Online bookie reveals impact of wagering tax

AUSTRALIA’S biggest online bookmaker has revealed the significant impact new wagering taxes will have on its profit margins as it commits to offset the losses by growing its market share.

The parent company of Sportsbet, Paddy Power Betfair, revealed the hit when releasing its first-half results in London overnight on Wednesday.

“In recent months, (Australian) state governments have confirmed their intentions for introducing point-of-consumption taxes,” the company said, adding that the taxes would cost the equivalent of about 13 per cent of revenue from next year, it said.

Amid growing community unrest over the pervasiveness of online gambling, Victoria and New South Wales have followed South Australia in introducing point-of-consumption wagering taxes, with Queensland to follow in October.

Paddy Power Betfair said Sportsbet’s earnings before interest, tax, depreciation and amortisation – a key profit measurement – was about 35 per cent of revenue now, meaning that for every $100 gambled, the bookie chalks up earnings of about $35.

The new taxes would “impact materially on Sportsbet’s profits … (but) will have a much greater impact on many of our competitors who currently operate at lower margins due to having less established brands and lack of scale”, the group said. It reported a 4 per cent rise in first-half profit to £106 million ($183.6 million). The results also highlighted that revenue in Australia increased 19 per cent.