October
JuneBookies will pay too
Economic theory wasn’t taught at my primary school either, but it was taught at my secondary school and at the tertiary institution I attended.
I therefore feel obliged to notify John D. Nott that his analysis of the effects of the High Court decision is flawed.
Writes John: "A turnover-based fee will not be paid for by those bogyemen — big, bad bookmakers or Betfair … It will ultimately be paid for by the punters, and only collected by the bookmakers and Betfair."
This is not true, as bookmakers who pass the tax on in its entirety to punters through lower odds will inevitably lose business to bookmakers who do not pass on the full tax but opt instead to take a hit on their margins.
If all bookmakers pass on the full 1.5-2 percent, it will not only smack of illegal collusion, it will result in the sector as a whole losing business to other forms of gambling and even to the tote — which, although still probably offering worse value than the bookies, will be more attractive (relatively) than it is now.
Betfair has already taken the extraordinary step of announcing it will throw the full whack of the levy on to its commission rate for Australian racing. This, if any Year 10 economics book is correct, will cost it business.
Therefore, while John is correct to say that a turnover-based levy will cost punters, he is not correct to say that bookies or Betfair will pay nothing. The new arrangement will cost those operators money via lost business, narrower margins or both.
Fitzroy (Vic)