JOINT COMMITTEE ON ARTS, SPORT, TOURISM, COMMUNITY, RURAL AND GAELTACHT AFFAIRS díospóireacht -
Wednesday, 31 Mar 2010

Funding of Horse and Greyhound Industries: Discussion.

Chairman

I welcome the representatives of Betfair Ireland, Boyle Sports, the Irish Bookmakers Association, the Irish Independent Betting Offices Association, Ladbrokes Ireland, Paddy Power, Bord na gCon and Horse Racing Ireland. I do not think we have seen so many people in this room. It is great that they could all make the meeting, as there is a strong interest in this subject among our membership. Many people here, including myself, are strong supporters of these industries, so we are looking forward to what the witnesses have to say.

I welcome the following: Mr. Graham Ross, Ms Katie Fuller and Mr. David O'Reilly, manager, public affairs manager and legal counsel, respectively, of Betfair Ireland; Mr. Lee Richardson, CEO of Boylesports; Ms Sharon Byrne, chairperson of the Irish Bookmakers Association; Mr. Liam Cashman, Mr. Paddy McAuliffe and Mr. Michael Carty, president, administrator and committee member, respectively, of the Irish Independent Betting Offices Association; Mr. Joe Lewins, vice chairperson of Ladbrokes; Mr. Patrick Kennedy, Mr. Breon Corcoran and Mr. Jack Massey, CEO, managing director of non-retail and development and finance director, respectively, of Paddy Power plc; Mr. Adrian Neilen, Ms Patricia Griffin and Mr. Jim O'Dwyer, CEO, head of tote and HR manager, respectively, of Bord na gCon; and Mr. Brian Kavanagh, CEO, Mr. John Oxx and Mr. Michael O'Hagan, general manager of Irish thoroughbred marketing, representing Horse Racing Ireland.

I propose that we take the witnesses in alphabetical order. Before we begin, I draw witnesses' attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before it. I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

I also welcome members of the Joint Committee on Agriculture, Fisheries and Food. Responsibility for this area will be moving to that committee as part of the new changes at Government level, so hopefully this meeting will give those committee members a head start on the relevant issues. I remind members and witnesses to be as brief as possible in their comments. We will try to conclude the meeting by 2.30 p.m. for various reasons, such as Question Time and for other reasons——

Senator Jerry Buttimer

Are there other sideshows?

Chairman

We have a meeting of our parliamentary party, which is very much part of the parliamentary process.

The horse and greyhound industries are an integral part of the Irish economy and psyche. These industries generate millions of euro in revenue for Ireland and the breeding of horses and greyhounds as well as the attendance at race meetings throughout the country is among our active pursuits as a people. There is great interest in this area as an industry, a pastime and a sport among the membership of this committee, including myself. We are anxious to have a good, open debate with all of the witnesses. There are many issues with regard to funding that we have touched on before at the committee and I know the witnesses have read our comments on the whole issue of the contribution of the on-line betting industry. I will not make any comment at this stage as I am keen to hear what those present have to say.

If possible, I ask those making contributions to do so within seven minutes. I also ask members to be as brief as possible given the numbers involved. The various organisations will present their comments and members will then comment and ask questions. The questions can then be answered by the relevant organisations. I call on Betfair Ireland to present its opening statement.

Mr. David O’Reilly

Thank you. I am the legal counsel for Betfair. My colleagues are Mr. Graham Ross, regional manager for Ireland, and Ms Katie Fuller, European public affairs manager. I thank the committee for the opportunity to present to it. We have read the transcript of the recent session of this committee, where there seemed to be a consensus that there was a general concern that the on-line-telephone betting industry in particular was not making a contribution to the funding of horse racing and greyhound racing. We have good news on that front because we believe there should be in place in Ireland a framework whereby all operators who are marketing their services into Ireland are required to pay tax based on that activity. The Irish Government could do what it chooses with that money, and we would be very happy if it was diverted into horse racing and greyhound racing.

As background, Betfair is the world's leading betting exchange, which is a person-to-person form of betting. Founded in 2000, it is a very technology-driven business. We transact approximately 6 million bets a day, which is more than the European stock exchanges combined. We estimate we probably have 15% of the on-line sports betting market in Ireland, which represents approximately 4% of our global revenues. The regime I referred to in terms of how Ireland could take this forward is in the form of a dual licensing platform. On the one hand, there is the licence that would apply to betting operators based in Ireland, and that licensing would apply to their technology, kit and infrastructure. On the other hand, those out-of-state operators who wish to target and market into Ireland would be required to apply for a licence to advertise and, with that, would come taxation obligations that would provide funding, with which the Government and the Oireachtas could choose to do as they saw fit. In summary on that point, Betfair is committed to paying tax in Ireland if there is a regime that allows us to do that.

Uniquely among on-line betting operators, Betfair has previously provided voluntary funding to the horse racing industry in the form, effectively, of a donation of approximately €4.5 million from 2006 to 2008. That was a three-year deal which we offered to roll over from the beginning of last year, 2009, but the horse racing industry decided to reject that offer. In the meantime, we have diverted that funding which would have been paid last year to other parts of our business. The only contact we have had from Horse Racing Ireland since then, formally, is a written e-mail some two or three weeks ago asking us what our position was on renewing that funding. We are in the process of responding to that e-mail but it is probably worth pointing out that, in the meantime, an attempt by us to roll over a sponsorship at Punchestown was effectively undermined by HRI influence on the Punchestown board. Therefore, another attempt by us to put money back into the sport was effectively rejected by the horse racing industry in the past few weeks, despite the relationship with Punchestown being a long-standing one. There are only two bodies that have provided funding voluntarily to the Irish horse racing industry, namely, the Irish Government and Betfair through its voluntary payments from 2006 to 2008.

I am happy to take any questions.

Chairman

I appreciate the good news that Betfair is committed to paying tax in Ireland. If comments are made about another organisation, I ask that organisation to wait until it is making its own contribution to respond so we can keep some order in the session. I am impressed with the number of Deputies and Senators attending, which is so great we are running out of chairs at this stage. To move on, I call the Irish Bookmakers Association.

Ms Sharon Byrne

I will speak on behalf of Ladbrokes and Boylesports. First, let me express my thanks for the invitation to attend the meeting. This marks the first time our organisation has come before the committee and I hope it is the beginning of a constructive engagement and much discussion. We regard this opportunity as very important for our organisation, which represents the main funders of the horse and greyhound fund since its inception.

Before I proceed any further, let me introduce our delegation. Mr. Joe Lewins is the managing director of Ladbrokes Ireland. Ladbrokes employs over 1,000 people in 286 Irish betting shops and is represented at 12 Irish race tracks. Mr. Lee Richardson is chief executive of Boylesports. Boylesports employs 850 people and has 138 betting shops in Ireland, along with a large telecentre in Dundalk. I am the current chairperson of the Irish Bookmakers Association and am serving my fourth term of office. I am also an independent bookmaker and own 11 of the Bruce Betting shops in Ireland.

Today's meeting highlights the importance of the horse and greyhound industries in Ireland. These industries are a significant source of employment throughout the country and make a significant contribution to the Exchequer. There are many reasons this sector is so successful – attractive grants such as the "stallion exemptions", our fertile lands, the love of horses, a strong tradition and the fondness of many Irish people for having a flutter.

Irish betting shops have been paying heavily towards this industry for many years via a penal betting turnover tax of approximately €30 million a year, a further €18 million through picture payments through SIS every year and direct advertising at the tracks. However, the current approach is threatening many betting shops, driving many out of business and leading to many job losses. Only 12% of the total turnover that comes through our shops is placed on Irish horse racing. When results are bad, our turnover increases; punters have more money in their pockets so they tend to bet more, which means the turnover tax is higher when the results are bad. This creates an advantage for betting companies who do not pay this tax. We must pay more tax whereas they pay none, so the shops paying the tax are put at a serious disadvantage.

I would like to stress a further point to the committee. In the UK, despite how it is portrayed, betting shops pay a 10% levy on their UK horse racing business only, and this is on profits, not turnover — we must pay on turnover, not profits. They also pay a 15% gross profits tax on their over-the-counter business. The crux of the point, which is conveniently left out, is that over 60% of the income in UK shops is derived from machines in the shop. Irish betting shops do not have this income. These machines have a FOBT — fixed odds betting terminals — and slot machine content on which an amusement machine licence duty and VAT is paid. These machines are not offered in Irish shops.

The table in our submission demonstrates how taxation is rendering Irish betting shops unviable. It is simply not feasible that we are paying out 98.6% of our revenue in tax and that our revenue is declining but our fixed costs are not. Previous Ministers for Finance recognised that we are providing jobs and competing in a global market. For that reason, they amended the tax over the years to allow us to stay in business and to provide jobs.

We have suggested simple, commonsense race and fixture changes to Horse Racing Ireland that would benefit the entire industry and the Exchequer year on year. We have also pointed out that HRI has done too little too late to secure payments for its product which has been used by offshore companies for several years through streaming of videos and betting. No action was taken to address this. HRI has not implemented reforms and continues to allow these firms to benefit, for a negligible charge, on the back of Irish racing and taxpaying bookmakers. These operators diminish the amount of betting that takes place inside a betting shop where duty would have been paid. The stance of Punchestown management this week, while welcome, is a perfect example of HRI inaction. I commend the management of Punchestown racetrack on taking a stand against an operator which does not pay any betting duty but can advertise its product all over the track. Action in this regard should have come from the governing bodies several years ago, not the week before this committee meeting.

We recommend that controls and measures be put in place to monitor and quantify the policies and effectiveness of HRI. Implementing the modest reforms recommended by the Irish Bookmakers Association would help the industry to realise substantially more funds for itself and for the Exchequer. Our reforms include extending opening hours and making use of the all-weather track at Dundalk – the only all-weather facility that is idle for most of the winter. Funding for prize money that is almost double that in the United Kingdom, the stockpiling of land, funding a loss-making tote operation, and giving pictures to betting companies for next to nothing, or nothing at all, thereby reducing the tax achievable through betting shops all constitute a serious misjudgment on the part of HRI. As fellow stakeholders in this industry, we ask the committee to examine closely the future policy direction of HRI.

