I will try to answer all the questions if I can. In reply to Deputy Moynihan's question, this is a more complicated area than many realise. Many countries are trying to extend tax or levies to online commercial activity, not just gambling or betting. A number of countries are interested in getting revenue from online betting, linked with horse racing and greyhound racing. They are watching how we are going to do it. We will introduce legislation which will require bookies to get a licence to take an online bet from an Irish punter. The only way to police that is if one licenses people for the activity in the first place. If one does not do that, then one is trying to monitor the amount of online betting which is going on, which is virtually impossible unless one has the co-operation of the companies taking the bets.
There will be a licence fee that companies such as Paddy Power, Boyle Sports, Ladbroke's or whoever wants to take online bets will have to pay in order to be able to legally accept a bet from an Irish punter. Then they will have to declare their online betting turnover from people who are betting in this country. The turnover will be equivalent to the turnover from betting shops in terms of the 1% levy on the entire turnover. If there are cowboy operators who want to take bets without paying a licence fee and being properly regulated then we will have to shut them down. How we do that will be a challenge for us but we think it is possible to do it.
Online betting activity is impacted upon in different ways in various countries depending on the policy and regulation approach. Having spoken widely to stakeholders it appears that the best way to do it is to license it. All of the big bookmakers will pay for a licence. They will want to be part of the system rather than trying to buck the trend. Most punters will want to bet with the big names they trust given that they provide credit card details rather than with undercover or black market bookies on the Internet who are looking to take a bet and give out winnings without having to pay a levy. To an extent this is a pilot project. We are going to review it at the end of the year to see if it works. I think we should be charging a higher levy, in terms of the percentage of turnover. I have spoken to the Minister for Finance at length on this matter. We want to get the online revenue stream working properly with proper regulation and enforcement capacity to deal with it. None of our bookmakers who is playing by the rules should be disadvantaged and put in an uncompetitive position versus people who are not. That would be totally unacceptable. Once we get the system working we will review it at the end of the year. We will also review the rate of the levy if we think we should increase our revenue stream from online betting.
We are also planning to take a revenue stream from online betting exchanges. These are different from bookies. Betting exchanges, such as Betfair, facilitate two punters to bet against each other. A different tax regime will apply to them. Instead of taxing turnover we will ask for 15% of commission turnover. For every bet a betting exchange puts together it charges a commission. We will be taxing that commission at 15%, which is based on a similar tax in the United Kingdom. That is how we will get a revenue stream from online exchanges. We will get 1% of turnover from online bookies.
We will monitor this carefully. This year, we will take in about €27 million through the betting levy from bookies' shops. Next year, if we had the full year we would raise about €12 million from online activity by bookies and another €2 million from betting exchanges. They are guesstimates, but I think they are educated guesses. Because the legislation will only be put in place in the first quarter of next year, we will probably only get revenue in the second half of the year. I suspect there will be somewhere between €6 million and €10 million of extra revenue on top of what is already there.
The legislation will be published in January. I have already seen a draft. I want to bring it forward as quickly as possible so that we can pass it and get the new revenue stream into the Exchequer.
Let us visualise a graph showing betting duty, going back to 2001. In 2002, we were bringing in €68 million per year from betting duty. At that time, the duty was 5% of turnover. It went to 2% of turnover and then to 1% of turnover during the so-called party years when betting turnover was increasing each year. We went from a 10% rate to 5%, then to 2% and then to 1%. The revenue stream was maintained for a while because of increased activity but as economic circumstances changed the revenue stream decreased and the take from the 1% levy this year will be about €27 million. This comes nowhere near matching the financial commitment we need to make to keep the racing and greyhound industries intact.
