by Renee Israel
The Australian Taxation Office has paid $91 million to
Centrebet, a leading online sports betting company owned by renowned UK
betting enterprise Sportingbet. This payment is a move on the part of the
taxation commissioner to settle a pending court case regarding Goods and
Services Tax (GST).
In court, Centrebet stated that it had overpaid GST by as
much as $91
million, and was seeking a refund. Executives at the online betting site were
confident that the court would rule in the firm's favour, considering rivals
International All Sports and Sportsbet had won similar cases in the past.
GST is actually the funds wagered minus awards and prizes handed over to
winners, and the tax office refers to this as the "global GST amount." The bets
placed by offshore bettors are not included in this calculation. According to
Centrebet, the money paid to offshore winners must be included, which further
lowers the margin and subsequently the GST.
The tax office had refused to accept this argument. In March 2010, the
federal government had sought to plug loopholes that might lead to leakage of
revenue.
Judge Jayne Jagot ruled in favour of the online betting company on Dec 20,
stating that the two parties had reached a consensus, according to which funds
paid as jackpots, awards, and prizes by Centrebet to its offshore bettors during
the tax period from April 2006 to March 201 is to be included in the calculation
to determine the "global GST amount."
However, the shareholders of Centrebet will not receive their money right
away because, according to the acquisition deal, the security holders of
Centrebet will get "a litigation claim right" as well as a "litigation claim
unit" entitling them to 90 percent of the total proceeds of Centrebet's GST
litigation claim in case it turned out to be successful, and the proceeds are to
be paid to the shareholders over a specific time span.
Centrebet Shareholders to Receive up to $80 Million
Sportingbet, which recently purchased Centrebet for $813 million, has not yet
made a formal public announcement about the acquisition. However, as per the
acquisition deal, Sportingbet will receive $9 million while the former
shareholders of Centrebet will receive as much as $80 million.
George Hudson, a Sportingbet spokesman, said that both Sportingbet and
Centrebet are digesting the judgment terms. As part of the acquisition deal,
Centrebet shareholders had retained their litigation rights. Accordingly, the
Kafataris brothers, who own a 60 percent stake in Centrebet, will receive a
major portion of the purchase price.
