“Sportsbet and KPMG: A Controversial Partnership”
Australia’s leading bookie, Sportsbet, is no stranger to controversy. Recently, it has come to light that the company has been engaging in questionable practices to funnel the losses of Australian punters to its overseas corporate partners. In collaboration with accountants KPMG, Sportsbet has devised a strategy to take the Tax Office for a ride and avoid paying taxes in Australia.
Politicians and Sportsbet: A Questionable Relationship
It seems that Sportsbet has been playing both sides of the game. In the lead-up to the 2022 Federal Election, Sportsbet’s chief, Barni Evans, hosted a lunch for Prime Minister Anthony Albanese. This event, which was not declared on the Prime Minister’s register of pecuniary interests, raised eyebrows and sparked concerns about the company’s influence on politicians.
But it wasn’t just the Prime Minister who enjoyed Sportsbet’s hospitality. Communications Minister Michelle Rowland also attended a lavish dinner at Melbourne’s Society Restaurant, courtesy of Sportsbet. The gambling lobby group Responsible Wagering Australia footed the bill for this extravagant feast, which cost a staggering $8,960. The incident sparked outrage and led to calls for Rowland’s resignation.
It is clear that Sportsbet is not afraid to spend big on wining and dining politicians. And why would they? With their profits soaring and their dominance in the online betting market growing, a few thousand dollars for a fancy meal is a small price to pay to protect their interests.
Tax Avoidance and Dodgy Accounting
While Sportsbet bombards the media with millions of dollars worth of advertisements each year, promoting the idea that betting with mates is cool, behind the scenes, the company is engaging in tax avoidance and dodgy accounting practices.
Through complex corporate structures involving the Netherlands and Ireland, Sportsbet is able to funnel money out of Australia and avoid paying higher income taxes. The company’s operations in Australia are conducted through a subsidiary called Paddy Power Australia Pty Ltd, with its ultimate owner being Flutter Entertainment plc, based in Ireland.
In its most recent financial report, Paddy Power Australia revealed that it had won $2.2 billion more from customers than it lost in the year to December 31, 2022. Over a two-year period, the company’s winnings amounted to a staggering $4.6 billion. These massive profits come at the expense of Australian punters, who are losing billions of dollars.
To further manipulate their finances and avoid taxes, Sportsbet has cooked up a scheme involving share capital and goodwill. Paddy Power Australia, the subsidiary through which Sportsbet operates in Australia, had $1 billion of share capital and $1.1 billion of goodwill as of December 31, 2022.
By ramping up share capital and claiming interest costs as deductions, Sportsbet can shift Australian profits overseas. This allows them to distribute surplus cash to their Netherlands shareholder in the form of tax-free capital returns instead of taxable distributions.
However, the creation of $1 billion of share capital from $1.1 billion of goodwill appears to be driven by tax motives rather than genuine business value. The allocation of such a large amount of goodwill to the Australian acquisition of TSG Australia Holdings raises questions about the accuracy and legitimacy of Sportsbet’s accounting practices.
The Impact on Australians
The consequences of Sportsbet’s actions are far-reaching. Billions of dollars are being taken out of Australian households, exacerbating the country’s cost-of-living crisis. While Sportsbet profits soar, ordinary Australians are left to bear the brunt of their losses.
It is clear that more needs to be done to address corporate tax avoidance and hold companies like Sportsbet accountable for their actions. The Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) must step up their efforts to combat tax fraud and ensure that companies are paying their fair share.
Author’s Quote
“Sportsbet’s partnership with KPMG and their questionable accounting practices raise serious concerns about the integrity of the gambling industry in Australia. It is crucial that we hold these companies accountable and protect the interests of Australian punters.” – Wally the Chartered Accountant
Author’s Conclusion
The revelations about Sportsbet’s tax avoidance and dodgy accounting practices highlight the urgent need for stronger regulation in the gambling industry. It is unacceptable that companies like Sportsbet can profit at the expense of Australian punters while avoiding their tax obligations. The government must take action to ensure that all companies, regardless of their size or influence, are held accountable for their actions.
George Barham, an accomplished journalist and avid gambling enthusiast, serves as the esteemed Editor-in-Chief at fly-to-australia.com, Australia’s leading source for comprehensive gambling news and insights. With an unwavering passion for both the written word and the ever-evolving world of betting and gaming, George brings a wealth of knowledge and expertise to the helm of our editorial team.
