Dáil Éireann díospóireacht -
Wednesday, 11 Jun 1975

Vol. 282 No. 1

Racing Board and Racecourses (Amendment) Bill, 1975: Committee Stage.

Section 1 and 2 agreed to.

SECTION 3.

Mr. O'Malley

I move amendment No. 1:

In page 2, after line 27, to insert a paragraph as follows:

"(b) The Principal Act shall be regarded as always having included the words added by paragraph (a) hereof; and".

The purpose of this amendment is to rectify retrospectively the position which had existed from the passing of the 1945 Act up to such time as this Bill is passed, in which there appears to have been a different statutory provision in relation to the deduction of levies from what was the actual position in practice in relation to the deduction of the levy. Subsection (1) of section 27 of the Principal Act of 1945 simply read:

Every person who, is a licensed bookmaker, enters into a course bet on or after the commencement of this section shall pay to the Board a levy calculated at the rate of the prescribed percentage for the time being of the amount of such course bet.

That was the end of the subsection. The clear meaning of that is—and I do not think it is in dispute—that the amount of levy payable to the board on that winning bet and, therefore, the amount that could be deducted by the bookmaker was 5 per cent of the stake wagered in relation to that bet.

The practice has been for a good many years past and possibly since 1945 for bookmakers, when paying a winning bet, to deduct the levy from the total of the stake which is being returned to the winner. The purpose of paragraph (a) of section 3 of this Bill is to regularise that position. If it did not need regularising and putting into statutory form, there would have been no need for paragraph (a) of section 3. There is a need and that is why it is there. What I am pointing out to the Taoiseach is that this paragraph (a) and the addition of these words to allow for the deduction of the levy from the total returned to the punter will regularise the position as, and from the coming into force of this Bill when it is enacted, but it will do nothing to regularise the position that has existed, apparently improperly as far as the statute is concerned, between 1945 and the passing of this Bill, because it has been, as I said, the invariable practice for a bookmaker to deduct 5 per cent of the total return to the winning punter. It seems to me that there was no statutory authority for that, even though it was a universal practice.

If there was no statutory authority for it, it seems to me that the punter would be entitled now to seek back from the bookmaker in the case of every winning bet the difference between the total amount of levy deducted and the amount of levy that would have been appropriate to the stake only. That would run into millions of pounds over a 30-year period. I do not think it is feasible or possible that that money could, in fact, be recovered now at this stage. That is why I have put down this amendment to cover that kind of situation, which would be simply to the effect that the principal Act shall be regarded as always having included the words added by paragraph (a) hereof which are the words to the effect that the levy is payable on the total amount of the stake and the winnings.

I presume that, even though a punter would be entitled under the statute to demand back the excess levy which was deducted from him by the bookmaker because the whole transaction is founded on a bet, which is an illegal and void contract anyway, no court, one imagines, would seek to indirectly enforce a bet, which is, what an action for the recovery of excess levy might be construed by a court as amounting to.

Nonetheless there is a situation which is quite anomalous. That it is anomalous is proved by the fact that it was found necessary in this Bill to add the words contained in paragraph (a) of section 3. If the situation had been that the previous practice was in order and in accordance with statute, there would have been no need to add the words which are here. By adding the words that are here and not making it retrospective, this House would, in effect, be saying: "Something improper and illegal took place for 30 years but we are not doing anything about it. We are just rectifying it as and from now for the future." In the case of very substantial bets the amount of the levy would be considerable, particularly in respect of a horse which was backed at generous odds, for example a winner at 50-1 or 100-1. The stake would be very small but the winnings would be very large and the combination of the winnings and stake would be very large. If somebody put £100 on a horse at 100-1—I know it does not happen very often on an Irish racecourse—the winnings would be £10,000. The practice hitherto has been to deduct the levy at 5 per cent on the total returnable to the punter which would in this case be £10,100. Five per cent of that is a very substantial amount of money—it is over £500— whereas by statute the entitlement of the bookmaker and the right of the punter was that the 5 per cent could have been deducted on the stake only, which was a £5 levy. The difference, therefore, in this example that I have given is a sum of £500, which is a considerable amount of money by anyone's standards.

It may well be that some punters will consider taking legal action or attempting to take legal action in these circumstances when they become aware of the fact that this section 3 (a) rectifies what is now wrong. In the example I have given the bookmaker is compelled to deduct levy amounting to £505 rather than £5 which is a bookmaker's only entitlement at the moment. It is a serious matter.

I adverted to it on Second Stage and the Taoiseach replied to the effect that he read out an extract from a document which the bookmaker signs for the Racing Board at the time that he is being given a permit. In the document there was an undertaking on the part of the bookmaker, as a consideration for his getting the permit, that he would deduct, not just on the stake but on the total returnable to the punter, a 5 per cent levy. This may well regularise the position as between the bookmaker and the Racing Board. It does not regularise the position as between the bookmaker and the punter who in the example I have given is still entitled under statute at least to claim the £500 excess levy back from the bookmaker which the bookmaker deducted from him. I am not to be taken as suggesting that the bookmaker, in deducting levy in accordance with what has always been the normal practice, acted improperly or that he did not return it to the Racing Board. I am quite satisfied that he did and that he was only doing it in accordance with his signed undertaking with the board on the obtaining of his permit.

Nonetheless, as between the bookmaker and the punter there was an over-deduction in the example I gave of £500. The only bar there might be legally—and I am not certain that it would be a total bar if this amendment is not accepted—to the punter suing for the recovery of the £500 excess levy in that instance would be a possibility that the court would hold that the action was basically founded on a bet which, as the House well knows, is totally illegal so far as the civil law is concerned. It is void and unenforceable, out of which, in the view of the court under our general law of contract, no rights of any description could accrue, and the court would possibly take the view that if someone wants to enter into an illegal contract with the bookmaker or anyone else, he cannot then seek to have rights enforced for him arising incidentally out of what is fundamentally illegal; when I say "illegal" here, I do not want to be accused of saying that it is against the criminal law or anything like that, but the Taoiseach understands I mean "illegal" in the technical contractual sense, not in the general popular sense to the extent of avoidance or unenforceability. It is more than just unenforceable because its side transactions are tainted by the original illegality of the act in entering into the bet. For that reason there is certainly the possibility that a punter taking action would not succeed. That is not the only reason he would not succeed.

