FTSE 100 bookie Paddy Power Betfair stocks took a severe hit, falling 5 percent as Ireland doubled down on its gambling taxes. Over £250 million was wiped from the company’s valuation when the Irish government revealed its tax plan. The largest operator across the Irish Sea, Paddy Power Betfair’s annual betting tax bill will increase by at least £20 million. Finance minister Paschal Donohoe said that doubling gambling tax from 1 percent to 2 percent for both retail and online bets from 2019 will help increase Irish revenues. Duties levied on gambling exchanges are also expected to increase. Gambling leaders are warning the authorities that the steep tax increase could “kill the industry.”
Paddy Power Betfair’s rival GVC, which owns both William Hill and Ladbrokes Coral, remained unaffected post the announcement because of a smaller market share. GVC, the biggest gambling company in Britain rolled out its corporate social responsibility objectives on Tuesday. It included a call to ban gambling advertisements on TV before 9 pm.
For Paddy Power Betfair, 2018 has brought many unpleasant surprises. Earlier this year, its Australian brand Sportsbet suffered because of dramatic changes to the local point of consumption taxes. The gambling behemoth appears to have a dark macro outlook, according to Investec analyst Alistair Ross. The company has landed in hot waters around the globe, especially with gambling advertising bans in Italy and its hazy strategy in the US. Rising competition in the gambling sector could also hurt the company’s overall health.
The Irish Bookmakers Association commented that the finance minister’s announcement had signed over 1500 jobs for P45s in the independent bookmaking sector. Sharon Byrne, chairman of the association, emphasized that the decision could ring the death bell for the industry. Byrne said that the government’s decision is “extremely disappointing” and it was taken by politicians who never engage with the industry or understand the consequences of the tax raise on jobs.