Chairman

To clarify, Ms Byrne spoke on her own behalf and on behalf of Boylesports and Ladbrokes. I thank her for her presentation which is of great help to us. Some very serious issues have been raised and I assure all the delegates that we are listening carefully. They can also be sure that the points they make will be considered carefully by the Minister for Tourism, Culture and Sport, the Minister for Finance and the Minister for Agriculture, Fisheries and Food. I now call on the delegates from the Irish Independent Betting Office Association to make their presentation.

Mr. Paddy McAuliffe

I thank the committee for its invitation to attend today's meeting. We represent smaller bookmakers, that is, those with one to ten shops. Most of our members have one or two shops. I ask our president, Mr. Liam Cashman, to deliver our presentation.

Mr. Liam Cashman

The future of native Irish bookmakers is in jeopardy because of the deepening recession and the effect offshore operators are having on our turnover and business. There have been approximately 120 shop closures since the downturn commenced in April 2008 and job losses of some 600, costing the Exchequer approximately €13 million annually. Furthermore, a multitude of shops are tied into long-term leases and are forced to remain open even though they are totally uneconomical. As these leases expire, many more closures and job losses are inevitable.

The wise decision by the Government to rescind the proposed 2% levy most certainly saved a further 250 shop closures, an automatic 1,000 job losses and a further cost to the Exchequer of €21 million. Some Irish companies operating offshore telephone and Internet businesses are attributing more than 65% of their net profit to their offshore business, allowing them to offer unrealistic giveaways and bonuses in their Irish betting shops with the expressed intention of gaining greater market share and converting more of their and our customers to their offshore business. The combination of giveaways, bonuses and the burden of the 1% betting levy — in essence a draconian rent with which no other industry is penalised — will inevitably lead to the extinction of every terrestrial bookmaker and massive job losses. Having achieved their objective it is almost certain a cosy cartel will then be formed by the multinational offshore Internet and telephone operators.

On average, a terrestrial employer will turn over €676,000 per annum, while an offshore telephone or Internet counterpart will turn over almost five times that amount at €3.12 million. With this in mind we are asking for a level playing field that will allow independent Irish bookmakers to survive and compete with offshore operators. The Government must act to prevent such operators from further diminishing the level of business that goes through betting shops and to prevent multiple job losses. This can only be achieved by restructuring the current levy system.

We propose a three-tier system that would introduce a 5% charge on all deposits made to offshore gambling sites by Irish residents, levy unlicensed bookmakers by ensuring all so-called Irish residents on betting exchanges pay a 5% charge on all deposits, and abolish the 1% levy on the labour intensive terrestrial bookmakers to avoid further shop closures and to protect jobs. These same terrestrial bookmakers would then pay tax on net profits as virtually all other industries do. Globalisation of the betting product has changed forever the taxing of the terrestrial betting product. Native Irish bookmakers can never again charge the Irish betting public a levy, as this will inevitably force more customers to bet with offshore Internet or telephone betting companies which enjoy a levy rate of virtually nil to 0.5% capped, and lead to massive job losses.

The levy on terrestrial bookmakers was introduced way back in the last century and is now historic, being pre-globalisation, pre-deregulation, pre-offshore betting, pre-Internet gambling sites and pre-betting exchanges, all of which make no contribution to the Exchequer. With independent Irish bookmakers already in dire straits, unless the 1% levy is abolished there will inevitably be massive shop closures and a needless massacre of jobs, resulting in a net loss to the Exchequer at a time when the economy needs every job it can muster. It is no longer possible for native Irish bookmakers to pay the 1% levy and compete with offshore operators that enjoy a levy rate of virtually nil to 0.5% capped and contribute nothing to the Exchequer. The offshore gambling industry is flourishing and the number of casinos, sports books, poker sites and exchanges is still rising exponentially.

In 2008 the dramatic downturn in the economy left native Irish bookmakers struggling for survival with a dwindling turnover. In 2009 turnover has fallen even more dramatically leading to approximately 120 shop closures since April 2008 and some 600 job losses, at an annual cost to the Exchequer of €13 million. Further closures, and the associated massive job losses, are inevitable and imminent. Betting duty has fallen by 20.27% from 2007 to 2009 and is falling still further in 2010.

In this unprecedented recession, protecting jobs is paramount. Independent Irish bookmakers are a major employer in all communities nationwide. The innovation we propose could make Ireland a world leader in obtaining revenue from heretofore untouchable offshore telephone or Internet operators. These operators have for too long taken revenue from Irish residents and paid nothing to the Exchequer. They have used every legal loophole and the protection of European law to siphon funds into their own coffers with scant regard for the consequences for employment in the Republic, and they will continue to do so if permitted. The advantages of these innovations both to the Exchequer and the native Irish bookmaking industry will be long term and far reaching and lead to greater employment and increased benefits for the Exchequer. A further advantage of this new system is its simplicity. It complies with European law and will help to level the playing field for independent Irish bookmakers and to protect jobs.

Chairman

I now invite the chief executive officer of Paddy Power, Mr. Patrick Kennedy, to make his submission.

Mr. Patrick Kennedy

Paddy Power today is an international business. Two thirds of our profits come from outside Ireland, we have customers in 162 countries and we offer markets on 72 international sports around the world. None the less, the Irish Exchequer has to date garnered all the employment, PRSI, VAT and corporation tax not just from our Irish shop, Internet and telephone businesses but also from our international Internet and telephone businesses which we have historically managed from Tallaght. We paid €41 million in taxes in 2009, including €19 million as a result of locating our on-line and telephone activities in Ireland.

We are the third largest on-line bookmaker in the UK, the largest in Australia and last November we announced our entry into the French on-line betting market through a partnership with PMU, the second largest betting organisation in the world. We employ 2,300 staff at present, compared with 1,300 five years ago, and 1,600 of these are based in Ireland. We envisage further strong jobs growth as our business continues to expand internationally. We currently have 150 job vacancies and will employ an additional 750 staff across the group in the next three years.

Paddy Power is the leading indigenous e-commerce company in Ireland and one of the leading smart economy employers in the country. The 700 staff in our Tallaght headquarters work in areas such as quantitative research, technology, risk management and e-commerce. We have worked with the leading third level institutions in Ireland and overseas to develop proprietary product, pricing and customer analysis, and this expertise has led to PMU selecting us from the 13 betting companies around the world which competed for its contract. These are high end, smart economy jobs and we have neither sought nor received one cent of State aid to create them.

Paddy Power and the wider industry face six misconceptions which I will deal with in turn. The first misconception is that Irish racing accounts for a substantial part of our business. In fact, Irish horse and greyhound racing are a small part of our business and account for only 15% of our Irish shop turnover and 11% of our Internet and telephone betting turnover. Despite this, Ireland is the only country in the world which levies a betting tax on every sport that is paid in its entirety to the domestic racing industry.

The second misconception is that Paddy Power is piggybacking on Irish racing. In fact, Paddy Power loses money on Irish racing. In 2009 we earned €25 million in gross revenue on betting on Irish racing from our customers all around the world. We paid out €9.5 million, or almost 40%, to Irish racing via the retail betting tax and, after an allocation of variable costs, lost money.

The third misconception is that Irish Internet betting is substantially bigger than Irish shop betting. On-line betting by Irish customers last year totalled one third of our Irish shop turnover. Looking at the industry overall, a recent survey by PricewaterhouseCoopers confirmed that on-line and telephone betting combined represent just 22% of the total Irish betting market. The significant majority of betting continues to take place in retail outlets.

The fourth misconception is that a pot of gold can be made available if an on-line betting tax on Irish residents is introduced. PricewaterhouseCoopers's survey showed that the value of on-line sports betting in Ireland in 2009 was €558 million. A tax of 1% on all on-line sports betting by Irish customers, whether on US politics, Six Nations rugby or the colour of the Chairman's tie, would yield less than €6 million assuming it could be enforced against all the international operators supplying the Irish on-line market.

The fifth misconception is that Paddy Power's Internet business makes no contribution to Ireland. In fact, we employ 700 smart economy staff in Tallaght, where we are the largest employer, in our Internet and telephone operations. The other Irish located Internet betting operator, Boylesports, employs 200 smart economy staff at its office in Dundalk. The proceeds from any new Internet betting tax would be dwarfed by the current tax contribution of the Internet and telephone activities of Paddy Power and Boylesports in Ireland.

The sixth and final misconception is that an Internet tax can be easily implemented for all providers. Effective international implementation is very difficult and there is a material risk that any such attempt will disadvantage Irish businesses which employ hundreds of people. Paddy Power has consistently stated that it does not have an issue with paying taxes on Irish Internet betting but we do have an issue if we have to pay it solely because we employ people in Ireland. Eight of the top ten Internet operators serving the Irish market are based offshore. A taxation system can only work if the State can sanction those eight foreign operators where they do not pay the tax. It would be an outrage if the only two companies which paid the tax were those employing people in Ireland. In effect, it would be a tax on Irish jobs.

A variety of solutions have been attempted internationally to penalise those who do not pay, including IP address blocking, financial transaction blocking and, most popularly, advertising bans. None of these has worked satisfactorily.

An advertising ban in Ireland for those operators who do not pay Irish tax would have a negligible impact on rogue offshore operators because Ireland produces a very low proportion of the media which it consumes relative to other countries, and on-line operators' marketing spend today is very substantially, and in some cases entirely, through on-line rather than off-line channels. To illustrate some of the practical difficulties, seven of the 20 UK Premiership football teams are sponsored by on-line gambling operators, as are Real Madrid and AC Milan. All 20 Premiership clubs have perimeter board advertising of on-line gambling brands specifically targeted for television. Could their matches be screened in Ireland in the event of an advertising ban? One can imagine the reaction if Manchester United matches could no longer be shown in Ireland because of an attempt to raise €5 million for the horse racing industry.

