The accounts of Sportsbet are a hot mess. A Wally the Chartered Accountant demolition job finds multiple breaches of the laws of Australia.
According to AI, ‘irregulation’ is a rare and archaic noun meaning a lack of regulation or control, or a state of disorder.
Irregulation is the straight-out choice for a noun when describing how the Federal Labor government helps the Sportsbet business model to flourish in Australia with virtually no oversight or accountability. For the quinella of nouns try ‘irregulation and maladministration’.
All this while Labor politicians enjoy sumptuous dinners and the company and financial support of Sportsbet at Labor Party fundraising events.
Irregulation of Sportsbet appears to be a policy setting of the Federal Labor government. In June 2023, the late Labor MP Peta Murphy delivered a scathing federal parliamentary report will 31 unanimous recommendations to reduce the social harm from online gambling.
Recommendation 1 of the Murphy Report is that responsibility for online gambling harm reduction be held by a single Australian Government Minister. More than two years later, the Federal Labor government has failed to respond to the Murphy Report. Alas, it seems the Federal Labor government prefers sumptuous dinners, parliamentary-report-avoidance and irresponsibility when dealing with online bookmakers like Sportsbet.
Awesome foursome ASIC, ACMA, NTRWC and ATO
The awesome foursome assisting the Federal Labor government in its irregulation of Sportsbet are:
(1) The Northern Territory Racing and Wagering Commission (NTRWC)
(2) The Australian Communications and Media Authority (ACMA)
(3) The Australian Securities and Investments Commission (ASIC)
(4) The Australian Taxation Office (ATO).
At the finishing post, which of these four government agency champions will be the winner at under-regulating Sportsbet, that is, the most useless at regulating Sportsbet? Here at Michael West Media, we’ll do our best to separate them.
Hollow NTRWC – gesture without motion
Kudos to ABC investigations for their recent expose on the Northern Territory Racing and Wagering Commission entitled Australia’s de facto online betting regulator accused of being too close to gambling industry.
The online bookmakers are regulated in the NT for good reason.
According to ABC investigations, the NTRWC meets once a month but has no full-time staff to enforce licence conditions against more than 40 online bookmakers including Sportsbet. These 40 online bookmakers have been reported to have a combined annual turnover of $50 billion.
The NTRWC issues the occasional fine to licensees for less than $100,000 for breaches of the responsible gambling code. These fines are a drop in the ocean for online gambling bookmakers like Sportsbet. An occasional small cost for conducting business with problem gamblers in bad faith.
ABC investigations uncovered various allegations against the NTRWC including: (i) conflicts of interest; (ii) pro-industry bias; and (iii) lengthy delays in dealing with complaints. What a trifecta for NTRWC’s regulation of the licence conditions of a $50 billion industry.
This evidence points to the NTRWC being quiet and meaningless and more like a business partner to online bookmakers than a regulator.
The NTRWC annual report for 2025 was tabled to the Northern Territory government on 16 October 2025. Apparently, we are prohibited from copying or publishing any material from this annual report without first obtaining written permission from the NTRWC.
For example, we cannot report the generous remuneration of the six committee members of the NTRWC or how much they pay their part-time workforce.
This prohibition is a telltale. The annual report of the NTRWC is a real stinker in terms of governance and accountability. Little wonder the NTRWC does not want anyone in the media discussing the contents of its annual report without getting their permission.
Lazy ACMA – wants somebody else to do its job
The Australian Communications and Media Authority does have a full-time staff. According to ACMA’s annual report for 2025 it had 684 staff employed under the Public Service Act on 30 June 2025. There seem to be many public servants at ACMA ready to serve the public interest.
ACMA is responsible for policing what it describes as ‘the strict rules’ that apply to gambling advertisements including Sportsbet’s advertisements on television, radio and online.
ACMA has substantial power and resources to monitor and act against online gambling companies like Sportsbet when they break the rules applicable to gambling ads. But ACMA is so lazy, or so gutless, that it outsources oversight of, and action against, rotten online gambling ads on television and radio to powerless members of the public.