On statute, under these two Acts, the 1945 Act and this Bill, on the face of it he has to win because it is proved beyond doubt by virtue of the necessity to put in section 3 (a) into this Bill to amend section 27 (1) of the 1945 Act that the position that had existed from 1945 up to the present has not been in accordance with statute.

The purpose of this amendment is to rectify that situation—to prevent or save actions being taken founded on bets. Where it was generally known and well-known to be the invariable practice that a bookmaker deducted levy on the winning stake, it would be unfair that anyone should seek to take an action in those circumstances. The situation will be rectified by section 3 (a) when this Bill is passed because what is recognised by section 3 (a) as the invariable practice has been the invariable practice since 1945. It is only right and proper that the intervening period of 30 years should equally be regulated by section 3 (a) in the same way as that proposes to regulate the position in the future.

The Taoiseach

I am advised that retrospective amendment in the case is not necessary. It is contended, I believe, that the existing practice is legal and universally accepted because, first of all, the practice is that every racing card contains the notice and I quote:

The existing percentage deduction for levy is 5 per cent or 5p in the £ on the amount returnable to backers, that is, stake and win.

The fact is that this term can be read into the betting contract between the punter and the bookmaker. In addition, as I mentioned on Second Stage, punters are familiar with the practice and I do not think any case has occurred where they have disputed the bookmakers' right to deduct levies from winnings.

Mr. Crowley

They should have the contract only really between the board and the bookmaker.

The Taoiseach

No, the contract is between the board and the bookmaker in respect of his licence and I suppose in respect of the levy he returns but I do not think it is correct to say there was ever a contract, as Deputy O'Malley remarked, between the punter and the bookmaker. As he mentioned, it is well settled that actions of that sort are unenforceable and void, as distinct from the legal and commonly accepted interpretation of the term. As I mentioned earlier, the bookmaker when he gets a permit from the Racing Board signs an undertaking to deduct the total amount being paid on winning bets. That is the practice. The document which I quoted here on Second Stage is the standard form between bookmakers and the Tote. In addition, there is this notice on the race card which, I think, implies and certainly puts punters on notice that the percentage deduction is 5 per cent or 5p in the £ on the amount returnable to backers, that is, stake and win. I am advised it is not necessary to insert the amendment as suggested. The purpose of the amendment which is contained in the Bill is to formalise the existing procedure which has been operated in practice possibly almost since the inception of the board, certainly for very many years.

Mr. Crowley

I understand what the Taoiseach is getting at when he says there would be a certain position made clear but if this was all that was needed up to now I should like to ask the Taoiseach why it was necessary to put in section 3 (a). If what was happening under the 1945 Act was valid up to now, why was it necessary to put in section 3 (a) into the Bill? The point that Deputy O'Malley is making is valid in that any punter, it would seem to a layman like me, would be entitled, unless Deputy O'Malley's amendment were accepted, to sue for having an excess of tax deducted from him. Not being a lawyer, I would not be able to interpret it but it would seem to me to be common sense and reinforced by the need that the drafters of this Bill saw for putting in section 3 (a). If section 3 (a) was not necessary in the 1945 Bill, why is it necessary in this Bill?

It would certainly tidy up the legislation tremendously if Deputy O'Malley's amendment were accepted. It would do away with all ambiguity. We have an obligation in this House, no matter how trivial or unimportant the legislation may seem to be, that the legislation coming out of the House would be tight and unambiguous. I would suggest to the Taoiseach that he would give very careful consideration to the acceptance of this amendment.

Mr. Coughlan

I should like to remind the House and particularly the Members who have spoken for this amendment that when the 1945 Act was being introduced, I happened to be chairman of the Bookmakers' Association. We impressed on the then Minister the significance and importance of the introduction of this regulation to protect us and to legalise our standard of operation. Unfortunately, the man concerned knew little or nothing about the business and his advisers were not very favourable to the profession which I represent. Having had long discussions with the Minister and the Taoiseach at that time, we failed to legalise what we thought should have been in the Bill.

(Interruptions.)

Mr. Coughlan

We had discussions with the then Minister. It was agreed with the Racing Board that we would sign a contract that on all winning bets we would make the appropriate deduction. That does not mean what Deputy O'Malley has misrepresented to this House. Up to two years ago tax deductions applied only to winning bets so that while the bookmaker paid tax on all bets, he collected only on winning bets. Therefore, something that should have been done in 1945 is being done in 1975.

Mr. Barrett

Deputy O'Malley has made the case very well for this amendment. It seems that a flaw existed in the old legislation and I wonder if the fact that a notice appears on every race card in any way regularises the position. What Deputy O'Malley is trying to do is to regularise the flaw. Do Deputy Coughlan and his colleague who put an advertisement in the Press believe that the people on this side of the House know nothing about what they are talking as has been alleged by them?

Mr. Crowley

The advertisement was totally false.

Mr. Barrett

Nobody from this side of the House in any way criticised Deputy Coughlan's profession. Now we find an advertisement in the public Press telling us we know nothing about what is under discussion in this House although the discussion only took place last Thursday and the Dáil Official Report has not even been issued yet. Most of what we said was not even reported in the Press. This kind of carry on by the bookmakers is all wrong.

An Leas-Cheann Comhairle

The Deputy should keep to the amendment.