IP address blocking, a technique attempted by China and other countries, is also flawed. A mini-industry will be spawned as the Department of Justice, Equality and Law Reform attempts to identify the many thousands of gambling websites around the world and notify all 85 Irish Internet service providers of them, conduct daily monitoring of changes to those website names, as operators always stay one step ahead of regulations, and attempt to enforce penalties against those which have not been blocked effectively. The growth in Internet betting on mobile telephones would only add to the complexity. To attempt to set up such an operation for a maximum take of less than €6 million annually to aid domestic racing seems misguided. It is also difficult to believe that Ireland wishes to copy unsuccessful Chinese censorship techniques as it strives to promote itself as a leading smart economy destination.

Other countries have attempted, without success, to restrict on-line gambling services, including the USA where, despite a ban on on-line gambling, the on-line sports betting market in 2008 was estimated to be worth $150 billion and the two largest poker websites in the world still take play from US customers. Despite a ban on on-line gaming in Australia, 700,000 Australians played on-line casino games in 2008. This is a greater prevalence rate than in the UK where no such ban exists. In Germany, despite a ban, 2 million people participate in some form of on-line gambling.

If Ireland attempts to succeed where these countries have failed, the companies which employ Irish staff will be squeezed and will have to take protective action unless the Government can genuinely enforce tax obligations on all the operators serving the Irish market. There is a fine line in this competitive industry between success and failure. Last summer Ladbrokes and William Hill moved their Internet operations from the UK to Gibraltar where they enjoy a much lower tax regime than in Ireland.

In anticipation of the potential for a two-tier competitive environment, Paddy Power has been forced in recent months to open two international offices where we will locate more of our job growth if we are disadvantaged. We have opened and staffed a new office in the Isle of Man and are also in the process of opening a UK head office for our Internet business in London. We have not done this as a threat but as responsible contingencies if our competitiveness is damaged. The impact would be that smart economy jobs destined for Ireland would be diverted to London and the Isle of Man. We do not wish to move jobs outside Ireland but a tax that cannot be enforced on all market participants will in effect be a tax on Irish jobs.

Paddy Power already pays €41 million annually to the Irish Exchequer, €19 million of which comes from our Internet and telephone activities located in Ireland. We have no issue paying betting tax on Internet betting as long as it is enforceable across the market. We do, however, advocate that all taxes collected should go to the Exchequer to allow the Government to decide how best to use them in the overall interests of the country. The Government has given €540 million over the past decade to Horse Racing Ireland and if it decides to give a further €540 million over the next decade, that is its prerogative. However, an automatic link between betting taxes and funding horse racing is not in the State's interests because it reduces the Government's flexibility and cannot lead to an efficient system if the recipient knows its funding is guaranteed. We need rational tax systems rather than ones based on an artificial connection to a sector with which there are increasingly tenuous links.

It is clear that the link between betting operations and Irish racing is increasingly without substance. The Government cannot justify granting €540 million over ten years directly to Irish horse racing when hospitals and schools are crying out for funding. Therefore, this subsidy is hidden behind an increasingly flimsy link to betting tax. That charade may well continue but it is fooling nobody. We will continue to grow aggressively internationally. We would like the committee to help ensure our hope that this country benefits from that growth.

Chairman

Before calling on the witnesses from Bord na gCon and Horse Racing Ireland, we should note that this debate has been ongoing on the airwaves for some time. I am the new Chairman of the committee and when I heard Mr. Ted Walsh and others discuss this at some race meeting as I watched television one weekend, I became conscious that it is a live issue. There is much interest in it among the committee and it is a very serious matter for the industries which are part and parcel of what we are. There are very valuable jobs in these industries and that key point has been made by everybody. There are also issues surrounding tax and on-line betting.

We are trying to put a shape on this and we are here as a supportive committee trying to help the Government of the day. We are all behind any efforts to provide, sustain and create jobs, especially in the high technology area. We are making a supportive commitment today.

The representatives from Bord na gCon will be next and the witnesses from Horse Racing Ireland will follow.

Mr. Adrian Neilan

I am the chief executive officer of the Irish Greyhound Board. I will begin by talking a little about the Irish greyhound industry. There are 17 stadia in the Republic of Ireland, with nine owned directly by Bord na gCon and eight privately owned. These provide the nucleus for the greyhound industry ecosystem which has spread throughout rural Ireland.

There are approximately 11,000 people deriving employment both directly and indirectly from the industry in Ireland, and it is also responsible for more than €500 million in economic turnover. This level of employment is also consistent with surveys completed in 1996. Most of these jobs are rural-based and in some locations the greyhound industry provides the only level of meaningful employment.

In 2010 the greyhound industry will receive €11.8 million via the horse and greyhound fund. However, during this period, Bord na gCon will return €5.5 million in direct and indirect taxes to the Government. In addition, based on 2009 figures, Bord na gCon will receive €6.2 million from the off-course bookmakers as a result of the 1% turnover levy. Therefore, at current levels of funding, the Irish greyhound industry costs virtually nothing to taxpayers while providing nearly 11,000 jobs.

This is clearly unsustainable and policy makers must understand that to protect this level of employment, meaningful long-term investment must be made. We are all well aware of the level of ongoing investment both the IDA and Enterprise Ireland make in companies which do not provide a fraction of the employment levels that the greyhound industry supports, especially employment that cannot be moved offshore to low-cost regions.

With moneys received from the horse and greyhound fund we have delivered on an aggressive capital development program which has meant we now have 11 fully developed facilities nationwide. This level of investment comes to more than €90 million. Developing our facilities means we can market our stadia to a wider audience that allows our stadia to go from loss-making to delivering a positive cash contribution to the industry. Taking Cork and Mullingar as recent examples, our capital investment programmes in these locations have yielded over 10% per annum without considering the wider economic benefits to the community of having developed facilities.

Our current capital development programme in Limerick allows more than 250 people to get employment over the course of construction of the stadium and will result in more than 100 people being employed during the course of its operation. Its construction is seen as a very clear example of effective regeneration in the entire mid-west and the level of local interest from schools, hospitals and clubs has exceeded all expectations. This again shows the value and economic benefit of the greyhound industry to Ireland.

Bord na gCon contributed €7.9 million to overall industry prize money in 2009. Based upon 21,371 races, this corresponds to an allocation of €369 per race. I am sure we can all agree that this level of investment is very prudent given the cost to the greyhound owners in getting six runners entered and ready for competition. Each year the cost to greyhound owners of keeping the so-called greyhound pipeline in operation is €257 million. This is a significant return to local rural economies.

During this time the greyhound owners compete for around €11 million in overall prize money. Accordingly, nobody can reasonably state that Bord na gCon is paying too much in prize money. It is clear that the opposite is the case and given the significant reduction of the 2010 horse and greyhound fund, we had to reduce prize money to compensate. Given the employment level, this is not the economic action that should be taken. However, we have no choice given the level of funding we are receiving.

The greyhound industry has been enormously successful in helping various clubs, social groups, schools and social causes in raising more than €7 million a year in funding via the use of our stadia. This ensures the needs of these very necessary causes are met and that the Government does not have to foot the bill. While trying to encourage wider economic growth, Bord na gCon has also been very focused in running a very commercial operation and trying to ensure high levels of capital surplus can be delivered each year to fund capital developments and pay down capital debt. In both 2007 and 2008 we delivered a surplus of more than €5 million each year as against a surplus of €2.2 million in 2006.

In 2009 we have again been very focused on cost controls and have reduced our labour costs by more than €1.3 million. In combination with other cuts, this represents a 25% reduction in labour costs over 2007 figures. This change is also down to the very good people who are proud to work with a successful industry and want to ensure it survives into the future.

Not only do we face many funding pressures as a result of the reduction in the fund, we also need to invest continually in welfare integrity programmes to safeguard the industry. These investments clearly are very significant, with more than €6 million a year provided for this purpose.

The greyhound industry is at serious risk from the Dog Breeding Establishments Bill which is in draft format and the subject of much debate. Greyhound integrity, control and welfare have been regulated by the Greyhound Industry Act 1958 and subsequent amendments, most notably in 1961, as well as significant revamping due to the industry's 2006 strategic plan, and we are at a loss to understand why the greyhound industry should be subject to a new tranche of legislation which does not reference our 1958 Act and which both bestows duplicate registration on owners and double inspection systems on greyhound establishments. The wording of the Bill will promote discord and confusion as to the governing authority. Owing to the movement of greyhounds from breeders to owners to trainers it will mean that under the new proposed Act, all these stakeholders will become so-called breeding establishments. This will result in less breeding in Ireland and destroy the greyhound industry. Those in the greyhound industry are more than happy to work with any Department in identifying any concerns and look to address them via updates to the 1958 Act. As a Government body, being self-regulated means holding ourselves to the highest possible standard.

We are aware from our research that more than €1.5 billion is wagered on greyhound racing in the UK each year. Over 77% of the greyhounds racing in the UK are Irish-bred and registered in Ireland before being exported to the UK. Consequently, based upon a crude ratio of bookmaker shops in the UK and Ireland, one can extrapolate that a turnover of more than €115 million is derived by Irish bookmaker chains on bets placed on Irish greyhound in the UK. It is clear that the majority of the business in the Irish bookmaker shops in the morning and early afternoon comes from greyhound racing.

We are aware of the high level of cross-party support for the greyhound industry in Ireland. I am sure the committee now understands the significant level of employment and economic turnover driven by the industry. It should be clear from this submission how commercially focused the organisation is in ensuring administration costs are minimised and all moneys derived are used to grow and promote both the sport and industry that is greyhound racing.

The greyhound industry appreciates the high level of employment the bookmaker industry also provides to Ireland and most bookmakers also contribute to the direct sponsorship of Irish greyhound racing. We also applaud the commercial success of some of the larger bookmaker and wagering organisations. However, with proper dialogue and a pragmatic understanding of the greyhound industry's contribution to Ireland, there should be a funding mechanism that can allow the Irish greyhound industry to continue to support the high level of employment, especially in rural areas, maintained so far.

