Battle of the Australian Gambling Giants Shines A Light On Off-Shore Business

India’s Jasprit Bumrah during a practice session ahead of the first Test match between India and South Africa, at Super Sport Park in Centurion on Monday

Regardless of where you are in the world, there’s likely to be a problem with how businesses are taxed. By that, we refer to the argument that some companies doing business in a particular country can escape the tax burden placed on others by way of the fact they are ‘headquartered’ in another. Naturally, these cases are most likely to involve tech companies, and plenty of newspaper articles have appeared detailing the tax payments of Big Tech behemoths like Amazon, Google and Facebook.

But one of the most interesting areas for this idea of offshoring is played out among internet gambling companies. And in Australia, a blazing row has broken out between those online entities and the incumbent ‘onshore’ companies over how they are taxed and how they contribute to the Australian economy. While Australia has been in the headlines for its fight with Facebook over tax payments, the issue over gambling companies is arguably the more interesting case, as it highlights the complexity of modern digital businesses and how governments have been slow to react to changes in the industry.

Big betting brands battle on Australian television

So, what exactly has happened in Australia? In brief, we have seen a television advert campaign by an entity called the Aussie Fair Play Coalition. This coalition, which represents established Australian bookmakers like Tabcorp and AHA, released a series of adverts that complained about international online betting companies taking money out of the Australian economy. The adverts were deliberatelyprovocative, showing ships containers with brands like Bet365, Neds, and Ladbrokes, and asking where is the money going?

While most citizens want businesses to pay their fair share of taxes, the argument is not as clear-cut as you might think. The body representing the online bookmakers – Responsible Wagering Australia – shot back, accusing Tabcorp of having “wagering monopolies” in some jurisdictions, including on the racetracks. The broader argument is that online bookmakers like Bet365 bring technology and innovation to the market, as well as a sense of nimbleness. Moreover, they argue that having more, let’s say, flexible tax arrangements give a better deal for the consumer, e.g., the person using Bet365 or another platform can, in theory, get access to better offers and (at times) betting odds.

Argument of better deals for consumers

As we mentioned, this is not just about gambling, per se. Seen in its wider context, it can be applied to almost any type of onshore business that is faced with a digital competitor. A bookseller might complain that the local taxes they pay are unfair compared to the percentage paid by Amazon, but the latter will argue that they are able to deliver a better service – cheaper books, wider selection – to the consumer. This argument, in some form or another, has been going on since the roll-out of the worldwide web in the 1990s.

The question, though, is where does the balance lie? It is all too simplistic to say that onshore and offshore entities should be taxed equally. Moreover, in the case of the Australian bookmakers, there are more complications. For instance, there is the financial support provided by onshore businesses like Tabcorp to the Australian racing. That ‘burden’, Tabcorp says, should be shared. But critics claim that those payments give Tabcorp access, such as on-track presence for big racing events, that is not possible for the online operators.

In the end, everyone will want a fair settlement. But it’s not always obvious where to draw the boundaries. Governments around the world are being continually faced with similar dilemmas. As the digital economy grows, finding an answer is going to be much more crucial.