Horse Racing Ireland this afternoon released a statement from Chief Executive Brian Kavanagh in response to calls from the Irish Bookmakers Association for an investigation into spending by racing's governing body.
IBA earlier claimed that a report by consulting firm KMPG showed dramatic increases in spending by HRI since 1998.
The statement from Brian Kavanagh, Chief Executive of Horse Racing Ireland read:
"The press release issued today by the Irish Bookmakers Association (IBA) either misunderstands or misrepresents the way in which the administration of Irish racing has changed since 1998.
The IBA statement contains a series of financial and other comparisons covering the period 1998 – 2008 and presumably the 1998 figures are those of the Irish Horseracing Authority, as HRI was not established until 2001.
It is effectively comparing figures across completely different organisations and thus the comparisons are fundamentally flawed and misleading.
It is clearly a smokescreen designed to deflect attention from the real issue which needs to be investigated, namely the declining tax contribution from betting to the Exchequer despite rapid and sustained growth in the sector.
It is the stated intention of the Government to introduce legislation to address the level of tax being secured by the Exchequer from betting and to deal with the increasing trend for bookmakers to route their betting income offshore and online to avoid the payment of betting duty.
The key figures are:-
· Ireland has the lowest rate of betting tax in the world – 1% of turnover, compared to 15% in France, 7.7% in Australia, and approximately 3% in Britain.
· Betting is not subject to VAT and is a tax free activity to the punter – for every €1000 spent on betting, the Exchequer receives €10, compared to €580 for an equivalent spend on petrol or €240 for an equivalent spend on beer.
· In the last ten years, betting in Ireland has increased from circa €1.3 billion to circa €4.5 billion, yet the take to the Exchequer has fallen from €68m in 2001 to €31m in 2009.
· It is estimated that one third of all betting in Ireland (approx €1.5 billion) is now routed offshore out of Ireland to avoid the payment of betting duty.
Since HRI was established, it took over all of the functions of the Irish Horseracing Authority, many of the functions of the Turf Club, and Tipperary and Fairyhouse have been added to its racecourse division greatly increasing its responsibilities and workload. Furthermore, fixtures increased by 33% from 258 in 1998 to 342 in 2008 as did all other activity measures within the industry.
HRI has not seen, or been asked to contribute to, the KPMG analysis and so cannot comment in detail on its figures. However on the prize money issue, it is worth noting that for the top five flat races in Ireland this year (i.e. the Classics), HRI’s contribution to the total prize fund of €2.5 million was €20,000 with the balance funded entirely by owners and sponsors.
I completely reject the statement that HRI spending is ‘out of control’. HRI is subject to annual audit by the Comptroller and Auditor General and at no time has its efficiency or effectiveness been called into question.
Our administrative costs have reduced by 28% since 2008 and the number of permanent employees in the HRI group (which includes the Tote, four racecourses and Irish Thoroughbred Marketing) has been cut from 176 to 143 in the same period.
It is untrue to say that HRI is secretive or in breach of Freedom of Information (FOI) legislation, which HRI has always operated effectively without any issues arising. In relation to the IBA, we received an FOI application on 14th October to which we replied on 22nd October.
The request sought thousands of documents and reports from HRI and its subsidiaries covering twelve years, and was rejected as it represented an unreasonable interference with the work of HRI, a rejection which is allowed for in the FOI legislation. The IBA’s revised application is being considered and will be dealt with in accordance with the provisions of the legislation.
In conclusion, HRI believes that the horseracing and greyhound racing industries can be and should be fully funded from betting duty by addressing the anomaly of the very low return which the Exchequer gets from betting and applying existing legislative provisions to all forms of gambling in Ireland."
