Sportsbet ready for new online gambling taxes in Australia
Online bookmaker Sportsbet says it is confident it can withstand the wave of new internet betting taxes sweeping Australia, after the gambling site’s profits soared more than 40 per cent last year.
Victoria and New South Wales, the nation’s two biggest betting states, are widely expected to unveil details of new wagering taxes in coming weeks, which, for the first time, will tax bookmakers based on where bets are placed rather than where the companies are licensed.
A so-called “point-of-consumption” tax is already in force at 15 per cent in South Australia, while Western Australia and Queensland have committed to follow suit.
The taxes have prompted concerns and lobbying from online bookmakers, such as Sportsbet, CrownBet and Ladbrokes, who operate nationally but are licensed in the lower-tax jurisdiction of the Northern Territory.
The industry, and the racing authorities who rely on their financial contributions, have been arguing that a 15 per cent impost is too high and will threaten online bookmakers’ often-thin margins and long-term sustainability.
But Sportsbet’s foreign-owned parent company, Paddy Power Betfair, on Wednesday night Australian time said Sportsbet was well-placed to handle the new taxes due to its strong profit and revenue growth.
Paddy Power Betfair revealed Sportsbet’s underlying earnings before interest and tax had rocketed 42 per cent to $246 million in 2017 from revenue that had shot 21 per cent to more than $700 million.
“Currently, point-of-consumption taxes are payable in South Australia, have been announced in Western Australia and we expect the other states to announce their intentions in coming months,” the company said.
“Sportsbet is in a good position to withstand increased taxes and benefit from any market consolidation.”
Delivering Paddy Power Betfair’s full-year results, in which global operating profits rose 19 per cent, chief executive Peter jackson singled out the performance of Sportsbet in Australia.
“Our Australian and retail operations performed particularly well, growing profits by over 40 per cent,” he said.
The company also said its Australian market growth remained strong, and Sportsbet was a popular, “market-leading” brand in terms of spontaneous awareness, customer usage and product satisfaction.
Sportsbet has recently risen to become the largest online gambling provider in Australia, and, according to recent research from investment bank Macquarie, it may be the only corporate bookmaker able to turn a profit if digital betting taxes are rolled out at 15 per cent nationally.
Since last year, Sportsbet has been paying the 15 per cent tax in South Australia, which accounts for 7 per cent of its revenue. Sources in the wagering industry said horse-racing turnover had not declined in South Australia as a result of the tax.
Following Sportsbet’s results on Wednesday night, gambling-reform campaigners called on the Victorian and NSW governments to “stop dithering and get on with implementing a point-of-consumption tax for the foreign bookmakers”.
The new taxes are largely in response to long-held concerns that online bookmakers do not face the same level of taxation in Australia that is paid by the TABs.
Tim Costello, of the Alliance for Gambling Reform, said online corporate bookmakers had been “lobbying furiously” to reduce the rate of the taxes or delay their introduction.
“State governments need to demonstrate they are not captive of the gambling lobby, particularly these foreign companies like Sportsbet which pay minuscule licence fees to the Northern Territory government,” he said