Greyhound racing has been an outstanding success story over recent years under the leadership of former chairmen, Mr. Pascal Taggart and Mr. Dick O'Sullivan. From the success it can be seen how to be transformed into a wide-ranging and exciting consumer brand. Based on inquiries we have received from other countries, it seems there is a wish to replicate the Irish success story that is greyhound racing. It is only with proper long-term funding that this opportunity can be realised.

I look forward to working with the committee to ensure we derive a level of secure funding for the industry. Consideration should be given to changes to the betting levy and who pays for that levy, as well as considering the introduction of a simple credit card transaction tariff levied by the banks and credit card companies on customers that ensures a consistent method of generating a level playing field for all the bookmaker companies operating out of this country. Therefore, Chairman, I look forward to both your and the committee's review and consideration of my points in order to develop a sustainable funding model for the Irish greyhound industry and its enormous value for money.

Chairman

I thank Mr. Neilen. The final presentation will be made by Mr. Brian Kavanagh from Horse Racing Ireland.

Mr. Brian Kavanagh

I am grateful for the opportunity to make a presentation to the committee and for the support which the committee has shown for our industry in the past. I am chief executive and Accounting Officer of Horse Racing Ireland. I am accompanied by Mr. Michael O'Hagan, general manager of Irish Thoroughbred Marketing, which is the company responsible for the export of Irish bloodstock to more than 30 countries around the world, and Mr. John Oxx, a face with which some members might be familiar. He is one of our leading trainers and was responsible for the world champion racehorse, Sea the Stars. He is typical of the hundreds of small and medium-sized enterprises involved in our industry, employing 50 people from his Curragh base and selling his services to an international list of owners.

The debate is about the future of rural Ireland. I am grateful for the opportunity to give some of the facts and figures about the industry before we commence a discussion of the betting issue. In these desperate times, great effort is made to find new industries which will lead Ireland out of recession. We have such an industry in horse racing. We are told such companies should be sustainable, export-driven and environmentally sound. Horse racing and breeding ticks all those boxes. It is a sector in which this country is an acknowledged world leader. For a small country we have always punched way above our weight. Ireland produces more than 42% of the European output of thoroughbreds and 11% of the total worldwide.

A report published by the economist, Mr. Alan Dukes, last year found that the industry makes a contribution of €1.1 billion annually to the Irish economy. The State obtains a far greater return from the racing and breeding industry than the amount of funding which it invests. Our success in the industry can be traced to a combination of factors, including, believe it or not on a day such as today, our climate, which is suitable to raising horses, our soil structure, which is limestone based which generates good bone structure and creates durable horses, an indigenous skills base and a positive approach by successive Governments towards the industry. To put it simply; Irish people are good with horses.

For those reasons, Government has always taken a strong interest in the industry as evidenced by the turnout today. Various pieces of legislation have been enacted, dating from the Totalisator Act of 1929 through to the Horse and Greyhound Racing Act 2001. This positive approach has helped create an economic, sporting and social success story and the very type of industry which as a country we are now frantically trying to create.

I will outline the background to the industry and why the State should support it. We have heard much talk today about jobs. That is the main reason support should be provided to the industry. The Dukes report found that approximately 16,000 jobs were supported by the industry — 22,000 when the betting sector is included. Most of the jobs are in rural Ireland where alternatives are very thin on the ground.

Behind the appearance of a horse at a race track lies a whole network of employment in the breeding, training, transport and veterinary sectors. Those jobs are spread throughout the country and, as Mr. Neilen indicated, in many cases are the largest source of employment in some towns and villages. The Dukes report gave some factual examples of which I will list a few. A total of 428 people are employed in the industry in the Bagenalstown area in County Carlow; 259 people are employed in the vicinity of Enniscorthy in County Wexford; 324 people are employed in Navan in County Meath; and 162 people are employed in Fermoy in County Cork. The survey considered employment within a nine mile radius of those towns. Can one imagine the fanfare if a multinational company announced it was building a factory in Bagenalstown to employ 428 people? Those figures are replicated throughout much of the country. In my county of Kildare, it is estimated that up to 3,000 people are employed in horse racing, breeding and ancillary activities. Coolmore Stud in south Tipperary is the leading stud farm in the world and together with associated operations employs up to 1,000 people at the height of the season. By any criteria, this industry is important from a jobs perspective.

The second criteria on which the industry should be measured is success. By any measurement, Irish horses and trainers are top of the tree. Horse racing has been the sport in which Ireland has enjoyed the most consistent level of international success in the past ten years. Irish trainers have won five of the last ten Epsom Derbys — two were won by the man sitting on my left, Mr. Oxx — five of the last ten Aintree Grand Nationals, three of the last ten runnings of the Prix de l'Arc de Triomphe, the most important flat race in the world, and seven of the last 12 runnings of the Champion Hurdle at Cheltenham. Those successes bring great credit to our country in terms of its reputation and image internationally.

All the focus currently seems to be on exports. Last year Irish horses were exported to more than 33 countries worldwide with a total value of €175 million. From Morocco to India and from New Zealand to Russia, people come to Ireland to buy our horses. Yesterday, Mr. O'Hagan and I met a delegation from Korea interested in buying horses. The major international race meetings are a shop window for our bloodstock and in that respect the fact that 15 of the winners at the recent Cheltenham festival were Irish bred or that three of the top four flat horses in the world last year were Irish bred is of huge significance. Trainers such as Mr. John Oxx are selling their services to an international market, and as the industry has developed we have seen many of the major international horse breeders buy property in Ireland and base their bloodstock here which contributes enormously to the country's balance of payments.

Racing also plays an important role in one of the other major areas under the Chairman's brief, namely, tourism. Research by Tourism Ireland showed that approximately 70,000 tourists came to Ireland in 2009 to attend race meetings on 123,000 occasions. The major racing festivals are a key component of the tourism product in many parts of the country, especially in the west. Ballinrobe in County Mayo is a perfect example of a well-run small racecourse, while the racing festivals are major contributors to the economies of towns and cities such as Killarney, Listowel, Tramore and even Galway. The horse has been a marvellous ambassador for Ireland internationally and the success of Irish-trained and Irish-bred horses has created enormous goodwill and profile for our country. The horse is a major positive association for our country and, as the Chairman said, is an important aspect of our heritage and culture. The Irish name for the Curragh is translated as the place of the running horse.

Horse breeding is probably the most environmentally sound agricultural activity, with low-intensive land use, minimal chemical and fertiliser requirements and a general conservation ethos demonstrated by most industry practitioners. The industry is responsible for the preservation of large green areas close to many towns and cities and the presentation of training facilities and stud farms enhances numerous towns and villages throughout Ireland.

Those are some of the good things about the industry. Each one of them on its own is a reason the industry should be protected and developed. However, it would be wrong to give the impression that everything is rosy in the garden. That is not the case. The industry is under serious pressure. We estimate that approximately 2,000 jobs have been lost in the past 18 months. This year we expect to see the number of Irish-born foals reduce by 30% from its peak in 2008. Statistics released last week show that approximately 50 trainers have relinquished their licences this year which will impact on a significant number of jobs.

As the chairman, Mr. Denis Brosnan has said, when 2,000 jobs were lost at Dell in Limerick, it was considered such a crisis that he was asked to chair a task force to examine how the economy of the mid-west region could be revitalised. Because the job losses in the horse racing industry are spread throughout the country and are in small numbers, they do not receive the same attention. However, when added together, they amount to a similar crisis.

Like any other industry, ours is feeling the effects of the recession. That would be enough on its own. However, the problem is exacerbated by a funding uncertainty which has the most serious long-term implications for our sport. In 2001, the Oireachtas enacted legislation with all-party support in the Dáil and Seanad to provide a secure and long-term funding structure for the horse and greyhound racing industries. That was for the reasons I mentioned earlier and to allow the industries to plan strategically and develop in the long term. The fundamental principle behind the legislation was that betting tax was to be ring-fenced for the development of these sectors. That principle is sound for two reasons. First, because Ireland has the most open betting market in the world and needs such a mechanism and, second, because the principle applies worldwide that betting funds racing. In 2001, total betting in Ireland was €1.3 billion with an estimated tax take of €68 million. That provided an appropriate level of funding for the two industries. The 2001 legislation also contained a provision that should the tax take fall below this figure the balance would be made up from central Exchequer funds. That is the nub of the funding issue which the industry now faces.

Since 2001, due to changes in betting technology and decreases in the rate of betting tax, while betting in Ireland has increased four-fold to more than €4 billion, the tax take to the State has fallen from €68 million to €31 million.

Betting in betting shops last year amounted to €3.1 billion — approximately 80% of which was on horse and greyhound racing — while telephone and internet betting amounted to somewhere between €1 billion and €1.7 billion. This is the fastest growing area of betting and has completely changed the betting landscape. In Paddy Power's recent annual report, the on-line business increased by 31%.

The other significant change since 2001 is that the liability for paying duty was switched from the punter to the bookmaker, meaning that betting is now an entirely tax-free activity for the punter in Ireland. The rate of betting tax which applies in betting shops in Ireland is now approximately half of the corresponding rate in the UK, and approximately one third of all betting in Ireland is now routed offshore in order to avoid paying betting duty to the State.

All of this has created a funding gap which has resulted in the Government having to top up betting tax by an equivalent amount from Exchequer funding to provide a significantly reduced amount to the horse and greyhound racing industries. That is not a situation which the racing industry ever envisaged or sought, and while such a supplement may have been acceptable in the good times, at a time of critical need in our education, health and welfare sectors, it is not sustainable.

What can be done? We are looking for the State to address the issue of betting. We have heard passionate views from all sides at this meeting. We want the State to obtain a fair rate of return from all betting activity, including telephone and internet betting, to ring-fence that as provided under the 2001 legislation, and allow the two industries to move on and create the jobs and economic activity which will help bring us out of the recession. The Department of Justice, Equality and Law Reform is actively looking at this area, and it has been encouraging in recent months to see the commitment of a number of betting operations, including Paddy Power and Betfair, to pay tax on their on-line and telephone businesses, provided the system implemented was fair and transparent.

