow, Fine Gael)
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I think that is a rhetorical question.
Éamon Ó Cuív (Galway West, Fianna Fail)
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We have to look at all the possibilities because the Government has to look for sources of funding.
The witnesses seemed to emphasise the question of why betting duties should go to horse racing, given that so little of the betting is actually on Irish horse racing. That is a good question and there is an argument in favour of a "hypothecation" as they call it, that is, that a particular tax is given over to a particular purpose. The Department of Finance hates hypothecation. The Department would get the money in the form of a lump sum and then decide how it is going to distribute it but it wants to have all the money to play around with at the beginning of the year. There is only an advantage in hypothecation if more money is going to be raised. It is fair to say that the public does not tend to see investing in horses as a good industry investment. It is actually much happier for us to invest in multinational high-tech and software companies. For some reason I cannot understand the public is not so keen on investing in thoroughbred horses, although they are huge earners for the country and we have a natural advantage in this area.
If that is a problem, it makes sense to look at hypothecation, even though there is no direct relationship. Does the objection come from the bookmakers?
The bottom line of the submission is a plea for no further taxes. Is that because of the competition with the online service or is it because it is believed the turnover on betting would drop? Of course, we cannot know the answer to that unless we get the figures for the online betting and learn whether they have grown as betting with bookmaker shops has dropped and then factor in the drop in the economy.
Denis Landy (Labour)
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I thank the witnesses for their submission. Bookmakers are a little like politicians - nobody believes them, no matter what they say. I was born and reared across from a bookmaker's shop and when The Hook was in action - Deputy Creighton will remember that - I was hooked at the time. I grew up with backing horses but I have seen huge change in the industry. I have also seen huge change in the little town I come from, Carrick-on-Suir, because retail shops are closing and business is going on line.
I feel sympathy for the smaller bookmakers but the multiples are getting as much online as the real online companies. I have accounts with a number of bookmakers and it is a lot easier to sit down on a wet Saturday evening and go online and watch whatever is on than to go to town and find parking. The little advantage Irish bookmaker shops had and seemed to use for a while was customer service. Biscuits were provided in some of them at one stage, but the biscuits have been withdrawn now and all that is provided is tea. This might seem funny but the point is that unless bookmakers provide an extra service people will use the online service.
I do not think there is anything in the point made about how much money bookmakers make from Irish horseracing. There is probably three times more racing going on in England every day than in Ireland. Certainly there is on an annual basis. People cannot expect the Irish horse industry to put on racing when it does not have the racing days. I have a certain amount of sympathy for bookmakers, but as Deputy Penrose said before he left, we never see a bookie on a bicycle. They must make their case here but to be honest, they will not get too much sympathy from punters.
Martin Heydon (Kildare South, Fine Gael)
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I apologise for missing the early part of the presentation, due to a prior commitment.
Andrew Doyle (Wicklow, Fine Gael)
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Sorry to interrupt, but a vote has been called. After Deputy Heydon makes his contribution, Senator O'Brien and Deputy Creighton have still to contribute. Ms Byrne and Mr. Tully must also be given an opportunity to respond. Rather than let Deputy Heydon get into his contribution, we will suspend the meeting until after the vote. Is that agreed? Agreed.
Rather than keep the representatives from Horse Sport Ireland, I thank them for their contribution. If they wish to withdraw and leave during the suspension, that is fine. They are welcome to remain, but the vote process could take ten or 15 minutes.
Andrew Doyle (Wicklow, Fine Gael)
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Sorry to interrupt, but a vote has been called. After Deputy Heydon makes his contribution, Senator O'Brien and Deputy Creighton have still to contribute. Ms Byrne and Mr. Tully must also be given an opportunity to respond. Rather than let Deputy Heydon get into his contribution, we will suspend the meeting until after the vote. Is that agreed? Agreed.
Rather than keep the representatives from Horse Sport Ireland, I thank them for their contribution. If they wish to withdraw and leave during the suspension, that is fine. They are welcome to remain but the vote process could take ten or 15 minutes.
Andrew Doyle (Wicklow, Fine Gael)
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Deputy Heydon was about to commence his contribution so I will revert to him.
Martin Heydon (Kildare South, Fine Gael)
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I thank the representatives from the Irish Bookmakers Association for appearing before us. I wish to focus on the online element of its business. Is it fair to say that there are members of the association that have an online presence? Could the representatives outline how the new online betting tax is bedding down? Are there difficulties in its administration or do they find it more straightforward? It is probably difficult for the Irish Bookmakers Association because in some ways, the retail bookmaker is almost in competition with the online element, a competition they have been losing in recent times. We have many discussions here about urban regeneration and about how our regional towns are struggling.
Only this morning I was talking to a couple of local businesses who sell menswear. They told me that the online market is killing business for them because people now have more confidence in going online and are better able to do so. That is no different in the case of the bookmaking business. This is a trend that will not be stopped easily and it is a challenge for businesses and their employees.
I ask Ms Byrne to outline how the online tax element is setting in for the association's members. There is a need for a symbiotic relationship between the horse racing and betting industries in both their interests. I acknowledge the very significant cost of media rights which is crucial for the ongoing operation of the racecourses. When bookmaking firms sponsor some of the bigger races they bring an added dimension to the promotion of those events. The industry at times finds it easy to bash the bookmaking sector but it would be in both their interests if they were to work closer together. It is in the interests of horse racing if the bookmaking industry continues to sponsor events and it is in the interest of the bookmakers if Irish racing remains the top brand. I ask Ms Byrne to outline her experience of the online element.
