Greg Ogle: South Australian needs a gaming tax to stop online bookmakers channelling profits through offshore tax havens
With the AFL footy finals well under way, we are hoping that this will be the last final series where online bookmakers can take bets from South Australian punters and channel them through virtual gambling tax havens, thus avoiding paying gambling taxes in this state. It is weird, but currently when South Australians bet on the game from a lounge in Glenelg or shack on Yorke Peninsula, their Crows bets will be recorded as being made in Norfolk Island or Darwin or wherever the bookmaker is licensed, and the bookies’ winnings will be taxed there.
You have to wonder why an international corporation whose Australian headquarters is in Brisbane would hold a bookmakers’ licence in Norfolk Island. And why three of the biggest online bookmakers in Australia are licensed in the Northern Territory. Both those jurisdictions have ridiculously low caps on gambling taxes - $550,000 in the case of the NT, which is around 0.1 per cent of the revenue of the biggest online bookmaker. These corporate bookies pay federal income taxes, but gambling has always attracted an extra state tax because it is a regulated market that allows for super-profits, and because it causes harm that costs the community as a whole.
When corporate bookmakers register in gambling tax havens, it is not fair to local bookies and “bricks and mortar” betting venues in South Australia who are paying local taxes. And it is not fair to the South Australian community who are wearing the problems from gambling — but are not seeing any of the revenue.
For this reason SACOSS welcomed the State Government’s Budget announcement of a 15 per cent wagering tax on all bets cast in South Australia – regardless of where an online bookie’s licence may be held. This is a good tax to ensure profits from South Australian betting are taxed in South Australia, and can be directed to services for South Australians.
It is also important that a proportion of the wagering tax will be put into the Problem Gamblers Rehabilitation Fund — a long overdue recognition of the problems that sports and race betting can cause. For many people who are not betting more than they can comfortably afford, having a punt on a race or game is simply recreation and no drama.
But for some the social, economic and psychological pressures are greater and the losses are much more serious. And either way, the big winners will be the bookies.
The corporate bookmakers’ reaction to the proposed wagering tax has been to launch a scare-campaign in defence of their privileged tax position. That campaign includes some fairly dubious claims. For instance, there is no way a 15 per cent tax can lead to 40 per cent reduction in odds. And most importantly, we need to be clear – this is a tax on bookies’ profits, it is not a “punter’s tax”.
There is one claim though in the betting corporations’ campaign that is worth attention. There is a genuine issue around the potential competition they face from overseas online bookers who pay no tax in Australia and are not subject to our (minimal) gambling regulations. That is not fair competition either, and it is even more dangerous for punters and our community.
If the gambling tax system was fixed, and if there were stronger harm minimisation measures around things like restricting inducements to bet and having reasonable limitations on advertising, then SACOSS would be keen to work with the gambling industry to ensure that there were strong barriers to accessing illegal overseas bookmakers. The recommendations of the recent O’Farrell report into illegal overseas gambling are a start, but the protections could be much stronger.
Ultimately though, a big part of a successful response to illegal overseas betting sites will be the reputation and social licence of Australian-based operations — making punters want to go with registered Australian bookmakers where they can know there are covered consumer protections and rights.
However, that social licence is undermined by corporations hiding their takings in gambling tax havens, by mounting scare campaigns in defence of those tax measures, and by other inappropriate corporate behaviour (such as saturation advertising).
In short, if the gambling industry in Australia wants support — it needs to be worth supporting. And in the meantime, State Parliament should pass the legislation to establish the Wagering Tax.
Dr Greg Ogle
Senior Policy Officer at SACOSS
This article was originally published by AdelaideNow 13/10/16