Shares in Paddy Power Betfair fell 5%

The shares of the company decreased by almost 5% after the country announced its plans to double the betting tax.

Ireland.- Shares in Paddy Power Betfair fell approximately 5% on Tuesday after the Finance Minister of the country announced the government’s decision to double betting tax levy from 2% to 1%, starting January 1, 2019.

The company said in a statement that if the increased rate had applied to its sportsbook stakes and betting exchange revenues in the 12 months ending June 30, it would have paid an extra €23 million in betting tax, Independent reported. Based on Davy Stockbrokers’ 2019 results forecast for Paddy Power Betfair, the tax is set to affect the company’s earnings by 4.3%.

Joe Quinn of Davy Stockbrokers said that Ireland is an important market for the company and that they estimate that the region represents 9% to 10% of group revenues, mainly through its retail division. “Furthermore circa 10pc of European online revenue is derived from the country,” Quinn added.

Ireland’s Minister for Finance Paschal Donohoe said during the announcement that the government’s priority has been to level the playing field by extending the tax to remote bookmakers and exchanges.

“This was achieved in 2015 and I believe it is timely to increase the tax from 1% to 2% on amounts wagered in the state. In addition, betting duty on the commissions earned by intermediaries, or exchanges, will increase from 15% to 25%. These increase will take effect on January 1st and will generate an additional €40 million in 2019 and €52 million in a full year,” said Donohoe.