It is our belief that there is more than enough funding available in a properly regulated and taxed betting market to meet the needs of horse and greyhound racing and to have a surplus left over for use by the Government. We ask the committee to urge the Government to address this anomaly to protect one of Ireland's true international success stories. Proposals have been submitted to the Department of Justice, Equality and Law Reform and the Department of Finance. Bookmakers have accepted the need to pay more and there continues to be all-party support for such an approach.

Chairman

Thank you very much. Your presentation has been very helpful and there is much food for thought for the various Ministers. I thank all the witnesses for the presentations today. As Chairman of this committee, I would like to acknowledge the presence of Mr. John Oxx and congratulate him on his great success. Mr. Kavanagh pointed out that Irish people are good with horses, but Mr. Oxx is particularly good and I thank him for the fantastic entertainment he has given to all of us over many years, especially his success with Sea the Stars. We rarely get a chance to welcome people who are involved in sport at such a high level and who represent that excellence in sport that we all admire.

I will now call on Deputy Mitchell and then Deputy Upton to begin the discussion.

Deputy Olivia Mitchell

I thank the witnesses for their presentations. We have met nearly all of them before, privately or publicly, but we have never met them all together. It is great to see that the only thing on which they agree is that they disagree on almost everything. Notwithstanding what is said by the witnesses from Paddy Power, there is a parasitical relationship between the horse and greyhound industry and the betting industry. They both need each other.

Notwithstanding the fact that responsibility for this area is being transferred to the Department of Agriculture, Fisheries and Food, the interest transcends committees. Everybody is interested in the horse and greyhound racing industry. I am conscious of the importance of the horse racing industry to our economy. We are world leaders in that industry and it provides jobs right across the country. It brings in badly-needed foreign revenue and it showcases Ireland positively at a time when we badly need it. It is true to say that the taxpayer has invested heavily in the industry, but it is an investment that has paid off.

We are here because the funding and tax regime that characterised the relationship between the betting industry and the racing industry has collapsed in recent years, for a variety of reasons. Everybody has been making their case and the outgoing Minister, former Deputy Cullen, has been speaking for the last two years about finding alternatives. Intuitively, I feel that a tax on turnover is inherently unfair. We cannot justify a situation where any business can pay tax when it has not made a profit. We could end up in a situation where a business pays tax having lost money, and that is unfair.

The on-line industry representatives are correct in stating that it would be grossly unfair just to tax those who are employing people in Ireland. If such a tax can be introduced, then we have to capture all on-line betting by Irish people. I accept that. I also contend that the taxpayer cannot go on supporting the horse or greyhound racing industry at the rate it has done in the past, given the economic circumstances. Every time we have raised this with the Minister, he has agreed that some new funding mechanism be found. He has never been very specific about that mechanism. In recent months, his replies indicated that there was co-operation taking place between various Departments to see how tax revenue could be raised in a fair way to fund the shortfall that has now emerged and which is currently being met by the taxpayer. He spoke about the Department of Foreign Affairs, the Department of Finance, the Department of Justice, Equality and Law Reform, the Department of Tourism, Culture and Sport, the Department of Agriculture, Fisheries and Food and the Revenue Commissioners all coming together. Have any of the witnesses been consulted about how this new tax might be found?

One consideration has been to try to compete with the likes of Gibraltar and offer a low-tax status to smart economy businesses coming here. Something like the so called "Beckham tax" would encourage businesses to come here. It would break the link between betting and funding sport, but it would also bring in quite a lot of revenue into the country and bring jobs here as well. Has this been considered at all?

Deputy Mary Upton

I thank everybody for their presentations. We have met with most witnesses already. Perhaps I prompted this discussion by publishing a document that I think all of them have read by now.

We are all agreed on certain things, one of which is that we must protect jobs. There are two very important industries, namely, the horse and greyhound industry and the betting industry. It is important to protect those industries as well. I also feel there is agreement to capture a tax on remote betting, provided it is fair. Maybe some people have a different view on that, but that is what I am hearing. It is all about ensuring we have a fair system that captures that on-line gambling tax that is not now available to us, but which should be available. The current situation is clearly unfair to those bookmakers who are paying a tax while there is no gambling tax associated with on-line betting. Reference was made to voluntary compliance, but that is something on which we do not have a good track record in this country. While it is a laudable idea and one I would be pleased to subscribe to, I do not have great confidence in the possible outcome. We must find another way.

We cannot continue to call down direct Exchequer funding to support two particular industries. However, we must recognise that gambling takes place in respect of many sports other than horse and greyhound racing. As such, some slice of any tax we take should certainly go back into those sports. An issue that is somewhat peripheral but very important is that of addictive gambling. There should be a process whereby some of the funds that are generated would be put towards assisting those who are dealing with the horrors of that addiction.

Oversight of the horse and greyhound racing industry is being moved from the former Department of Arts, Sport and Tourism to the Department of Agriculture, Fisheries and Food. It is important that there be co-operation between the various agencies and groups involved, some of whose interests are in conflict. If the Minister for Agriculture, Fisheries and Food, since it will be his responsibility, is willing to bring all the groups together, that would be a starting point. We could make a start today by agreeing to agree on those elements of our discussion that are not contentious. We must have a more efficient system.

Going back to remote gambling, many barriers have been raised, by Mr. Kennedy in particular, as to how a tax might operate. We cannot simply be entirely negative about it. I agree with much of what he said in regard to such issues as people who are working in Ireland. We cannot allow those people to be disadvantaged. Any tax must be fair and across the board and should be charged on the basis of bets that are placed in Ireland; it should not affect people working in Ireland for those companies. In the case of any bet that is placed in Ireland, whether the operator is located offshore or not, a tax should come back from it. I accept it is not easy to put in place a system that will capture the tax. It has been tried in other countries with varying degrees of success. There are positive developments taking place in France and the European Union is looking at the issue. There are possible ways forward that can be considered.

Chairman

Deputy Upton has done a great deal of research in this area and I thank her for her contribution. I echo what she said in that we must seek to facilitate solutions. Politics is about finding solutions and our objective must be to identify constructive suggestions. I appreciate the attitude adopted by all the organisations. We will seek to highlight the issues on which there is agreement and to look at best practice in other countries.

Deputies Mitchell and Upton have asked to be excused in order to prepare for Question Time with the new Minister at 2.30 p.m. They will undoubtedly keep a close eye on what is being said and will follow up with the delegates if necessary.

Deputy Michael Fitzpatrick

I thank the Chairman for allowing me to speak at the meeting. I begin by acknowledging that I have had a close association with the racing industry over many years. We have three highly-rated tracks in County Kildare. While I am not directly involved in the betting industry, my son, Dara, is involved both on-course and off-course.

I have several questions for Mr. Kavanagh of Horse Racing Ireland. Paddy Power recently ran a newspaper advertisement relating certain facts and figures. Will Mr. Kavanagh comment on that? Why has HRI not engaged with the betting industry to improve fixtures lists and hence the betting yield for betting shops? Is there any particular reason that the all-weather track in Dundalk did not perform to its maximum last winter? There is a golden opportunity there. Sources in the industry tell me that whenever there is a race meeting, it is beneficial to businesses. Friday night and Wednesday race meetings, for example, would be a great boost to local shops. Is there any reason that the average prize money is much higher in Ireland than in the United Kingdom?

On Internet betting, what is the income, if any, derived to HRI from the sale of live pictures? It is my understanding that HRI has full control, and perhaps ownership, of several s in Ireland. How many courses does HRI own? Is there an element of unfair competition between State owned and privately-owned courses?

The Tote now operates at all Irish courses. Is it true that it does not make any tax contribution to the industry and may even, in some cases, demand tax from bookmakers and betting shops? I read in the newspapers about the offer of sponsorship from Betfair. I fail to understand why HRI has not availed of the opportunity to engage in constructive dialogue with the company in order to enable agreement to be reached on this. While I understand why Punchestown management turned it down, €100,000 is a huge amount of money. Why is attendance at race meetings declining? I understand HRI spent some €500 million on promotion in recent years but to little apparent effect.

William Hill has said it pulled out of Athlone because of the tax regime. Perhaps we should set up some type of committee, possibly comprising members of this committee, to investigate how we can ensure that all operators in the gambling industry are working on a level playing field and so that companies such as Paddy Power cannot say that if they are disenfranchised or disadvantaged they will move their operation out of the country. With all the brains around this table and all the people in the industry, could a group be formed to make a worthwhile submission to the Department of Finance to see how we can get over this problem? We will probably not be allowed to set up a tax-free area in Ireland, with call centres located there, but there must be some way in which this issue can be addressed.

Many punters will sit at home watching television and bet on the Internet and through other credit card betting. Why should they not? Why should they travel to a race meeting and pay a pretty hefty admission fee for a race card and all the other expenses when they can sit at home and have a good day's enjoyment watching from the comfort of their own fireplace?

Chairman

I will call the Deputy to a stop shortly. He has jumped a fair few fences.

Deputy Michael Fitzpatrick

Corporate entertainment appears to be cheaper at Fairyhouse than Punchestown. Is there a reason for this other than competition? On another point, while I am not referring to Mr. Oxx, what influence would Horse Racing Ireland be subject to from owners and trainers in its operation of race courses?

Chairman

I am anxious to have as many members contribute as possible and to then leave time for responses. The witnesses should take note of the questions. I call Deputy Barrett.

Deputy Seán Barrett

Like Deputy Fitzpatrick, I should declare an interest in that I am involved in a company that insures horses, although I do not believe it has any direct impact on this discussion. From time to time, I have owned a half a leg or a tail in a horse so, if that is a vested interest, I suppose I had better declare it also, in accordance with the rules of the House.

