14 - 20 December 2000

Paddy Power considering Malta for internet operation

by Franco Aloisio

Malta is being considered as the frontrunner to serve as the internet operational base of the Irish bookmakers Paddy Power, sources said.
Paddy Power Bookmakers has decided to relocate its internet betting operation offshore early next year to avoid Irish betting tax of five per cent,. The move will cost the Irish Exchequer millions of pounds in lost taxes and follows Finance Minister McCreevy’s decision not to reduce betting tax in the Budget, despite intensive lobbying by Irish bookmakers.
The move is likely to be followed by a host of smaller Irish bookmakers and could prove a precursor to Paddy Power moving its lucrative telephone betting operation offshore. Paddy Power managing director Stuart Kenny said the company would make a final decision on the location of its Internet base by February.
The Internet centre is likely to be based in either Malta or Jersey. According to Paddy Power, it made the decision in reaction to the recent Budget. Bookmakers had sought reductions in Irish duty to between zero and two per cent.
This would have allowed Irish bookmakers to compete with rivals such as William Hills, which offers tax-free betting from a low-tax base in Gibraltar.
Brian O’Farrell, administrator of the Irish Independent Betting Offices Association, confirmed several other independent bookmakers were considering offshore locations.
Paddy Power’s website generated £728,478 in sales from its 2,666 active customers in its first 10 weeks of trading to June 2000. Since then, active users have increased to 5,887 and revenues are almost certain to rise as the Internet increases in popularity.
Moving its telephone arm offshore would impact even more severely on betting revenues.