March 04, 2010

Paddy Power to leave Ireland?

Paddy Power could be leaving Ireland according to reports. The very proud to be Irish sportsbook could seriously be thinking of leaving home, as chief executive Patrick Kennedy shared that he is considering moving operations offshore if the tax burden in Ireland continues to rise.

In 2009 Paddy Power reported a 15% decline in pretax profits down to €67.2m. This is despite high street betting turnover being up as the company has nearly a third of Ireland’s sport betting market.

The decline can be attributed to punters getting better at picking winners in particular with horse racing, however the main culprit is the ever increasing tax burden with the company paying over €18m in taxes and fees alone last year.

Just a 1% increase in tax on betting turnover would remove €2.5m from the company’s annual operating profits, which the company can seldom afford. It’s further problematic as the group intends to expand their services over the next few years, looking to employ a further 250 people to keep up with the increasing popularity of online sports betting.

Operating offshore could effectively halve the company’s tax burden. Last year, William Hill did exactly that, which gave them a huge advantage over their competitors. If Paddy Power wants to continue to effectively complete in the online gambling market, they too may be forced to migrate.

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