Having listened to the debate, nobody referred at all to the owner. One thing is for certain: one cannot have race meetings without horses, and to have horses, one needs somebody to own them, somebody to train them and also somebody to provide a facility where they can race. We are talking about a very large industry in which we are one of the leaders in the world. We will not have owners unless we have prize money. Anybody who fools themselves into thinking that winning a race will set a person up for the year is wrong. The prize money is reducing simply because the funds available to Horse Racing Ireland to go into prize money are reducing. If that happens, it affects the whole breeding industry and jobs in rural Ireland, it affects training establishments where there are fewer horses to be trained and fewer people working in the stables, and it affects the trainers who have overdrafts, like anybody in business, because they have to run an establishment where they train horses. At the end of the day, no business in the world can escape this fact.

Can anyone imagine owning a theatre, putting on a show, opening the door and letting everybody in for nothing? If people are to be able to bet and look at a source of entertainment, whether it is through television or by attendance at a racetrack, they will have to make a contribution towards it. The taxpayers cannot be expected to keep dipping their hands into their pocket to pay for this. It is those who are involved in the industry who will have to be involved, particularly those in the betting industry.

As was stated, there are approximately 16,000 people employed in the racing industry in various parts of the country where there is very little other opportunity, and I understand 11,000 people are involved in employment in the greyhound industry. We are talking about a huge business. The reality is that the breeding end of the business is becoming extremely competitive. I have a document before me which outlines that the French are offering huge premiums to people basing their mares in France. We are under attack. We are very fortunate, when we talk about Sea the Stars, whose owner is not Irish, that this horse was left in this country. A horse does not know what country it is in. It can breed in Australia, America, France or anywhere else. We are under attack, like any other business, in the fight to retain top quality mares and stallions in this country, and anybody who thinks otherwise is fooling themselves.

We can talk about betting shops and off-course betting and all the rest. If we do not have an industry here, we have nothing. At present, we export 85% of what we produce. There is no other business in Ireland that exports 85% of what it produces but that is what the breeding industry does, which results in foreign money being brought into this country. The reality, if anybody went to the trouble of going to the horse sales recently, is that prices are down 50% to 80%. The breeders are now in serious difficulty and not only because of the competition from abroad. These realities have to creep in.

With the greatest of respect to people who say that all the money raised should go into the Government pool and should be then distributed out, that is dreamland. Anybody who knows anything about what has been happening over recent years knows that ill-informed commentators have been comparing what the luxury racing business is getting out of the taxpayer of this country compared with other sports simply because it was transferred to the Department of Arts, Sport and Tourism. If one examines the Estimates, one will see that racing is supposed to be getting €60 million and that athletics is getting, say, €5 million. This is painting completely the wrong picture about an industry.

Let us deal with the betting industry. In the US, Japan and France, the racing industry owns its own gambling product and all profits come back into the industry. Recently, as a result of a competition case taken to the European Court, there will now be off-course Internet pari-mutuel betting. However, I understand the French Government is insisting on 8% coming back into the industry. We are talking about 1% here.

On another point, if we want to attract people to any event, we need good facilities. Take the Curragh racetrack. Somebody was prepared to invest some of their money into that track courtesy of the Aga Khan but that has been put on hold. This is where we are staging our main showpiece, the Irish Derby, but that has to be put on hold because there is no money. In this day and age, we cannot go to the taxpayer to ask them to fund new racetracks and pay for prize money. That is not real. As politicians, and I am sure I speak for everyone present, we cannot ask people to dip their hands in their pockets to pay for racing. It has to pay for itself.

We have to put aside all our vested interests and come up with a solution to this problem. I was part of a Government that took over in 1982 when betting tax in this country was 21%. Mr. Alan Dukes, as Minister for Finance, in his first budget reduced it to 10% and it was subsequently reduced to 5% and then to 2%. Then, I understand, the bookmakers, instead of charging the punter, took it upon themselves to contribute 1% of turnover. As was said, that is unfair to the small person and is perhaps putting them out of business because the big person can carry that 1%. However, the reality is the tax was 21%.

Things were bad in 1982 but, bad and all as they were, they were not as bad as they are now. Can anyone imagine us asking the people to fund racing from taxes today? It will not happen. None the less, there must be some solution to this issue. If I bet €100, I do not think it is too much to pay €2 in taxes for the racetrack, television coverage and other facilities. That applies across the board, even if one is based in the UK and collecting money from Irish people betting on Irish racing. That money should be collected on behalf of the Irish industry and submitted to the Exchequer. It should not solely apply to the person who is caught in Ireland.

This is a very important industry but it is on the downward slide. It will be difficult to build it up again and if the facilities or horses are not good, people will not attend races. Anybody who knows anything about racing will attest that Leopardstown is jammed when Sea the Stars races there. The reality is that people want to see the best. We have a breeding industry that produces good horses and creates employment in all parts of this country. We have to ensure these horses remain here for breeding. A mare does not know what country she is breeding in but if we do not have good stallions, we will not attract mares to be covered by them. I appeal to everybody to wake up to what is happening to this industry.

It is not a question of being pro or anti-bookmaker, it is about reality and everybody having to live together. As one cannot dream of asking the taxpayer to fund the industry, another solution has to be found and if this entails requiring the funder to pay a percentage which is passed to a central fund, so be it. There will be no television betting or bookmakers' offices without racetracks and horses.

Chairman

As the witnesses will realise, members have a strong interest in and knowledge of this area.

Deputy Seán Power

I will be brief because, in show jumping terms, we are jumping against the clock given that the Chairman intends to conclude at 2.30 p.m. It is wonderful that so many people have appeared before us to express their views on how we can put in place a fair and equitable funding structure for horse racing. The horse racing industry is one of the few sectors in which we are recognised as world leaders. This recognition has required a lot of effort and energy and it is important we make every effort to retain our status.

My colleague, Deputy Barrett, referred to the decision taken by Alan Dukes in the early 1980s to reduce the tax rate, which I understood was 20% at the time. I admit, however, that in a previous existence I was chairperson of the Irish Bookmakers Association and member of a delegation which met Mr. Dukes. That association claimed credit for convincing him to make the change but others were clearly working behind the scenes. Like Deputy Barrett, I have a history of involvement in horse and greyhound racing. My education came from owning the legs of a few slow animals in my time and I am at present the president of the Irish Stable Staff Association.

To add clarity to the claim by Mr. O'Reilly from Betfair in regard to the horse racing industry's refusal, the industry did not refuse anything. Perhaps he can expand on the discussions held on Punchestown. While I can understand the perspective of Horse Racing Ireland, it is unfortunate that Betfair's plans to sponsor Punchestown are not being proceeded with at a time when sponsorship is so scarce. Would he accept that the voluntary contribution his company is making is not sustainable in the long term and that we have to arrive at a permanent solution in the interest of the industry?

I thank Mr. Kavanagh for his contribution on Horse Racing Ireland. He referred to the legislation enacted in 2001 to allow the agency to plan strategically for the industry. Mr. Kennedy from Paddy Power stated that the automatic link was not in the best interest of the State and that the guaranteed income did not lead to efficiencies. I ask for Mr. Kavanagh's response to that claim.

I take my hat off to Bord na gCon for selling greyhound racing as an attractive product. People who may know very little about greyhound racing can go to the track on a Saturday night, eat a meal or a snack and have an enjoyable time.

As someone who follows both sports, I believe the average age of those who attend greyhound racing is a lot younger than those who follow horse racing. Perhaps Mr. Kavanagh can outline his plans for attracting new people and marketing his sport.

We depend on our national newspapers for details of race meetings and horses but how would we deal with a scenario where they decided in the morning that they would no longer carry this information?

Mr. Kennedy said Paddy Power is prepared to pay its share provided this does not entail a tax on employing people in Ireland. Simple solutions are often proffered for complex problems. The Internet has dramatically changed how people gamble and one can bet on nearly everything in many countries throughout the world, but the Government is getting no return on the millions of euro spent. What advice would Mr. Kennedy give to the Minister for Finance in drawing up a new scheme?

Deputy Jack Wall

I welcome the delegations. I am sure many more representatives of these industries would share their concerns about the financing of the industry, although perhaps not as much as the bookmakers. Perhaps I am the only member of this committee who was a Deputy when legislation on funding the horse and greyhound racing industry was before the House in 2001. This was seen a progressive initiative which would put the industry on a sustainable basis by 2008. The bookmakers were responsible for a change to the regime in 2004 which meant that the gap was far wider in 2008 than it was seven years earlier. Nobody can get over the fact that in 2001 we had €1.3 billion in bets generating €68 million for the Exchequer and in the current economic climate, we have €4.5 billion in bets generating approximately half that figure at €31 million. Deputy John O'Donoghue was the Minister of the time and he got everybody on board in getting a positive plan in place to ensure Horse Racing Ireland would act. Three or four of my colleagues from Kildare are present today and we benefited from that action. Horse racing facilities at Punchestown, Naas and the Curragh as well as the greyhound track at Newbridge were upgraded and we reaped the benefits.

It would be short-sighted not to give funding in the proper proportions to Horse Racing Ireland and Bord na gCon as they could not make plans as a result. If funding is hit and miss, no plan can be put in place, which will be detrimental to both industries. A significant number of people in Kildare are employed on stud farms as trainers, for example. I acknowledge the presence of Mr. John Oxx, one of the leading trainers in Kildare. One can see in the Cill Dara Golf Club the number of people employed by Mr. Oxx in his stable. That is indicative of the entire county. With regard to the greyhound industry, there are more derbies and trainers in Rathangan than in any other part of Ireland.

We are speaking individually today but we must act collectively on this. Deputies Barrett, Seán Power, Fitzpatrick, Upton and Mitchell all want to see the industry survive but it cannot do so if we are fragmented or if there is talk of the industry going overseas. That is a negative attitude to something that has been very positive to the establishment of the organisations represented today. I would rather see a positive attitude today so that we could talk about meeting to facilitate funding for the likes of Bord na gCon or the HRI to plan for the long term. Any other action is negative and misses the point.

