I only have a few sites on my Blogroll, one of them is Daily25. I always look forward to what Steve has to say and recently he wrote about the prospective point of consumption tax in South Australia. At the end of his post he asked for the thoughts of people who were “much smarter, more informed and generally better looking than him”. Ignoring those criteria Well I definitely fill that bill so I thought I’d offer my two pennies’ worth.

In every country there are individuals/companies that take money out of the country, but there are also individuals/companies that bring money into the country. You could say that Sportsbet is taking hundreds of millions out of your economy each year, but I’m guessing that they’re also employing plenty of people in Australia, paying them a wage which they will certainly spend most of within Australia.

You could say “look at Apple & Microsoft taking money out of our country”! But I don’t think that protectionist policies ever favour the consumer, as the fact is that these companies are providing a product/service that people want. So too are Sportsbet. Competition is good, and I’m assuming there’s nothing stopping Australian bookmakers from succeeding to the same extent. I agree that all bookies just care about profit. But that is the case with every private company. And to make a profit you have to provide a product/service that people want to part with their money for.

Retail bookmakers exist because their business model relies on losing punters. If you’re a winner, then you’ll end up getting restricted or banned. I know that it’s frustrating when this happens. I was whinging on Twitter about this the other day when William Hill were restricting me to a tiny inplay bet on Rugby. But if we’re all honest then we would all do the same thing in their position. If we had our own bookies, which relied on losing punters, then we wouldn’t want sharp bettors taking our money. If someone was making money from us, then we would ban them too. One of the ways around this would be government intervention, which is rarely ever a recipe for success, and I don’t think that a company should be forced to do business with a customer.

Ok and on to the South Australian Place of Consumption Tax. I’ll write this as someone who has never visited Australia but knows firsthand about their insatiable appetite for a bet. We had an Aussie at work whose eyes lit up whenever there was a possibility for a wager and was always talking about putting the departmental budget on a horse.

Anyway, yes this is clearly a cash grab by the government; it’s one of the very few things governments are good at. It’s very long odds that much money will be directed into problem gamblers and longer odds still that that money would be spent effectively. So what may happen:

• Odds will stay the same. Although a lot of square bettors just bet with one company and aren’t sensitive to the odds.
• Same promotions. If promotions are so effective, then bookies would already be maxed out on the promotions-front, so to speak. Right?
• Unintended consequences. This is key when considering government intervention. I don’t think that a company is just going to accept reduced profits. So I’m just going to speculate that they may:
  • Cut some staff
  • Restrict or ban even more unprofitable punters
  • Engage in some ways in which to reduce the appearance of their profit or to otherwise reduce this tax liability.