The ACMA website has a section on misleading or socially irresponsible-gambling ads that states as follows:
Gambling ads during live sport on TV, radio and online are not allowed to contain content that:
- targets children
- makes exaggerated claims
- suggests that gambling is a way to achieve success
- make a connection between betting or gambling and alcohol
If you see or hear this type of content, it may be breaking:
- TV or radio broadcasting codes
- the rules for providers of online content services
To make a complaint about advertising contact the broadcaster.
To paraphrase the ACMA website, if you see a gambling ad on televised sport targeting children we don’t want to know about it. Contact the media company that is making money from the advertisement and maybe they’ll do something about it. Our 684 staff employed under the Public Service Act are too busy doing other things.
Sleepy ASIC – eyes wide shut
The Australian Securities and Investments Commission is another regulator that can’t find the time or the resources to fulfil one of its core responsibilities by looking through Sportsbet’s financial reporting practices.
ASIC is responsible for the enforcement of accounting standards in the annual financial reports of large Australian companies including those controlled by multinationals. For example, the annual financial reports of Paddy Power Australia Pty Ltd: the owner of the Sportsbet business. But when it comes to multinationals, ASIC is generally asleep at the accounting standards wheel.
Set out below are some of the mind-boggling accounting irregularities present in the recent financial reports of Paddy Power Australia Pty Ltd.
What accounting standards require
Financial statements shall present fairly the financial position, financial performance and cash flows of an entity (AASB101.15).
What Paddy Power Australia Pty Ltd and KPMG do
The company misstates dividends paid in its financial statements by $43.6m here and $110.9m there. Pay attention ATO. Perhaps this company uses two different dividend amounts – one for their bank account and another for their franking account.
Dividends declared and paid during the year to 31 December 2023
- Directors’ report $60.0m (paid 28/7/23)
- Statement of cash flows $16.4m (discrepancy $43.6m)
Dividends declared and paid during the year to 31 December 2022
- Directors’ report $472.1m (paid 14/1/22, 15/7/22, 16/12/22)
- Statement of cash flows $361.2m (discrepancy $110.9m)
What accounting standards require
An entity shall report separately major classes of gross cash receipts and gross cash payments arising from investing and financing activities (AASB107.21). Financing activities are activities that result in changes in the size and composition of contributed equity and borrowings of the entity.
What Paddy Power Australia and KPMG do
‘Payment of related party transactions’ is reported in its financial statements as a major class of gross cash payments from financing activities separate from borrowings, dividends and interest. This description is inconsistent with the definition of financing activities in accounting standards.
Cash flows from Financing Activities for the year to 31 December 2024
– Payment of Related Party Transactions ($167.0m)
– Dividends Paid ($Nil)
– Payment of Related Party Loans ($137.4m)
– Interest on Related Party Loans (28.9m)
A hot mess
Pay attention ATO. The statements of cash flows of Paddy Power Australia Pty Ltd are a hot mess.
What exactly are the transactions covered by ‘Payments for Related Party Transactions’ and why are they classified as cash flows from financing activities instead of operating activities?
Note 20 to the 2024 financial statements refers to related party transactions for operational support services and value-added services. These transactions clearly relate to operating activities not financing activities.
What accounting standards require
Revenues, expenses and assets shall be recognised net of the amount of goods and services tax (GST) (INT1031.6)
What Paddy Power Australia and KPMG do
Note 2(c) to the financial statements for 31 December 2024
- Revenue is stated inclusive of goods and services taxes.
Note 2(f) to the financial statements for 31 December 2024
- Goods and Services Tax (GST) is payable on wagering revenue and is an expense to the Group. GST associated with wagering revenue is brought to account in the Statement of Profit or Loss and Other Comprehensive Income as an expense item and is included in Cost of Sales.
What accounting standards require
Interest, dividends, losses and gains relating to a financial instrument or a component that is a financial liability shall be recognised as income or expense in profit or loss (AASB132.35). An entity shall not offset income and expenses, unless required or permitted by an Australian Accounting Standard (AASB101.32)
What Paddy Power Australia and KPMG do
Note 1(c) to the financial statements for 2024
- The Group’s betting activities are classified as derivative financial instruments. Revenue from internet, telephone and mobile betting activities represents the net gain or loss from betting activities in the period plus the gain or loss on the revaluation of open positions at period end, and is stated net of the cost of customer promotions and bonuses for the period.