We should not let greed or money destroy this wonderful industry that has Ireland at a level that is seldom matched, if at all, around the world. I hope that after today's meeting, the leaders in the bookmaking industry will think about how to move on. A point has been made that even the stable boys are important. We should work together to ensure the protection of the industry because there is no way in the earthly world that we, as politicians, can give as much to the horse and greyhound fund as we have done.

The future of these two wonderful industries is as much in the hands of the governing bodies as it is in ours. If they are not positive in their thinking towards a solution, it is on their heads. It is not fair to try to blame the elected representatives because we have acted in 2001, 2004 and 2008 to try to sustain and develop the industry. It is the turn of the governing bodies to try to achieve the protection and future development of the industry.

Deputy Michael P. Kitt

I join in welcoming all our visitors today. Ireland is a world leader in this important industry, which is at least one good news story from this. We have provided some new facilities in a number of places, both for horse and greyhound racing. It has been mentioned that more investment is needed in some places and I hope it will happen.

I support in particular what has been said about the 2001 legislation. Funding could be ring-fenced from betting activity to create jobs and stimulate economic activity. A case was made by the group representing smaller bookmakers, and they are the businesses in smaller towns. It was a good decision to rescind the 2% levy as shop closures and job losses were avoided by that action.

The point has been made that betting has increased so much even in past ten years, with four times as much betting recorded as before. I am concerned that the tax take for the State has fallen from €68 million to €31 million, and we should deal with that issue today. I would like to see people meeting about that.

Deputy Upton referred to gambling addiction and compulsive gambling. More radio programmes are discussing the matter and there are all kinds of betting, even within racing. Would bookmakers suspend the accounts of people if they knew the circumstances of such people? The question is often asked in public houses and other places with regard to drinking problems. There are horror stories, so what do bookmakers think of their responsibility or role in the matter?

Senator Labhrás Ó Murchú

I thank the various groups who made presentations. They were very helpful. This committee has been proactively supportive of the horse racing and greyhound industries in previous meetings. We understand the significance and importance of the industry, especially from a public relations point of view internationally and bearing in mind the creation of jobs in areas that have not always benefited from the Celtic tiger.

Coming from Cashel I am keenly aware of the importance of the industry, and we have great pride and affection for the people who have made that industry successful, such as Mr. Vincent O'Brien, Mr. Tim Hyde, Mr. Mick Kinane and others. It is the same with the greyhound industry where we think of Mr. Dick Ryan of Goulds Cross, McKenna and Dalton. They have all played a very important role and I have seen the extent of the employment provided in that area at a time when there was no employment. The industry has made a major contribution.

I was a little disappointed to think it necessary today for the different groups — all part of the same industry — to make cross-references in the presentations. Social partnership was very successful in the past when the different players and partners were able to come together. This is the same industry and we must be very open and frank about it. It will be very difficult to see the subvention of the State maintained at the present level, even with the best will in the world and acknowledging the importance of the industry to the economy. There are many calls on the country's finances. The developments yesterday and this morning are indicative of this and we all realise the country is in a serious position.

I have one suggestion to make in the context of my commitment to the industry. I do not understand the betting world and am not an ardent betting fan. I had my fingers burnt on one occasion as a young person when I put my savings on the Queen Mother's horse, Devon Loch, and when I was counting my winnings having thought nothing could happen the horse decided to jump an imaginary obstacle. I have listened to the group representing small independent bookmakers. I echo the comments of Deputy Kitt. They are a very important part of the industry. We can only act as a conduit or facilitator. The time has come for a joint submission to Government by all the players. If we return to the committee again, discuss State subvention and realise that everybody has not bought into an approach, it will create a difficulty in the future. I am not sure if it is a question or a suggestion. I echo the comments of others today. It is time for the delegations to leave and meet on their own like social partners. They could get an outside mediator or facilitator and come up with a joint submission in the future. We will not be able to sustain and maintain the level of State funding which was provided in the past.

Chairman

I ask Senator Buttimer to be as brief as possible.

Senator Jerry Buttimer

I thank the delegates. I will be parochial in welcoming Mr. Liam Cashman who is from Cork and has had a proud association with the greyhound industry. In its presentation the Irish Independent Betting Offices Association hit the nail on the head. There are independent small operators who are in trouble and have lost shops and jobs. It behoves all of us to keep such people going.

As has been mentioned, one of the biggest threats today to the greyhound industry is in the Dog Breeding Establishment Bill, something which has been glossed over here today. As a committee we have an obligation and duty to address the matter. I appeal to the members of the committee to go back to the Minister, Deputy Gormley, and make him amend the Bill in order that we can have a viable greyhound industry in the future. If we can do that we will have achieved a great deal. That is a job which we all have to do. I challenge all the members of the committee to get the Bill amended immediately.

Deputy Barrett is correct. There are vested interests here today. We have a collective obligation to come together, perhaps in the form of social partnership, to preserve and protect one of the best, if not the best, industries in the country. I refer to the Cheltenham festival which took place a number of weeks ago. I do not want to be patronising to Mr. Oxx, who is before the committee. If we are serious about having a generation of stars like Sea the Stars or other horses which we had in the past and the dogs in the greyhound industry then minds must come together.

I was very disappointed with Mr. Kennedy's remarks today. I do not like to hear phrases like "To grow aggressively" in a committee. It is about positivity and working in partnership. I understand the delegates all have roles to play and must look after themselves — the phrase is man mind thyself or lady mind thyself. If we do not have people like Mr. Oxx, owners, horses like Sea the Stars, Mr. Ruby Walsh or whoever else, the industry has nothing.

Mr. Patrick Kennedy

The Senator is wrong.

Senator Jerry Buttimer

I am not completely wrong. I know Mr. Kennedy can throw out figures. I do not buy figures because they can be manipulated, as we saw yesterday with the banks. I have no vested interests or allegiances, but we need to have a level of co-operation and mutual understanding, whereby we can all see the industry and jobs provided by the delegates staying in Ireland. That is the bottom line. To that end, I have one question for Horse Racing Ireland. I have examined its excellent report. The attendance figures baffle me. It has postponed work in the Curragh, which I understand.

Deputy Fitzpatrick referred to Dundalk and the all-weather track. Has any consideration been given to changing some of the tracks to all-weather tracks and having more meetings at night?

Deputy Power referred to Bord na gCon. I live in Bishopstown, which is next to Cork greyhound track and to which I regularly go. Its model should be used by Horse Racing Ireland. Has it any plans to develop all-weather tracks in Cork or other areas? Some of the figures indicate that one can attract people to visit race meetings. Some of the tracks are not sustainable.

My final question concerns on-line betting. Is there a willingness from the major players to meet halfway? Is there a willingness to have consensus in the future? I do not get a sense today that there is. I know we are constrained for time so I will conclude.

Chairman

I thank all of my colleagues who have participated. It is a very important issue and one in which there is major interest. It is a growth area which is why we are discussing it. As the new Chairman of the committee I propose we have such a meeting, from the point of view of having open dialogue. Dialogue is always vital. This dialogue would be very useful for the Ministers who have to make decisions on the matter. I will not go over any of the ground covered but, with the agreement of my colleagues, I propose that we ask the Minister for Finance, Deputy Lenihan, to liaise with other relevant Ministers in order to continue to support and protect the horse and greyhound racing industries and to note the view expressed by the witnesses present here today regarding the preparation of legislation in this area in the future. That is a summary of the views expressed here.

It is complex and it is clear there are vested interests. I have been impressed by the fact that people have come in with positive suggestions. We are living in a high-tech era and the Government is talking about the smart economy. This agenda is changing all the time with new ways of betting. I know a little about that but I will not get into it. I do not own the leg of a horse or dog or anything else, but I am one of the ordinary punters who goes to their local betting shop and I also attend race and greyhound meetings. It is a vital industry and an important part of Irish life. It provides entertainment for a lot of people and we know the entertainment industry is growing, even in these recessionary times. There is potential for growth. We want to protect and grow jobs. We will use this information.

Deputy Seán Power

I regret I have to depart.

Chairman

You are excused. Many comments were addressed to Mr. Kavanagh and Mr. Kennedy. I will give the witnesses two or three minutes to respond. I remind them that all their remarks are on the record and we will make use of that.

Mr. Brian Kavanagh

Trying to answer all the questions is a bit like Saturday week's Grand National. If I cannot answer them in three minutes I will deal with them with the Deputies outside the meeting. There are two or three key issues. The question of prize money was raised and Mr. Oxx is better able than I to address that. In effect, our prize money in Ireland is, as Deputy Barrett said, an incentive to encourage owners to buy horses and put them in training. The investment which Horse Racing Ireland put into prize money produced a return of €275 million as a result of owners having horses in training. The best example is a 30 runner race. Only one horse wins the race, but the other 29 cost the same to feed, train, shoe, vet and whatever, which all builds up to a significant investment on the part of owners in jobs in rural Ireland. That is the issue with prize money.

Quite often we hear criticisms of our prize money. It is now significantly lower than the level which applies in France. We are already seeing a movement of horses away from Ireland to France. Half of the prize fund in Ireland is put up by owners, in the form of entry fees, and sponsors. Prize money operates as a filter, in that trainers, jockeys and stable staff all receive a significant proportion of some 30% of the total prize money. It filters down and is an important part of the income of those people.

With regard to the last question on the plans to build a second all-weather track, we had plans to build it in the south of the country. Dundalk has been a success but those plans are on hold, given the cutback in our funding. We have had to put all of our capital development programmes at all our racecourses on hold. It is a big concern for us in the future. It will have an impact on our attendance figures in the future and it is not sustainable in the long run. We cannot develop an industry without being able to invest in our key racecourses. This country has a relatively high number of race tracks — 26 — relative to other countries. I pay tribute to the racecourse owners. Deputy Barrett touched on the issue. I assure him that none of the racecourses are about to be launched on the Stock Exchange. They are put at the disposal of the racing industry by landowners. Committees are often composed of family or local groupings that have had the racecourses in their ownership for years to run race meetings effectively. If one took a long, hard cold business look at it, one would say that with 4 million people, 26 racecourses are too many compared with Britain where there are 60 racecourses for 60 million people. However, racecourses are a vibrant part of the local economy in rural areas. It is not as straightforward as saying we should close ten racecourses and construct one all-weather one to replace them.