Mr. Barrett

It is all wrong for that profession to tell some of us here who have been going to race meetings since we were able to walk that we do not know what we are talking about. It is not necessary to be a bookmaker to know all about racing and racing affairs. The attitude of Deputy Coughlan and his colleague —he knows who I am talking about— is totally wrong and unjust when, by the amendment put down by Deputy O'Malley, we are proving our concern and our knowledge of what is under discussion. Deputy O'Malley saw a flaw in the old Act. He has pointed it out very forcibly and very impressively.

The Taoiseach maintains that the fact that the notice appears on a race card more or less regularises the position but acceptance of Deputy O'Malley's amendment regularises the position from a legislation point of view and will protect what has happened in the past in the event of somebody suing for paying huge amounts of tax on the winning portion of the money as against the original stake. Deputy O'Malley gave an example of 100/1. He said this does not happen very often but even on a 5/1, 6/1, 8/1 or 9/1 shot most of the tax which was deducted by the bookmakers was all on the winning content. A strong and very good case has been made for the acceptance of this amendment.

Mr. Power

Could I have clarification on one point? It would appear from the discussion that up to now 5 per cent on all bets placed with bookmakers should have been paid as a levy but the bookmakers collected in tax the levy on the total winning bets. Deputy Coughlan has pointed out that no tax was collected on losing bets. Am I to understand that the correct tax was paid as a levy to the Racing Board while the bookies collected tax which, on the law of average, should have been somewhat less since, if a bookmaker is to remain in business he must take in more money than he would pay out? Am I to understand that bookies collected less tax but, in fact, paid more tax or was the tax that the bookie paid just the tax that he stopped from the punter when he was paying out his winnings or was it the tax that should have been paid on all bets struck?

Mr. Coughlan

Deputy Power, again because of his ignorance of the matter, is misinterpreting the position. The position is that if a bookmaker holds a £100 on a race and does not pay out anything, that £100 is no longer a £100 because he has to pay the tax out of it. He is not collecting tax because nobody collects winnings. This does not often happen, unfortunately, but to off-balance that, he collects on winning bets and very often he pays more tax than he should pay.

The Taoiseach

As Deputy Power will see from the section, it has been the practice that a bookmaker deducts tax—the current rate is 5 per cent— on the total amount paid to a successful punter. In other words, the total stake and win which the punter should get. That has been the practice for I think most of the time that the Racing Board has been in existence. The point that has been made by Deputy O'Malley is that because the proposed section 3 (a) seeks to amend section 27 of the 1945 Act and to formalise this procedure, that a section should be added to provide the amendment would be regarded as having been in the original Act, in other words, that it would apply retrospectively in order to remove doubts. I am advised that this is not necessary. But it has often been the experience in this House that when legislation is introduced, some changes are made to formalise procedure or to remove doubts and this particular section is for the purpose of doing that.

Mr. Power

I am slightly ignorant of the procedure that bookies adopt in regard to the return of levies but perhaps it is as well that one should admit his ignorance rather than feel that one is in a position that one knows everything about everything. My question still remains unanswered as to whether the tax that is returned is the tax that the bookie actually collects on winning bets or the tax which the bookie should have collected on all bets which is returned by way of levy at the moment? If it is the tax that the bookie collects, I maintain that that, if the bookie is to remain in business, is less than the levy that would be returned on all bets because a bookie, if he hopes to stay in business, must take in more money than he pays out.

An Leas-Cheann Comhairle

Is this relevant to the amendment?

Mr. Power

One could go to a race meeting and be involved in racehorses, as I have been since I was able to walk, but one would not be aware of the ramifications of what goes on in the minds of bookies and in the returns of bookies. Most Deputies know that a bookmaker's books should balance. I cannot say if that is always the case but the practice is, as I mentioned here the last day, that the bookmaker gets a betting permit from the board. He gives an undertaking to deduct the levy from the total amount paid on a winning bet. That is what the bookmaker is liable for and that has been the practice.

Mr. Crowley

So there was no obligation on them at all to return any levy on losing bets?

The Taoiseach

They are liable to pay levy on all bets and that has been the practice all the time. The same phraseology as is contained in the proposed section 3 (a), which amends section 27 of the Principal Act, is contained in another section in the Act establishing Bord na gCon.

Mr. O'Malley

I wonder if I could comment particularly in relation to Deputy Power's question? I see the point he is making. Many people may be under the misapprehension that what a bookmaker returns by way of levy to the Racing Board is what he deducts from successful punters. That is not so.

Mr. Crowley

That is what the Taoiseach said.

Mr. O'Malley

If he did, I am afraid that is wrong. What the Racing Board require from a bookmaker and what he is obliged to pay them is what is set out in section 1 of section 27, that is, 5 per cent of every bet that is made with the bookmaker.

In the example I have given of a 100 to 1 winner and a man with £100 on it, the total amount of levy that is deducted by the bookmaker, as between the bookmaker and the punter on that particular bet, is £505, but the amount payable by the bookmaker to the Racing Board in respect of that bet is £5 because the Racing Board under subsection (1) of section 27 of the 1945 Act are entitled only to 5 per cent of each bet that is made, irrespective of whether it is a winning or a losing bet. Therefore, in that particular instance the bookmaker has collected, ostensibly by way of levy from the punter, £505 on that bet but he remits to the Racing Board only £5 in respect of that bet. But in case anyone thinks that the bookmaker makes a profit of £500 on that transaction, he does not necessarily do so, because he also has to pay the Racing Board 5 per cent of every bet which he held on that race, all the other bets being losing bets from the point of view of the punter. He pays 5 per cent on every bet he held. He pays only £5 on that particular bet but he also pays 5 per cent on every other bet.

Other things being equal, the extra £500 levy which the bookmaker deducted from that punter on that particular winning bet would cover, and perhaps more than cover, all the other bets which he held in that race and in respect of which he had to pay levy to the Racing Board. From a bookmaker's point of view, the longer the price of the winner, the better, in the sense that he receives back by way of deduction from the punter a much larger amount of levy than he himself has to pay to the Racing Board in respect of that particular bet.

