After looking into William Hill’s financial activity, the Australian media is suggesting international online bookmakers need stricter regulations.
William Hill’s decision to enter the Australian gambling market has really paid off. The British bookmaker’s operations in the Land Down Under have been very successful so far; in fact, online gamblers and players who bet on sports in Australia have generated 48% of the company’s operating profits in 2013.
But now the local media is concerned about the way William Hill is handling its finances, and The Age has raised some serious questions about the company’s financial affairs. The Australian newspaper discovered that about AUS$40 million of the bookmaker’s profits are going offshore, tax free, every year.
Australia, a second home
William Hill’s 15% market share makes it UK’s top bookmaker. The list goes on with:
Last August, the top British betting giant bought three online sportsbooks in Australia: Sportingbet, Centrebet and tomwaterhouse.com. The Aussie branch was placed into bookmaker Tom Waterhouse’s hands, whose website was purchased for $35 million, plus an additional “earn out” payment of up to $70 million.
Waterhouse has been criticized for his style of marketing and ads, after closing a deal with the National Rugby League to give live odds on air. Concerned about underage viewers being exposed to gambling, Julia Gillard, who was prime-minister at the time, pressured broadcasters into stopping the practice.
But when William Hill was looking for someone to take lead of its operations in Australia, chief executive designate James Henderson thought Waterhouse was the perfect candidate. Henderson told reporters that the Aussie bookmaker was a passionate, innovative and digitally savvy industry expert.
The new branch turned out to be a great investment, and it has already made a lot of money. The company’s official financial report for 2013 showed operating profit increased by 3% to GBP335 million last year, and 48% of that amount came via William Hill’s online and Australian operations. With such great results and a promising future ahead, Henderson called Australia William Hill’s “second home”.
Tax-free profits taken offshore?
As a new player on the Australian market, William Hill has also managed to attract some unwanted attention from the local media. One newspaper has become suspicious of the company’s financial activities and has implied that the UK bookmaker is taking part of its profits offshore, without paying taxes.
The article published in The Age reveals that Hill has taken a loan of GBP 334 million (AUS$ 580 million) from a company in Gibraltar called Steeplechase. Considering the 5.79% interest rate, reporters at The Age have done the math and found that AUS$ 40 million of the company’s profits are going offshore every year, completely tax free.
When asked to comment on the matter, a company spokesperson said: “William Hill Australia does not discuss its trading policies. William Hill Australia complies with the regulatory requirements of the markets in which it operates.”
This is not the first time when the media has suggested that foreign operators are not contributing enough to Australia’s budget. Politicians have also debated this issue before, demanding that the activity of international online operators be more tightly regulated through Australian gambling laws, and not just at provincial level.
Australian gambling laws should be stricter
National Party senator for Victoria Bridget McKenzie has recently introduced a motion to regulate and tax online betting at federal level.
“Such a move would thwart the big corporate bookmakers Ladbrokes, Paddy Power and William Hill, from ‘jurisdiction shopping’ to find the best odds on tax and licensing,” the article said. “Most corporate bookies are licensed in the Northern Territory where, on the most recent figures available, the entire sector paid just $2.3 million tax on turnover of $5.7 billion and profit of $469 million.”
Meanwhile, Kevin Andrews, the national minister for social services has also recommended stricter national regulations, despite the fact that it was the Coalition government of Tony Abbot who got rid of the National Gaming Regulator last year.
In any case, international gambling companies have become a prominent feature of the Australian online betting scene, and such legislation would not be to their benefit.