The long awaited Irish Betting (Amendment) Bill 2012 (the Bill) was published last month by the Irish Minister for Finance, Mr Michael Noonan T.D.

If the Bill becomes law, it will introduce a new licensing and taxation regime for remote (online) bookmakers and betting intermediaries (betting exchanges). It will also introduce changes for land-based bookmakers. The Bill has been expected since May 2010 when the then Taoiseach, Brian Cowen, (the Irish Prime Minister), announced that the Irish Government intended to tax online betting and to introduce licences for overseas betting providers.

Upon publication of the Bill Minister Noonan stated:

This bill will bring into place a fair and equitable licensing and regulatory regime for all bookmakers and betting intermediaries. This bill, once enacted, will allow for the extension of betting duty to remote bookmakers and will ensure that all bookmakers activities offered in the State are taxed equally. The fact that off-shore bookmakers were not subject to the betting levy represented a competitive disadvantage to on-shore firms and also narrowed the State's yield from the levy.

Main Points of the Bill

  1. Applications can now be made to the Revenue Commissioners for a remote betting licence and/or a remote betting intermediary's licence. A remote betting intermediary is defined as "a person who, in the course of business, provides facilities that enable persons to make bets with other persons (other than the first mentioned person) by remote means". The Bill defines "remote means" as including "the internet, telephone and telegraphy (including wireless telegraphy)". Essentially, the same requirements exist for remote licences as a land-based bookmaker's licence.
  2. The excise duty for a remote betting licence and a remote betting intermediary's licence will be €5,000. The relatively low licence fee is presumably designed to attract overseas providers to apply for a licence in Ireland, thereby bringing them within the taxation net in Ireland.
  3. A company can now apply for a bookmaker's licence in addition to an individual. A company's managing director, chairperson, CEO or persons acting as such can be held personally liable for any breaches of the Betting Acts 1931 to 2012. Those persons must apply for and hold a Certificate of Personal Fitness (CPF) from the Superintendent of the Garda Síochána (a high ranking Irish police officer).
  4. A bookmaker's licence will also allow the bookmaker to accept bets by remote means (e.g. telephone) provided that the annual value of all such bets does not exceed the lower of €200,000 or 10% of the bookmaker's turnover. A remote licence is required if remote bets exceed the aforementioned threshold. Land based bookmakers can accordingly compete with online bookmakers without having to apply for a remote licence provided they trade within the caps.
  5. The 1% turnover tax will be extended to remote bookmakers. Provision was made in the Irish Finance Act 2011 for the taxation of remote bookmakers and betting exchanges, subject to a Ministerial Commencement order. The turnover tax model rather than a gross profit tax will no doubt be the subject of much debate. It is understood that the existing betting tax regime brought in €27 million to the Irish Exchequer in 2011 and is expected to raise €26 million this year. Commentators have said that the extension of the duty to online operators could add as much as €14 million to that amount in a full year, much needed revenue for the Irish State.
  6. A 15% commission tax will be introduced for remote betting intermediaries.
  7. Surprisingly, Ireland has not followed the lead of the UK by removing the prohibition on enforceability of bets in court: wagering contracts remain void. However, a Superintendent of the Garda Síochána can refuse to grant a CPF if a bookmaker has "unreasonably refused to pay sums due to persons who had won bets".
  8. A person must be a licensed remote bookmaker to carry on business as a remote bookmaker from a place outside Ireland by means of an internet website that may be accessed by a person from a place in Ireland. Remote betting intermediaries must also have licences to carry on their business. This means that unless remote operators have an Irish licence, they must block access from people in Ireland or risk incurring extensive sanctions. It is expected that remote operators with licences in other jurisdictions will raise concerns with the Government and the European Commission with regard to the legality of these provisions.
  9. Only a licensed remote bookmaker who carries on the business of or acts as a remote bookmaker from a place outside Ireland may communicate or attempt to communicate with a person by remote means (e.g. telephone, internet or telegraphy) for the purposes of the making of a bet or bets. The same licensing obligation applies to remote betting intermediaries. The Bill defines what it means for a person to "communicate" with another person but the definition will be the subject of much debate.
  10. Contravention of the above mentioned prohibitions will allow the Minister for Justice and Equality to serve what is known as a "Notice". A Notice is a document which specifies the contravention and sets out the steps to be taken for the purposes of securing the cessation of the contravention. If the Notice is contravened, the person shall then be guilty of an offence and shall be liable to substantial fines.
  11. In circumstances where bookmakers, remote bookmakers or remote betting intermediaries are believed to be in contravention of certain prohibitions under the Betting Acts 1931 to 2012, the Minister may make an application to the District Court for the following orders:
  1. An order that credit institutions cease conducting business with the bookmaker, remote bookmaker or remote betting intermediary;
  2. An order that advertising in the State on behalf of the bookmaker, remote bookmaker or remote betting intermediary be prohibited;
  3. An order that any sponsorship of a sporting event by the bookmaker, remote bookmaker or remote betting intermediary be prohibited; and
  4. An order that telecoms providers and internet service providers prohibit access to the websites of the offending remote bookmaker or remote betting intermediary. These are very significant orders and there is no doubt that they are intended to act as a major deterrent. Enforcement will however be key and the enforcement mechanisms set out in the Bill are novel and interesting features.
  1. The Bill provides for prosecutions in absentia, which will deal with prosecutions against overseas bookmakers who fail to present themselves before an Irish court.
  2. A Register of Licensed Bookmakers and of Remote Bookmaking Operations will be published on the internet by the Revenue Commissioners.
  3. Carrying on business as an unlicensed bookmaker and/or remote bookmaker and/or remote betting intermediary constitutes an offence. In addition, persons holding themselves out as a bookmaker and/or remote bookmaker and/or remote betting intermediary constitutes an offence. Persons guilty of such an offence could be liable for fines of up to €150,000.  

When Will the Bill Become Law?

It is expected that the Bill will become law in early 2013, subject to any amendments made by the Houses of the Oireachtas (Ireland's upper and lower Houses of Parliament), and amendments that may be required by the European Commission. Certain sections of the Bill have to be notified in draft to the European Commission in accordance with the Technical Standards and Regulations Directive 98/34/EC, as amended by Directive 98/48/EC. The Directive is intended to assist in avoiding the creation of new technical barriers to trade within the Community. It requires Member States to notify technical regulations to the Commission in draft, and then generally to observe a standstill period of at least three months before adopting the regulation, in order to allow other Member States and the Commission an opportunity to raise concerns about potential barriers to trade.

Conclusion

Almost all parties in Ireland have long been in agreement that the current gambling laws which date back to 1931 do not adequately address online gambling. The Bill is to be generally welcomed as it introduces significant reforms in terms of creating a proper regulatory and licensing regime for remote bookmakers and remote betting intermediaries. The Minister argued that the new licensing system for remote operators will serve the important public interest in preventing crime and protecting consumers against fraud and will ensure that all businesses offering betting services from Ireland or to persons in Ireland are regulated appropriately.

Ireland as a jurisdiction relies heavily on foreign direct investment. The horseracing sector, including betting operations, is seen as a key element of the overall economy. The government hopes that by creating a regulatory environment for online gambling operators, significant down stream revenue from investment by major gambling firms in Ireland will be generated. It is no secret that such major firms prefer to base themselves in a properly licensed and regulated regime.