This is not just an Irish industry. If it were we could manage it differently. In tough times we could reduce expenditure on it and everyone would just have to cope with that, and we could increase revenue when times were better. If we cut revenue and reduce prize money below a certain point, particularly in Irish horse racing, top race horses would be removed from Ireland. Race horses are movable commodities. They are often owned by non-Irish nationals who invest huge amounts of money in breeding and training their horses here because they see Ireland as the best place in the world to do that. They could quite easily move their horses to France, the UK, Australia or the United States. Breeders and trainers in those countries are trying to entice them to do that all the time. My fear is that in an effort to save money we will cut below the breaking point where people will decide to take top horses out of Ireland and place them somewhere else. The financial incentives we would need to get them back would not be affordable at any stage in the next ten or 15 years.
We are world leaders, particularly in horse racing. We are second to none. We are the biggest exporter of race horses in the European Union. This year, we will export approximately €150 million worth of race horses. As recently as this week, a senior Government official from Inner Mongolia was in Ireland looking to buy thoroughbred mares to breed in China, because they are trying to develop an industry there. All over the world, people look at race horses in Ireland as the standard setters. Our jockeys, breeders and, most importantly, trainers set the standard for the world. If we are to maintain that reputation we must spend money.
How do we create a situation where the industry is, by and large, self-financing through the betting that takes place on the back of the industry so that we do not have to compete for funds with other very vulnerable sectors which Deputies have, rightly, raised this morning? The context of this is important. There have been significant cutbacks in a series of areas. We are reviewing some of the disability payments, as the Deputy knows, because we think a mistake was made. As far as I am concerned, if one makes a mistake one should set about correcting it.
We get back far more than we give to the racing industry, financially as well as in a series of other ways in rural communities. The horse racing industry is worth about €1.1 billion and greyhound racing is worth between €300 million and €400 million. If we are to keep that industry, and all the people who are employed by it and enjoy it, intact, we need to maintain a funding stream. If we fall below a certain breaking point we will undermine the foundations of the industry. That is the point we are at in horse racing in Ireland.
I do not want to over-egg this argument, but let us look at what they are doing in France at present. They are trying to entice horses from Ireland, and investment that traditionally comes to Ireland from all over the world, into France. This year, the betting turnover in France is about €9 billion. The state will have a tax take of €1.5 billion from that and will spend €750 million in direct supports to horse racing in France. In Ireland we have a turnover of €4 billion, we will have a tax take of €27 million and we will spend about €45 million on horse racing. That compares with €750 million in France, our direct competitor.
It is important to understand that context, as well as the context of the budget, cutbacks and the difficulties families are facing. If, in four or five years, we have a small-time racing industry in Ireland rather than being an international leader, people will look at me and ask what I was doing when I allowed funding to fall below a certain tipping point from which we did not manage to come back. That is why I am so protective of the industry at this point.
We have made a cut. Every sector has to deal with less. Coming down from €70 million to €56.5 million per year in supports for these two industries is a significant drop. At some stage we need to put a floor under that drop. I have provided a response with regard to how we will deal with enforcement and regulation.
A number of questions were raised with regard to welfare of race horses and generally. One of the areas in which I have increased funding this year is for animal welfare organisations which are coping with increased numbers of dogs and horses. There is a massive amount of voluntary work being done in this regard and in the bigger scheme, the funding being provided by the Department is very small. However, it is important that we signal to the people doing significant voluntary work and putting private money into caring for animals that they deserve support from the Department. We have also provided a lot of money to local authorities this year to deal with an increase in the number of abandoned horses that need humane treatment. We also intend to introduce new animal welfare legislation, hopefully next week, but I am not sure the Office of the Attorney General will return it to us by then. If not, the legislation will be introduced early in January. This legislation will introduce new legal responsibilities and codes of conduct for animal welfare organisations. It will also introduce regulations that not only make it illegal to organise a dog fight but make it illegal to attend a dog fight. Until now, it has been hard for gardaí to get convictions in cases where they raid a venue where a dog fight is taking place, but in the future it will be illegal to attend a dog fight. If people are aware of specific instances of cruelty or maltreatment of horses in the race horse industry, they should report that to the Garda. They do not need to wait for legislation in that regard, as there is legislation that can be used to deal with that. However, we intend to improve animal welfare legislation early in the new year.