Ladbrokes, like many commercial bookies, is sitting pretty in Australia. In an earnings call a few weeks ago, the company, now officially known as Ladbrokes Coral, after its landmark merger with another top UK bookie, Gala Coral, said that stakes were up 68 per cent here, while net revenue was up 67 per cent.
“In Australia, we continue to knock it out of the park,” said CEO Jim Mullen, who had earlier in the year praised his company’s growth in its Australian digital division and in multi-channel sign-up.
Mullen was keen to emphasise that he remained bullish about the Australian market, despite forthcoming regulatory changes and the possibility of the dreaded point-of-consumption tax.
What the Point of Consumption Tax?
Point-of-consumption means online betting companies will have to pay a tax on all wagers taken from players residing in a certain state, rather than simply paying a tax of gross gaming revenue to the state in which their operations are based.
South Australia has already resolved to introduce the system. From July 1 this year, the state will levy a 15 percent tax on all bets placed within its borders, an emulation of the scheme adopted by the UK at the beginning of 2016.
This is bad news for the Northern Territories which has forged a name for itself as a licensing jurisdiction for a great deal of corporate bookmakers due to favorable tax rates offered.
Worse news for NT is that the federal government is mulling adopting the same idea and imposing that 15 per cent tax rate across the board, which would finish the NT as a gambling jurisdiction.
Why Not Tax Commercial Bookies Harder?
The corporate bookies have experienced all of this in Europe over the past five or six years, as individual European states have opted to license, regulate and tax online gambling in greater numbers.
Extra taxes have stymied growth and innovation, for sure, but bookmakers have largely weathered the storm, through consolidation and cost cutting.
What’s wrong with taxing bookies, and especially foreign ones, you ask? Well, bookmakers already pay a lot of tax in countless jurisdictions, and the more they pay, the less competition and disruption there will be, and that means less choice and fewer benefits for punters.
For now, Mullen doesn’t see any immediate changes on the horizon in Australia.
“With regard to the strategy for Australia, I mean, frankly, we’ve been delighted with the growth rates that we have there,” he said. “We didn’t see as an executive any reason to change that. Now we might get to a point if we are seeing a slowdown in that growth in rates that we may decide to change the approach. But we decided that, that wasn’t the case at the moment.”
If point of consumption happens across the board, though, Mullen says his company will “deal with it,” as it has in Europe, but he also adds it has “some mitigating plans in place to address that.”
Those “mitigating plans” are likely to impact the punter, in terms of curtailed bonuses and promotions and less generous odds.
The government is about to ban in-play betting, not to mention online poker, but the point of consumption tax may be an even harsher blow against consumer choice in this country.