Paddy Power founder: Bookies ‘scaremongering’ over tax hike damage
The betting sector is “scaremongering” over the potential damage of a tax raid on gambling, according to the retired co-founder of Paddy Power, who said he had led similar industry warnings of job losses and store closures before other mooted tax changes.
Stewart Kenny, who served as chairman and chief executive at the Irish gambling giant for several decades, accused his former industry of exaggerating the ill-effects of a proposed raid, saying he saw “no reason” for the £3.2bn raid to trigger sweeping layoffs.
“It’s scaremongering,” he told lawmakers at a parliamentary committee. “I played that game every time there was mention of a tax rise [during my career]… I was using exactly the same arguments 25 years ago… and betting businesses have exploded in profits since.”
The government is widely expected to turn to the gambling industry at next month’s Budget to help plug the £30bn fiscal shortfall it is expected to have to fill to remain within its self-imposed fiscal rules.
Gambling industry must ‘pay their fair share’
Backed by former Prime Minister Gordon Brown, the left-leaning Institute for Public Policy Research and cross-party Social Market Foundation think tanks have developed reforms that they argue will bring the taxation of gambling firms into line with other industries. Campaigners have focused efforts on the rise of online casinos and betting, which they argue are especially addictive and allow problem gamblers to lose money faster than traditional sports betting.
In a sign that ministers are heavily considering the changes, Chancellor Rachel Reeves told reporters at the Labour party conference that she would “make sure” gambling operators pay their “fair share” of tax.
The gambling industry has mounted a protracted rearguard action, warning the raid could lead to as many as 40,000 job losses, nearly half of the 109,000 people currently employed in the industry. Separately, the founder of Betfred has branded it “the biggest threat” posed to his sector in over half a century.
But Kenny, who left the Paddy Power board a decade ago, told the Treasury Committee that high street betting shops were already closing, and he did not envisage any acceleration of the rate of closures.
“I do not see any reason why betting shops – and people employed in betting shops – should go down because of the tax rises,” he said. “Betting shops were closing before [these] tax rises [were proposed].”
Betting transactions are not currently subject to VAT, and many of the sector’s biggest players are headquartered in low-tax jurisdictions like Malta and Gibraltar. The advent of online gambling has seen most major bookmakers enjoy record profits.
The former Paddy Power boss told MPs that he was “still a believer in the gambling system”, but accused operators of using open deals to hook young gamblers on more addictive casinos and online slots.
“It’s taking someone from the least addictive product to the most addictive products.” he said. “It’s rather like going to the bar and having a shandy, and the barman – once you’ve finished the shandy – saying, ‘Why not have a triple strength brandy on the house.'”