If a man had a 100 to 1 winner in some race, the probability is that the bookmaker would hold only one bet on that particular horse and would have held a large number of bets on other horses. He would have to pay 5 per cent levy on each of those bets that he held. In theory, over a long time the profit levy or the apparent profit on the deduction in an instance like that would balance out by the apparent loss on the other bets. In other words, if you held several thousand pounds on an even money favourite in the same race which was beaten then you pay 5 per cent on that several thousand pounds. It may be that on a particular race a bookmaker would make a profit vis-à-vis the levy; in other cases he would make a loss. Over a long period, in theory at least, the two probably balance out.

Nonetheless while that is the mechanics of the situation, the additional words here make no reference to paying anything to the Racing Board. Section 3 (a) simply refers to the transaction as between the bookmaker and the punter. If the Taoiseach suggested that the amount deducted from the punter was payable to the Racing Board that would not be correct. Even though in practice it might be correct it would not, as a matter of mechanics, be correct. In section 3 (a) there is no reference to the Racing Board. It regulates only the relationship or position of the bookmaker vis-à-vis the punter. The Racing Board are getting their 5 per cent anyway on all bets. This has always been the practice, and it is not being changed by this Bill, because they are not involved. But because the position as between the bookmaker and the punter is very much involved I would again strongly urge on the Taoiseach that to avoid disputes which must inevitably arise when the position has been brought to the notice of people, as presumably it will be after this Bill is passed, and to regularise the position as between the bookmaker and the punter for the last 30 years, this amendment should be accepted. It would simply have the effect of putting the 1945 to 1975 period on the same footing as the post-1975 period would be.

If there were no problem about this, if the problem did not arise, as the Taoiseach suggested—but I suggest that it did—there would be no need, as was suggested by Deputies Crowley and Barrett, to bring in section 3. What the Taoiseach is suggesting to the House now is that because there is a notice on a race card that solves the problem, everything is all right. I do not think that we could accept that a notice anywhere on a race card would have the same effect and power and precedence as an Act of Parliament. I agree with the Taoiseach that it regularises the position as between the bookmaker and the Racing Board, but it does not regularise the position as between the bookmaker and the punter. We are proposing in section 3 (a) to regularise it for the future, but we are leaving a 30-year gap in which it is not regularised at all. All the notices in the world on race cards cannot overrule what is the statutory position, and the statutory position as it is at the moment is contained in section 27 (1) of the 1945 Act. In other words, it states that a bookmaker is entitled to deduct only on the stake and not on the winnings.

Mr. Cronin

Is it not a fact that under the present arrangement, a punter can rely on his rights under the 1945 Act and insist that he be entitled to pay tax on his wager and no more? I am sure Deputy Coughlan will agree with me that this has been accepted by some bookmakers—the accepting of tax on the placing of the bet——

Mr. Coughlan

On the course?

Mr. Cronin

Is not the punter entitled in the present situation to insist upon his rights under the Act as it stands?

Mr. Coughlan

He would seem to have those rights.

Mr. Cronin

He has those rights. He is entitled to them under the Act as it stands, without amendment. He can insist on paying tax on his wager and no more. If he should win no further tax should be deducted. What is in operation is an arrangement of convenience between the bookmakers—an illegal arrangement if you like—and the Racing Board, that tax as a lump could be deducted from the winning bets only. I would like to know what happens to tax in cases where the punter will pay on his placing of the wager. Is that tax returned to the Racing Board? This practice is in operation and the punter is entitled to insist upon it.

Mr. Coughlan

It is not in operation.

Mr. Cronin

It is accepted, perhaps by the minority, but it is accepted.

Mr. Coughlan

The Deputy is confused.

Mr. Cronin

I am not confused. This is a fact and the punter is acting within his rights. Is this tax returned to the Racing Board? For these reasons, as well as others, Deputy O'Malley's amendment is quite a sensible one. Racing is a very important industry. Punters, many of whom are visitors from far-off places, are entitled to be clear-cut in their understanding of betting, levy and taxes. There is an inconsistency between the SP offices and the course betting in that when one places a bet in an SP office the tax is immediately submitted with the wager. The two situations are parallel. The Bill as it is needs the type of amendment that Deputy O'Malley proposes. It is sensible and reasonable.

Mr. Barrett

It seems from the difference of opinions expressed in this debate that the man who has been carrying all the taxation which has gone to the Racing Board happens to be very much in the minority, the winning punter. The bookmaker from what has been said, and from what Deputy Coughlan has been saying, has not suffered because there is a balancing up between winning and losing bets. As we know, very few bookmakers go out of business and we do not want to see them going out of business. The balancing must be working pretty well, because the amount they collect is balanced by their total commitment to the Racing Board. Therefore we can only assume from what has been said that the punter who has a winning bet pays full tax on stakes and winnings. He has been carrying practically the whole burden of this taxation as we see it without any legislation to back up this situation. The way out is really to accept Deputy O'Malley's amendment in this case to regularise the whole position. It seems to have been most irregular, as we now see from the way the debate has developed.

The Taoiseach

A levy is payable on all bets. Some confusion may have arisen because of the query of Deputy Power. The procedure is that the levy is payable on all bets. If a person has a bet of £1 at 9-1, he is regarded as winning £10. He gets £9 and the bookmaker deducts £1. From the £1 he pays 5p in the £ to the Racing Board. On losing bets he pays in the same way, 5p in the £, that is at the current rate of deduction of the 5 per cent levy. I do not think there is any confusion about this. It is the practice and has been the practice.

Mr. Crowley

Is the Taoiseach right in saying that a £1 is not deducted? I am getting confused now. Is it 50p on £10?

The Taoiseach

I am sorry, it is 50p.

Mr. Cronin

Does the bookmaker return tax on every bet placed?