Andrew Doyle (Wicklow, Fine Gael)
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Another vote has been called in the Dáil. We have six minutes before we suspend for the vote and we may be able to conclude the meeting. Deputy Creighton and Senator Mary Ann O'Brien have not returned and they had indicated they wished to contribute.
I have a question for Ms Byrne. Is it fair to say with regard to the net profits that the independents who lost €3 million to €5 million would, by and large, be the core smaller independent retailer who is less likely to have a big online activity which would seem to be the more profitable option even with taxation? I ask Ms Byrne to clarify.
Ms Sharon Byrne:
I will begin with Deputy Ó Cuív's questions. He asked about the turnover as between the online and retail businesses. It is difficult to know because online companies, apart from PLCs, have been so secretive about their business. I will extrapolate Paddy Power's published figures and its market share as an estimation. We are expecting a 1% tax collected on Irish business of €15 million to €20 million. That means €1.5 billion to €2 billion from Irish customers on sports betting online. The figures from our shops are €2.4 billion to €2.5 billion. They are almost on par and that figure is growing rapidly.
On the reason for the decline in our business, we currently have the lowest number of shops on record for the company that beams us our pictures. It was 850 shops 15 years ago. I received figures this week from the Department of Finance on the betting tax paid for the past 25 years in comparison to the rates. The number of shops we have in Ireland today is almost equal to what we had nearly 20 years ago. The recession accounts for some of it but the online element is a big factor. However, it is not all doom and gloom. The retail side could certainly compete a lot better if legislation allowed it. We are now operating in a computerised world. We have customers in our shops betting on their telephones or at home. If we had computers in our shops offering the new types of betting we could compete but the legislation dates back to 1931 and it prevents us from competing.
I have commended Deputy Martin Heydon. In fairness, this Government has introduced the evening opening all year round. We have been screaming for that for years. We are now allowed to open after 6.30 p.m. from September to April, whereas historically we have had to close. This is the first year and it is very welcome. About three years ago we were also able to get Dundalk to start racing throughout the winter and this has been a huge boost.
However, preventing us from competing with online operators and not allowing computer products into the shops makes it very difficult.
The reason I mentioned VAT is not that I think we should not be paying VAT, rather it was to highlight that the cost of racing with the addition of VAT is a real cost to us. Most businesses get VAT back although I do not think farmers do so. We cannot and so it is a real cost. The cost of racing at €3,000 to Horse Racing Ireland per shop plus VAT, is a real cost.
Éamon Ó Cuív (Galway West, Fianna Fail)
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My point is that VAT is only repaid if it is taken off the final customer.
Éamon Ó Cuív (Galway West, Fianna Fail)
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The VAT on sales always exceeds unless one is losing money-----
Ms Sharon Byrne:
It should. However, we do not have that return. We pay VAT on everything flat and we have no way of reclaiming it. I was highlighting the cost of racing.
On the question of whether there should be a higher charge for online betting, I represent the retail sector. In my view the online sector has got away without paying tax for a very long time. We have been employing thousands of people. We are in every little town and community in the country. We are paying newspapers in our local shops, we are sponsoring local football teams, we have bums on seats around the country. Should they be taxed the same as us? It would not be my view that they should be. There should be a differentiation but I also disagree with the taxation model that is being imposed on exchanges, which is 15% on commission. A lot of customers on exchanges pay no commission because they are just providing liquidity. That system is flawed. I know the Department of Finance is looking at that.
Senator Landy said there was no sympathy from punters. We were not looking for sympathy; we are here to try to explain how much money we pay towards racing versus what the profits are. Deputy Heydon asked how is online tax bedding in. The collection of that tax does not start until 1 August but we had some concerns with regard to the legislation. We were concerned about the personal fitness companies from all over the world who can pay a small licence fee to have a betting licence in Ireland while the Department of Justice and Equality has to verify their personal fitness credentials. They might have to go to the Caribbean to check out this company that no one has ever heard of and which is applying for an Irish online licence. The Department will have two weeks to verify their fitness credentials. We have concerns about this provision and also a concern about the identification of the country of residence of the customer placing the bet. We explained our concerns to the Department and it worked with the industry to find a solution. The only other concern we have is that it remains to be seen whether it will be collected from all countries.
Mr. Paul Tully wants to make a comment.
Mr. Paul Tully:
It is important that the Irish racing industry is a healthy industry even for the Irish bookmakers. At the moment we pay a 1% tax on our turnover. As Ms Byrne has shown with the figures, we cannot afford to pay any more. Deputy Penrose raised the issue of Horse Sports Ireland and the small owner. That is a key aspect that needs to be brought back into Irish horse racing. At the moment, Irish horse racing is dominated by the big owners and the small owner is playing around for small money on bad racing in the back end of the country. He is not able to compete with the big owner. Irish racing was built on small owners, not the big owners. If there were an incentive for small people to have a horse and run it this would make it more competitive and more people would be brought back into racing, and to the racecourses. This would increase betting and would bring interest into the industry.
Andrew Doyle (Wicklow, Fine Gael)
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That goes for both industries. As part of the pre-legislative scrutiny on horse racing we decided to look at the wider industry. We will be hearing from the local authorities who have to deal with straying and problem horses and from the ISPCA. Reputation is everything. The players and stakeholders in the industry can work and yet the image can be that of animals being neglected in poor conditions. Then all that effort in good public relations is diminished.
As such, the industry has a role in it which we wanted to emphasise so that we can contribute, hopefully, to the development of a model, whether through taxation or incentives to support smaller producers and owners. It is to ensure it is approached the same way. Ms Byrne said it herself when she referred to looking after addiction. That is very important.
I thank the witnesses for attending and for their forbearance.