Sports Writer Aoife Brady looks at government funding for the horse racing industry.
As 2017 drew to a close, there were no signs of the government’s political fondness for horse racing being reined in. The October budget for 2018 revealed that a whopping €64 million would be set aside again for Horse Racing Ireland (HRI), which absurdly attracted criticism from the CEO of the organisation, Brian Kavanagh. He commented that the Government showed a “baffling lack of support” for racing by not increasing betting tax, additional revenue that he believed would be further injected into the sport. As other sectors in Ireland struggle to regain momentum amidst post-recession slumps, the Horse Racing industry shamelessly canter around government officials jostling for increased investment on top of their already lucrative tax-free funding.
Every year since 2001, Horse Racing Ireland and Bord na gCon have enjoyed a statutory entitlement to funds amounting up to a combined total of €80 million. The exchequer who foot the bill, justify the payment as a rechanneling of the funds received from betting tax back into the sport itself. Indisputably, horse racing in Ireland has catapulted Ireland to the forefront of thoroughbred propagation in global ranking. The recent Deloitte report commissioned by Horse Racing Ireland, indicates that the industry boasts a contribution of €1.8 billion in expenditure to the Irish economy, employs over 15,000 people and for the first time in history, Irish trained horses won all of the ‘big five’ races in Britain in 2016, truly establishing Irish horse racing on an International scale. The Horse racing contribution to the Irish economy is invaluable, however, the Irish State has not been shy to acknowledge this in more than generous monetary and ‘political’ terms.
Political Ties
There has been uncontested revenue support for one of the most profitable industries in Ireland for decades in the form of statutory funding and tax exemptions. These statutory concessions can arguably be correlated with the unwavering strong political affiliation and ministerial affection with the sport of horse racing outside the walls of Leinster House. Incredibly, up until 2008, stallion and stud fees were not liable to tax. Former Taoiseach, Charlie Haughey, who flaunted his passion for the sport, was responsible for introducing the controversial tax exemption. However, upon discovering the preferential and partisan nature of the tax, Brussels intervened and called a halt to the exemption on the premise that it was in breach of European Rules on State Aid.
On another controversial note, the re-appointment of Brian Kavanagh for a third term as CEO of HRI contravenes government guidelines which state that CEOs of commercial state bodies can only serve one term of seven years. Kavanagh’s current salary falls €25,000 above the specified salary range for a commercial state body, a tidy €247K. Not bad.
Betting Duty
The Horse Racing and Greyhound Fund is supported through the receipts from the current ‘Betting Duty’ on gambling, which has fallen substantially since the early part of the last decade. This has impacted the Horse and Greyhound Racing Fund, which as a result, has been supported via substantial exchequer subvention to make up the difference.
Despite the enormous growth in gambling in Ireland which sees around €4.2bn punted each year, the betting tax is yielding just €27m per year – roughly the same as it did in 1984. Aside from the fact that at 1%, Irish betting tax is possibly the lowest in the world, the Department of Finance were slow to amend legislation to start taxing online and off-shore gambling. Only in 2015, the Betting Amendment Act was introduced as the government finally caught up with global internet trends of online gambling and subjected all online bets to the same 1% tax rate.
The government’s failings to push the Gambling Control Bill over the final hurdle, which has been gathering dust for nearly five years, has meant that the sector is still not properly regulated and a lot more funding could have been obtained to benefit the sporting sector or indeed, other sectors in Ireland. An independent report, commissioned on behalf of the Department of Agriculture on horse racing in 2012, concluded that “analysis indicates that the main potential source of additional funding” for sports organisations in Ireland, “is from the betting industry.” The sport’s semi-state administrative body, HRI, has argued that the current tax rate of 1 percent, which is absorbed by bookmaking firms, should be increased to 2.5 percent with the extra charge being passed on to customers. There has been an unforgiving failure by the government to implement an effective, equitable and comprehensive tax system for the betting industry. Despite having their own financial motive to lobby the government for regulation reform, even HRI have failed to persuade government officials to respond to the findings of the commissioned report. While the government have been dragging their feet in reforming betting tax, the biggest losers of the lot are the sectors in Ireland desperately in need of additional funding and struggling to provide basic services to Irish citizens.
Two very significant issues are at play here. Why has the government not resolved the gaping hole in the untapped betting industry by taxing it further in line with the rest of the world, and why are there just two (highly profitable) sports reaping significant financial benefits from the state, above other sports? The answer, it seems is less to do with broader objectives for the Irish economy and may be more closely linked to handshaking and punting at Punchestown.
Aoife Brady – Sports Writer