The Taoiseach

At the present levy the bookmaker is liable at the rate of 5p in every £.

Mr. Crowley

Is it 5 per cent of every bet staked? It would appear to me where people have been paying tax on their winnings that money has been extracted from them under false pretences. Strictly to interpret this legislation would mean that if taxes to be paid are levied they have to be paid on the stakes. Only now in this do we see any provision to have a levy collected on the winnings. It reinforces all the more Deputy O'Malley's amendment because, although I have been going racing since I can remember, I was never aware that I could go to my bookmaker and insist that he took 5 per cent on my stake. I understand now that he can do it but up to now has never done it. I think that it is legally possible to do exactly what Deputy O'Malley says, to sue the bookmaker for taking money under false pretences from the punter. All the legislation says is that 5 per cent is payable on all stake money. It is only now that we have a situation whereby it is on the stake plus the bet. I would ask the Taoiseach to have a very serious look at it.

Mr. Callanan

Is it not a fact that if we got 5 per cent on all bets placed at the moment we would not be looking for an increase of 6 or 10 per cent? We heard a lot about illegal betting, off-course betting. Is it not a fact that all these percentages are collected from the small punters, from £20 down? No tax is being paid on bets of £100, both on and off course. If it was collected from all there would be no need to have 5 per cent for the Racing Board. The small punters are paying all the charge. If it goes up to 10 per cent I can see more and more illegal betting going on, both on and off course. The problem is the greater the levy the smaller the Racing Board's percentage. Let us be honest with ourselves, we know this is going on and have been told it is going on both on and off course. The large punter who goes up with £100 is not going to pay 5 per cent.

The Taoiseach

I do not think that is true because bookmakers are obliged to make a return of bets. I think what is being contended is a number of people who are not bookmakers accept bets. Bookmakers themselves are liable to make a return of any bets entered into.

Mr. Callanan

They do not always do it.

Mr. Cronin

I want to ask for clarification on one point. Is the bookmaker who has accepted tax on the wager acting incorrectly? It is not in accordance with the contract entered into between the bookmakers and the Racing Board. What is the position of the bookmaker?

The Taoiseach

It is in accordance with the contract between the bookmaker and the Racing Board.

Mr. Cronin

I do not think so.

The Taoiseach

I read out the form of the arrangement or agreement between the bookmaker and the board which they sign on the issue of a bookmaker's permit. The bookmaker agrees to do this with the Racing Board.

Mr. Cronin

He agrees to submit the taxation on the amount of winning bets.

The Taoiseach

I will read out the form. The bookmaker, when he gets a permit from the racing board, signs an undertaking to deduct the levy from the total amount being paid on winning bets. That has been the practice.

Mr. Cronin

This is not in accord with the 1945 Act which requires that the levy should be paid on all bets wagered. This has been adopted by many punters who stand on their entitlement under that 1945 Act to pay the levy on placing the wager. Despite what Deputy Collins says, bookmakers have no option by law but to accept tax when the wager is being placed. The situation certainly needs clarification. I think the Taoiseach would agree there is no political kudos in this. It would be a sensible arrangement to regularise the situation whereby people would know exactly where they stand.

Two practices have been in operation on race courses, maybe with a small minority of the bookmakers, but I asked a bookmaker would he accept the payment of tax on the placing of a wager and he said: "Yes, I have seen a woman produce pennies and halfpennies and, according to law, I have to accept the payment of tax with the wager." This is a point that needs clarification.

The Taoiseach

I need not read the preliminary part of the form but this is a form addressed to the secretary of the Racing Board by a licensed bookmaker. It says:

As a condition of the grant of such a permit I hereby undertake——

that is the bookmaker——

(1) To pay duly to the Board the full amount of levy as prescribed and in force from time to time on all course bets entered into by me other than such bets as have been validly laid off by me or have become void otherwise than through the mutual consent of the parties thereto;

(2) In the case of each winning bet to pay to the backer (or give him credit for) the amount accruing to him on such bet (including the stake) less the amount of the levy at the prescribed rate in force from time to time calculated on such amount.

And then you have:

(3) To comply in all respects with the terms of the Racing Board and Racecourses Act, 1945.

Mr. Crowley

That has no back-up whatsoever in any legislation passed by this Parliament. The agreement entered into between the bookmaker and the Racing Board cannot be sustained except between the bookmakers and the Racing Board. If any punter challenged the right of the bookmaker to deduct from his winnings the money stated I think he cannot but win. He must succeed because the legislation through this House is very clear that the 5 per cent is on wagers and not on the accumulated winnings. Another statement the Taoiseach made was that bets can become void if mutually agreed between the punter and the bookmaker. I would like to know how this could come about outside of a horse being scratched or the withdrawal of a horse.

The Taoiseach

Or have become void otherwise than through the mutual consent of the parties thereto.

Mr. Coughlan

A disputed bet.

The Taoiseach

Say a race is declared void, the bet becomes void.

Mr. Crowley

Suppose I have a bet with my bookmaker at 7 to 1 and I see the horse that I backed at 7 to 1 drifting up to 10 to 1, can I then go to that bookmaker and say to him that I want to cancel my bet?

Mr. O'Malley

Under those circumstances you would not get civility, courtesy or prompt payment.

Mr. Crowley

I would not dream of approaching him but, if bets can become void, it is very important that we know how those bets can become void.

Mr. Coughlan

Disputes!

Mr. Crowley

I could not dispute, for instance, that I was not in my proper senses when I took 7 to 1 when I should have got 10 to 1. I think this should be clearly stated. It is raising the issue a bit further.

