Paddy Power may be forced to move offshore
According to reports Paddy Power could be seriously thinking of leaving Ireland. Chief executive Patrick Kennedy admits he is considering moving operations offshore, if the tax burden in Ireland continues to go up.
Despite high street betting turnover being up, in 2009, Paddy Power reported a 15 per cent decline in pretax profits, despite having nearly a third of Ireland’s sport betting market.
Just a 1% increase in tax on betting turnover would remove €2.5m from the company’s annual operating profits. The group plans to expand further over the next few years, so this is even more of a problem. They plan to employ about 250 more people to keep up with the increasing popularity of online sport betting.
Going offshore could cut their tax problem in half. William Hill did that last year and gained a big advantage over their competitors. Paddy Powers may be forced to move.
“This is a very competitive, cut throat market,” said Kennedy. “The gap between doing well and underperforming is very, very narrow. You can’t take too many structural impediments to your cost base, and that could lead to the tipping point.”
Kennedy stressed that the company was not looking for a reason to leave the country and said that the group retains a “strong commitment” to Ireland.