On the question on the Paddy Power document and the advertisement, I was pleased with the advertisement in that it promoted a focus on the issue. There has been a debate about the level of off-course betting and whether it is €1 billion or €1.7 billion. That is a red herring to some extent but the advertisement has promoted discussion and debate on that matter. Plenty of people who would not have said it to me otherwise have asked me about offshore betting so the advertisement has raised the profile of the issue.

Chairman

Mr. Kavanagh has made a very generous offer to take up any issues raised by individual members after the meeting. Due to time constraints I will stop him. Mr. Kennedy was asked a question.

Mr. Patrick Kennedy

I will try to go through the questions sequentially. I am aware Deputy Mitchell is no longer present, but for the record, she asked whether any of us had been consulted on the current initiatives. We were contacted by the Department of Finance and the Department of Justice, Equality and Law Reform. She observed that the relationship was a parasitical one and that Paddy Power did not agree with that. We do agree it is a parasitical relationship given that 90% of betting is not on Irish racing. Her suggestion on competing with Gibraltar was spot on. The issue on which we should focus, whether it is in regard to the Internet or shops, is how we can grow the economic pie here. One of the ways of doing that is by competing with Gibraltar. I observe that Gibraltar has a very low tax regime, not just on betting tax but in terms of VAT, corporation tax and capital gains tax. Work would be required but something could be done. I welcome the suggestion.

Deputy Upton observed that gambling is done on many other sports. It is approximately 90% of our take. She inquired whether the funding should go towards those sports. We agree that it should. She also said that Internet betting should be taxed in a fair way. I entirely agree. We have always said we are happy to pay tax on Internet betting. Our only issue is that it is enforceable against everyone who offers Internet betting to Irish residents and not just those who employ people here.

One observation is that on-line betting is not the panacea. Even if we manage to enforce a 1% tax, that would be worth €5 million. On-line betting is not growing. It is not becoming the source of all betting in this country. It accounts for approximately 13% of total betting in this country — not 73%, not 53%, not 33%, it is 13%. There is no pot of gold. We are happy to pay tax. Deputy Power inquired about how one would go about doing that. I will talk about that in a moment. The first thing one would do is recognise what is in the pot one is going after, which is approximately €5 million to 6 million.

On Deputy Fitzpatrick's question about the document, the document that was in the press highlighted that the chairman of HRI, Mr. Brosnan, had said that most betting was now done offshore and on the Internet, which implied a value of between €3 billion and €4 billion. His chief executive said it was €1.7 billion. On the critical issue of funding we wanted to know who spoke for the HRI. We also wished to point out that it was not €3 billion or €1.7 billion. PricewaterhouseCoopers surveyed Internet betting and came up with a total of €550 million in Ireland. We were trying to highlight that key issue which goes back to the previous point that we need to understand what the pot is. The pot is €550 million and 1%, which is a similar tax to the retail, and is worth €5.5 million. That is a key first step before we take things forward.

On Deputy Barrett's comments, we entirely agree we should make a contribution to the industry. We already do. We are happy to make a further contribution as we said previously on Internet betting, as long as everyone does it and as long as we are not penalised and made uncompetitive solely because we employ 700 people in Tallaght. We are world leaders in breeding and training but there is a key distinction to be made, we are not leaders in racing. Racing and breeding are separate industries. Racing is a showcase for breeding. If it is a showcase for breeding, those who participate and benefit from racing should make their fair contribution to it.

We need prize money so that we are competitive with the United Kingdom but as Ms Sharon Byrne observed, the prize money levels in this country compared with our nearest competitor, namely, the United Kingdom, are 75% higher. We do not need them to be 75% higher. They need to be higher so that we are competitive; they do not need to be 75% higher.

Deputy Barrett inquired whether everyone could just pay €2 from every €100 they bet in a shop. We make bottom line profits in our shops. We make 2% on total stakes and a €2 tax would take the profits out. We are the largest player and our margins are probably higher than anyone else's, so if it wipes us out it would wipe out the rest of the industry even if it is an extra 1%.

Deputy Seán Barrett

I am talking about the punter.

Mr. Patrick Kennedy

The punter is not foolish. If there is a 2% tax on the retail but there is no tax on telephone or Internet betting, punters will find the cheapest source. They will find the best odds. What will happen is that there will be an even greater migration offshore.

On Deputy Power's question about paying our share, I reiterate Paddy Power is and has always been happy to pay its share. On how the Government can get a return, the first point is that the Government already gets a substantial return from Internet and telephone betting in this country from Boylesports and Paddy Power. The Exchequer receives approximately €25 million in addition to the employment figures.

Deputy Power should acknowledge that the pot is €5 million and then consider ways of addressing that. Some of the initiatives that Ms Sharon Byrne proffered on the fixture list and racing at Dundalk make sense. A proposal was made in the United Kingdom last week by the Department of Culture, Media and Sport that operators would voluntarily buy into a licensing regime. There can be an advertising ban. That would work at the margin. People would pay for an advertising ban. They will not pay €5 million for an advertising ban in order to participate but they might pay €500,000. If we recognise that we are trying to raise €5 million it might work if ten operators would pay 500,000.

In reply to Senator Buttimer, the point about aggressive growth was intended as a positive comment. What I was saying is that we are going to grow aggressively overseas, as we have to date. My aspiration was that this country would benefit from that growth rather than anywhere else. The key for us is, as the Chairman indicated, the smart economy. Ireland wants to be the next e-commerce hub in Europe. We want to be a smart economy location. We want to export services and smart economy services. There has been much talk today about how to tax the Internet and block the Internet. My challenge might be sensationalist but I do not wish to be the next China. I do not wish Ireland to be the country that blocks e-commerce; I wish it to be the country that opens up to e-commerce. That goes back to the point Deputy Mitchell made from the outset. In the same way as Mr. Kavanagh, we are happy to take questions from members off-line to offer ongoing assistance. I extend an invitation to members to visit us in Tallaght to get an upfront feel for the operation we offer.

Mr. Brian Kavanagh

I wish to take up one point. It was incorrect of Mr. Kennedy to say that Ireland is not a world leader in racing, whatever about being a world leader in breeding, especially given that Mr. John Oxx is present. For the record, the world champion race horse for the past two years has been trained in Ireland. Last year it was Sea the Stars and the previous year it was New Approach. Seven races were won by Irish trainers at the most important national hunt meeting of the year in Cheltenham and 18 of the winners were ridden by Irish jockeys at the peak level of international success. Mr. Aidan O'Brien has been champion trainer twice in Britain in the past five years. The suggestion that Ireland is not a world leader in racing is absurd. It is unfortunate that was said in the presence of Mr. John Oxx.

Mr. Patrick Kennedy

My point was that we are world class in training and breeding.

Senator Jerry Buttimer

If one is talking about breeding, one only has to look at Coolmore. We should defend the industry. The record speaks for itself. I challenge Mr. Kennedy. We should bear in mind what has been achieved in Coolmore and by Mr. John Oxx, Mr. Ruby Walsh and Mr. A.P. McCoy. One could go through a long list.

Deputy Seán Barrett

Mr. Kennedy is only interested in making money. He is not interested in the industry. He wants to be the Michael O'Leary of the racing industry.

Senator Jerry Buttimer

This type of arrogance is not helpful.

Chairman

Let Mr. Kennedy finish his point. The Deputies have had their say.

Deputy Seán Barrett

This is outrageous arrogance. If we had achieved in soccer what we have achieved in racing, we would have people marching on the streets praising these people. For somebody to come in who knows nothing about racing——

Chairman

I agree with what Mr. Kavanagh has said. Can Mr. Kennedy clarify what he said?

Mr. Patrick Kennedy

I think Ireland is world class at breeding and training. However, I do not think we are necessarily world class in our racing facilities. That is my only point.

Chairman

That is a different point. Let us relax here because we have had a very good meeting. The word "facilities" has just been used. I will ask Mr. John Oxx to come in, but first I would like everybody to reduce the temperature.

Mr. John Oxx

I will make two comments. We all know prize money is very important. Bookmakers seem to be under the impression that prize money does not count. Owners are paying €275 million to €300 million to race for €50 million or so. Owners are the investors in the business, and they are losing over €200 million every year to keep guys like me and my staff employed, as well as everybody who supplies us. There is no other industry in the world where investors would put in €300 million and lose €250 million every year. They do this because we are selling them dreams and they all want to have the next Sea the Stars. That is why people love horses and that is how the industry survives. If the prize money drops below a certain level, that business drifts away. It is already drifting away.

The figures on our prize money when compared with England are a little twisted, because in recent years the English fixture list was expanded dramatically to favour the betting industry. Many low standard races were brought in with derisory prize money, and these are distorting the figures. Having said that, our prize money needs to be much bigger than England because it is almost three times more difficult to win a race in Ireland. Examining statistics such as the number of races versus the number of horses in training, and the number of winners per runners entered by a trainer, we can easily see that it is two and a half to three times easier to win a race in England. In order to compete with England, we must have higher prize money, or else everybody will have their horses in England. Many Irish people already have their horses in training in England.

We are all here to support the racing and greyhound industry. It is a big worry to see the absolute disdain that Mr. Kennedy has for Irish racing. He has no interest in Irish racing and he does not care whether I go out of business or whether my staff are unemployed. The only thing he cares about is Paddy Power and jobs at Paddy Power. One would think nothing else mattered.

Chairman

I must leave the meeting. I apologise to our other witnesses and I thank them all for attending. All of the points made are on the record and they are going to the various Ministers and the Government. The meeting has been helpful. We have had a lively concluding period, but that is part and parcel of dialogue and politics. We will follow this up with the various Ministers.

The joint committee adjourned at 2.45 p.m. until 12.30 p.m. on Wednesday, 21 April 2010.