Mr. O'Malley

In support of the point Deputy Cronin has been making which is fundamental to this amendment, to demonstrate it I must go back to the example I have already given of a bet of £100 at 100 to 1 on of which what purports to be levy is deducted by the bookmaker on the total amount concerned; this will amount to £505 deduction from the punter in this particular example. Assume for the purposes of the argument, even though I know it is unlikely to happen in practice, that that particular bet was the only bet the bookmaker held on that race, he would deduct £505 from the punter but under section 27 would remit only £5 to the Racing Board. In other words, there would be a profit for him of £500 or there would be £500 put towards the losses he sustained on the bet. What I want to make clear is that, in that instance, even though £505 is deducted by the bookmaker from the punter only £5 is paid by way of levy to the Racing Board. This gives rise to a great deal of misunderstanding and confusion. It is another very strong reason why, in fact, this amendment should be accepted to regularise the position, not just for the future but over the past 30 years.

When people become aware of this, particularly those who have had substantial gains at longish odds like 50 or 100 to 1, and of the fact that there has been no statutory authority for the practice of the past 30 years, then, as I said at the outset to the Taoiseach, there is a strong possibility of quite a series of actions being started in the courts, with a lot of disagreement and misunderstanding.

The position is being regularised by section 3 (a) here as to the future. What I am saying to the Taoiseach is borne out by the kind of examples and queries of Deputy Cronin, Deputy Power and others. We agree with the regularisation of it for the future, but because it only accords with what has been the practice we think that it should be regularised for the period from 1945 to the present day. If it is not there will be action against bookmakers by punters who are aggrieved, and rightly aggrieved. I am not suggesting that the bookmakers did anything wrong. They did not. They deducted in accordance with their own undertaking to the Racing Board and they had to do it. Nonetheless under statute the punter was wrongly treated. There was not statutory authority for what happened in relation to him. It is borne out by the kind of example I have given where in a particular bet the bookmaker deducts from the punter £505 but remits to the Racing Board only £5. That is the precise position, and it will cause a lot of annoyance on the part of the punters, particularly when they now realise that there was not statutory authority for the deductions that were made. They were made on the strength of an undertaking or a contract as between the bookmaker and the Racing Board and not under any authority of any Act of this House.

The Taoiseach

There is not really much confusion in the minds of most punters on this. They all understand the position. Occasionally people who do not bet or race regularly may be slightly confused and occasionally issues arise, either disputes between bookmakers and those who bet, or we hear criticism even occasionally of tax deducted in the SP offices. Any punter who places bets with bookmakers at race meetings is familiar with the pattern. The existing practice is not included in detail in the statutes. So far as I am concerned I do not suppose it makes an awful lot of difference. As I say I do not feel very strongly about the amendment proposed by Deputy O'Malley and it is not necessary from the legal point of view.

If Deputies feel that it would improve the Bill, I do not mind having a look at it to see whether it is necessary. The phraseology used by Deputy O'Malley is all right but it might be necessary to have a look at the actual terms of it because what in fact has been done here is to formalise a procedure that has been in operation for very many years under the 1945 Act and which is included in similar terms in the Act Governing Bord na gCon.

Mr. Power

Would the Taoiseach not agree that what has been in operation up to now bears no resemblance to what should have been done if the Act had been adhered to? Furthermore, the reason for this Bill is to provide money by way of levy to the Racing Board. The Racing Board ignored the Bill as it was in 1945 and implemented an agreement with the bookmakers whereby they were meant to accept 5 per cent of the money that a bookmaker paid out rather than accept what they were legally entitled to, 5 per cent of what a bookmaker took in.

Mr. Crowley

The way the bookie was expected to collect it was by way of deducting it from the winning bets. I agree with Deputy Cronin. We have been going to races a long time and this is the first doubt that I have ever had about the system of betting.

The Taoiseach

Remember the whole background of betting is, in the legal sense of the term, regarded as outside the law as Deputy O'Malley said and I suppose a lot of people did not raise any issues about it. As the Deputy said most people accepted the position as it was.

Mr. Crowley

Now that people have become aware of the flaw there was they could very easily have recourse to the courts and in my opinion, again as a layman, win their case. I have been totting up how many bets I can remember where you had to pay out a substantial amount of tax on them that you could certainly under the present legislation claim back. The Taoiseach would be very wise really if he did cover retrospectively. Nobody likes retrospective legislation. It is something to be avoided, except in the direst emergency, and this could be one. If he accepts Deputy O'Malley's amendment he would be cutting off any source of dispute that may occur.

Mr. Coughlan

I wonder if that would stop the Fianna Fáil Party from speaking——

Mr. Crowley

Fairly on the side of the punters.

Mr. Coughlan

I am looking after the protection of my own profession. Deputy O'Malley can look after the legal profession. I swim in my own pools at all times and I fish in my own rivers not in others.

Mr. Crowley

No poaching.

Mr. Coughlan

We, as professional men, return our tax the Friday following the week the event takes place. That is the regulation and that is the law and, having held our books for six months we destroy them. We have to hold all books and all accounts for six months. Deputy O'Malley comes along with a mythical situation of a man having a £100 on a 100/1 winner. Aesop in his hey-day would not produce anything like this of a man putting a £100 on a 100/1 winner and that was his only bet. That would not have happened in Aesop's time.

He mentioned that any person having a bet since 1945 can now come along and sue a bookmaker for some levy that he was not entitled to pay. That is another myth because it is an absolute impossibility for this person to do it in this Bill. We discussed the matter with the Taoiseach who, as I said, and repeat again, is the only Taoiseach who ever met us. On the introduction of the Racing Board Act, 1945 when I was chairman of the bookmakers and on the introduction of the Bord na gCon Act we could never get as far as we wanted to go. We have had discussions with the Taoiseach. We are professional men licensed to carry on a professional business. We are happy and we are convinced that what is included in this Bill satisfies us and is a protection of our future. That should be our consideration.

Mr. Barrett

With respect to Deputy Coughlan and this great study and discussion that his association seem to be having among themselves and with other people, if they got a professional in-depth study done on the existing legislation because of this legislation they would have discovered, like Deputy O'Malley has discovered on behalf of all of us that there was a serious flaw which could escalate now as a result of it being highlighted. If there is a flaw in legislation it is only right and proper that it should be highlighted and corrected. Deputy O'Malley has brought in his amendment in order to correct the previous position which could now prove very dicey because there are people and punters who can remember the individual bets with bookmakers on which they had to pay a lot of tax. They now appreciate that they did not have to pay tax on the total and were left completely unprotected or wide open by the existing law. It is quite possible that they will go to court and perhaps look for their money back. They may not have had too many winning bets since they had that one.

Deputy O'Malley has highlighted a flaw and we all accept that it was a flaw. The only thing that seemed in any way to regularise it, as the Taoiseach said, was a notice published in all racing cards but this does not amend the existing legislation. In order to protect everyone who has been involved, including bookmakers, Racing Board and strong punters I think the acceptance of the amendment is the key to it. With regard to having doubts about on whose side Fianna Fáil are we are on the side of the racing industry as a whole, breeding and racing, for the good of the economy. I have nothing against bookmakers, racing boards, punters or the people that are interested in racing. We are out to improve in every way we can within reason an industry that we are all proud of.

Mr. Coughlan

The Fianna Fáil Party are not doing that.

The Taoiseach

To get the facts right, section 3 of this Bill formalises for the future the practice that has been in operation. It is considered necessary to do this in order to remove doubts. That was how this problem was brought to light. Deputy O'Malley suggests that because it is being brought to light in section 3 which amends section 27 of the Principal Act, it should be made retrospective to cover any transactions which were provided for since the parent Act was introduced. I do not think there is any fundamental objections to it but I am advised, that it is not necessary. In fact this issue was brought to life by the provisions of section 3 of this Bill.

Mr. O'Malley

If the Taoiseach says there is no fundamental objection to it, even though it may or may not be necessary in the view of his advisers, its acceptance would certainly do no harm, so would he not accept it?

The Taoiseach

Yes. I might just want to examine the wording.

Acting Chairman (Mr. Pattison)

Will the amendment be withdrawn and introduced on Report Stage?

The Taoiseach

We accept it. It has to be reconsidered on Report Stage.

Amendment agreed to.

Mr. O'Malley

I move amendment No. 2:

In page 2, line 28, to delete "ten per cent." and substitute "six per cent."

This is possibly the most important amendment that I put down. It has the effect of giving statutory force, if it is accepted, to what I understand is the proposal of the Racing Board in relation to levy. The Taoiseach informed the House on Second Reading that while the Bill contained a provision allowing the Racing Board to increase the levy to a figure not exceeding 10 per cent from its present figure of 5 per cent the intention of the Racing Board was at the moment to increase the figure to 6 per cent only. I was informed to the same effect by the Racing Board but I was also informed, quite properly, by the official concerned that while it was the intention of the board to raise the levy to 6 per cent only in this present year, that he could not, on their behalf, give any assurance or give any indication that it would not be raised to some higher figure next year or in some other future year.

That may well be the feeling of the Racing Board but I feel strongly, particularly as we have raised no objection, in principle, to the increase of 20 per cent—it is an increase of 20 per cent from 5 per cent to 6 per cent—one can get away with saying that the difference between 5 and 6 is one, but the increase in the amount of levy that will be taken from punters is 20 per cent. We feel that that is more than adequate at the moment. In agreeing to that we think it not unreasonable that this House would bind the Racing Board to a situation that if they wanted a higher increase than 20 per cent in some future year they should come back to this House to get it.

I understand that in 1945 there was a great deal of discussion about the levy that was being imposed on the establishment of the Racing Board. Many people were afraid that the introduction of a levy would be used in some way as the thin end of the wedge, ultimately, to establish a tote monopoly here as there is in almost every country in the world, except in Britain and ourselves.

Mr. Coughlan

There are some States in America where it is legalised.

Mr. O'Malley

Apart from a number of States in America, Britain and Ireland, betting is a State monopoly. It is enormously profitable. The Taoiseach was good enough to quote figures here the last day; £84 million was given to the industry in 1973 in France. No wonder they have huge stakes. The minimum bet there is something around £2,000, where our minimum stake is about £200. It was feared that it was the intention of the Government of the day to increase this levy gradually until it reached the stage where it was no longer profitable or economic to bet with bookmakers and it would be more attractive to bet on the tote instead. Ultimately, the stage would be reached, as in France.

It was specifically written into the 1945 Act that the maximum levy was to be 5 per cent. That was inserted, I believe, by way of amendment. In the original draft of the Bill there was no limit but an amendment was inserted to prevent that ever happening. Now there is a proposal to increase the levy. There is a fair enough case for a certain increase; that is why we did not oppose it the last day, but there is no case for a potential increase of 100 per cent, which is what section 3 (b) would bring about.

In effect, this House will lose all control of any future increases up to 10 per cent if we pass this section as it stands. The Taoiseach will tell me that there is a provision at the end of this Bill to lay the regulation which the Racing Board will make on the table of the House, but in practice those regulations are never disallowed. It must be years since one was disallowed in this House because the Government of the day, presumably, would not allow the regulation to be made in the first place if they did not agree with it. They have a majority and they are going to get it through anyway even if a motion is put down.

I disallowed, in the Seanad about four years ago, an order of the Incorporated Law Society increasing their fees. That is the only time for many years where a statutory instrument such as this was actually disallowed by either House of the Oireachtas. It can only be done, as it was done in that instance, where the Government of the day so decide. It is really the Government who have the say rather than either House of the Oireachtas. Giving the power to the Racing Board to effect an increase of up to 100 per cent in levy, even though it is subject, in theory to the power of the Houses to overrule it, is not good enough. If we give them that power, we can be fairly sure that it will be used within a matter of a few years because the temptation to use it will be too great, the pressures on the Racing Board to use it will be too great.

The only effective brake on a further increase being imposed by the Racing Board would be the acceptance of my amendment. This would confine the increase to 20 per cent— from 5 per cent to 6 per cent—and if in one, two or three years' time, the Racing Board feel they have a strong enough case for a further increase to say 7 or 7½ per cent let them make a case to the Government and Opposition of the day.

It is wrong in our view to give power to the Racing Board to effect a 100 per cent increase. I know they are not going to do it this year but we are practically half way through 1975 and they could easily on 1st January next impose a larger increase than the 20 per cent they are doing this year. They could immediately increase the levy by 20 per cent and on 1st January, 1976, they would not be in breach of any undertaking if they went from 6 per cent to 10 per cent and effected a 100 per cent increase in the levy. That would be wrong from a number of points of view.

I am not going to go into the merits or demerits of a State monopoly on the French lines. I know there are quite a number of people connected with racing who are strongly attracted to that ideal because of the huge amounts of money which are made available to the betterment of racing in France and in other countries. But our circumstances and those of Britain are different. While the amount that the Racing Board are able to get as a result of our present betting set up is, unfortunately, much less than one would wish for the sake of the industry, nonetheless much of the atmosphere of meetings is created by the fact that bookmakers are there. You have probably much higher attendances from people who might not otherwise bother to go, people who are not that interested in racing but because there is an atmosphere, not so much in places like the Curragh, Leopardstown and others, but at many of these holiday meetings, where the attendances are often huge, in places like Galway, Listowel, Tralee and Killarney where the quality of racing is not the only attraction. Therefore, I cannot see the French system working here, and because many people will feel it should not operate here, we have got to maintain a control on the right of the Racing Board to increase the levy on bets with bookmakers. Otherwise the levy could become so high that betting would drop off, and a lot of licensed bookmakers would go out of business —and unlicensed bookmakers would begin to spring up.

There is no doubt that 80 or 90 per cent or more of the betting that takes place in Ireland is done with bookmakers rather than with the tote, which never caught on in this country in the way that it did in some others. The tote for the most part as the Taoiseach and the House know, deals only in very very small sums of money. Most of its betting is in tiny units of 20p and 40p. I often wonder if it is economic for them to bother at all with such tiny sums of money. Because of that, the levy of bets with bookmakers is of considerable importance to our whole racing industry. That is why this House and the Oireachtas generally should maintain close control over what the Racing Board are permitted to do by way of imposing a levy. For these reasons I would ask the House to accept the amendment here in my name to confine the increase to one of 20 per cent and let it go up from 5 to 6 which is, as I said, 20 per cent. If in 1977, 1978, or subsequently, the Racing Board feel that they have a strong enough case, let them come back here to the House and make that case through the Government of the day.

The Taoiseach

I cannot accept this amendment for a number of reasons. In this Bill for the first time the regulations are obliged to be laid before the House and they can be annulled. That power was not in the previous Act. That is a change which gives the House control over it. It was prescribed in the 1945 Act that the Racing Board can change the levy only with the consent of the Minister for Finance. The procedure and practice in the earlier years was that the levy was put on at 5 per cent. It was subsequently reduced to 2½ per cent. Many people forget that. It was only after a lapse of a number of years that it was again raised to 5 per cent. In this Act the ceiling is raised to 10 per cent, a ceiling which is not in the Bord na gCon Act. Deputy O'Malley is aware that there is no ceiling in the Bord na gCon Act. Deputies have not said anything about it. The House has no control. The Minister for Agriculture and Fisheries in that case is the Minister responsible. It can only be increased with his consent.

In fact, there are two safeguards in this Bill, one is that there is an overriding ceiling of 10 per cent and also this Bill amends the 1945 Act, which had no requirement that regulations should be laid before the House.

Mr. O'Malley

The Bord na gCon Act has that requirement, I think.

The Taoiseach

That requirement, but no ceiling, none whatever in the Bord na gCon Act—it could be 100 per cent—and there has been no criticism about it. In this Bill there is an overriding ceiling, but, in addition, there is the requirement, which was not in the 1945 Act, to lay the regulation before the House, and the House will have the opportunity of annulling it.

In this Bill there are two requirements which must be complied with; neither the board nor the Minister can exceed 10 per cent. It is the intention of the board to increase it by 1 per cent. Admittedly, the personnel of boards change, but as I said on the last day here, although Governments have come and gone, this is the first amendment of the Act for 30 years. The board never appeared to exceed in any sense what would commend itself to the board as being in the interests of racing. In fact, as I say, originally the levy was 5 per cent, which was the maximum permitted up to now, and subsequently the board, with the consent of the Minister for Finance, reduced it to 2½ per cent. Then, over a period of years, it was again raised to 5 per cent.

In the Bord na gCon Act there is no ceiling. There is only the requirement that the consent of the Minister for Agriculture and Fisheries must be secured; in this case it is the consent of the Minister for Finance. There is the added safeguard now that if a regulation is made it must be laid before the House. All experience would indicate that, conscious of the needs of racing and, at the same time, aware of the liability of punters, the Racing Board have taken these matters into account in the past, and I believe they can be relied on to do the same in the future. It is hardly the occasion now to get into the wider question of whether a total monopoly would provide more money for racing or not. However, the general view is that circumstances here are different from those of France. In France there are no football pools; here, although they are not run in this country, a good deal of betting takes place on pools in Britain and to that extent some of the money is siphoned off in directions other than racing.

In any event, the Dáil for a very long period has recognised that the procedure laid down in the Racing Act and Totalisator Act provides for both tote and bookmakers, is the one most suited to our conditions. As I say, this particular section as drafted gives the original safeguard of the consent of the Minister for Finance. It has an overriding maximum as in the parent Act, but the maximum is now being raised to take account of changes in money value. In addition, the regulations are required to be laid before the Dáil and can, if the Dáil wishes, be annulled.

Progress reported; Committee to sit again.