Yes Sportsbet, the Australian public would like to know the breakdown of your gains and losses from online bookmaking activities because it is required by accounting standards. We really want to see your disclosure showing the flip-side of the slogan ‘You win some, you lose more’.
What accounting standards require
Cash flows arising from taxes on income shall be separately disclosed and shall be classified as cash flows from operating activities unless they can be specifically identified with financing and investing activities (AASB107.35).
What Paddy Power Australia and KPMG do
Statement of cash flows for 31 December 2021
- Taxes Paid (including Withholding taxes) $98.5m
Withholding taxes on interest paid to non-residents are not taxes on the income of Paddy Power Australia Pty Ltd.
What accounting standards require
Disclosure of prior period errors is required including the nature of the error and the amount of the correction (AASB108.49).
What Paddy Power Australia and KPMG do
In the statement of profit and loss and other comprehensive income for 31 December 2024, prior period finance income was changed from $6.8m to $2.6m and net gaming revenue from $2,184.6m to $2,188.8 without any disclosure about the error.
ASIC maate where are youse?
ASIC’s failure to enforce accounting standards against multinationals like Paddy Power Australia Pty Ltd is symptomatic of it being a slave to the Big 4 audit firms.
ASIC trusts Big 4 audit firms to enforce accounting standards against multinational companies so deeply that it does virtually no enforcement itself. Recent events suggest that ASIC’s deep trust in the Big 4 firms is misplaced. Events like these:
- US watchdog fines KPMG Australia over widespread cheating on online training tests
- PwC A calculated breach of trust
- EY’s history of curious reports for whoever is willing to pay
- Deloitte was caught using AI in $290,000 report to help Australian government crackdown on welfare after researcher flagged hallucinations
ASIC’s weak enforcement of accounting standards against multinational companies like Paddy Power Australia Pty Ltd feeds multinational tax avoidance. When multinational companies are routinely allowed to misstate income and expenses and cash flows in financial reports there is a high risk that these misstatements will flow into the calculation of lower taxes due to the ATO.
ATO – watch the red flags, ask the right questions
The Australian Taxation Office collates corporate report of entity information for the Federal government. This data shows that Paddy Power Australia Pty Ltd has assessed income tax totalling $486.7 million on total income of $10.1 billion across the six income years 2019 to 2024.
The total of $486.7 million is by no means a small amount of income tax to collect, but the relevant question for the ATO to ask is should it be much more?
The collective force of the following analysis indicates that Paddy Power Australia Pty Ltd has been evading income tax. The ATO should do a deep dive into their tax affairs.
Declining tax
The recent trend of income tax assessed against Paddy Power Australia Pty Ltd is downward, but total income is stable.
| 2024 | 2023 | 2022 | |
| $000 | $000 | $000 | |
| Total income | 2,196,283 | 2,250,572 | 2,397,823 |
| Tax payable | 87,048 | 121,998 | 156,350 |
| Tax payable to Total income | 3.96% | 5.42% | 6.52% |
Why is income tax assessed declining in dollar terms and also as a percentage of total income?
Reconciling ATO data with financial statements data
Over the six-year period from 31 December 2019 to 31 December 2024, there is a significant difference between the total income tax assessed against Paddy Power Australia Pty Ltd by the ATO and the total taxes on income disclosed in the statements of cash flows.
Similarly, there is a significant difference for total income according to ATO data and total income in the statements of profit and loss and other comprehensive income.
| ATO data | Fin. Stats | Diff | |
| $000 | $000 | $000 | |
| Total income | 10,070,116 | 11,400.039 | 1,329,923 |
| Tax on income | 486,738 | 551,729 | 64,991 |
What explains these differences? GST is included in net gaming revenue (income) in the financial statements. Has the ATO collected over $1 billion in GST from Paddy Power Australia Pty Ltd for the six-year period 31 December 2019 to 31 December 2024?
Declining gross margin percentage
The gross margin percentage of Paddy Power Australia Pty Ltd has declined significantly in the last decade even though Sportsbet has more gamblers on its books doing more gambling.
| 2024 | 2019 | 2014 | ||||
| $000 | $000 | $000 | ||||
| Net gaming revenue | 2,114,311 | 100% | 820,508 | 100% | 332,664 | 100% |
| Less: Cost of sales | 1,156, 895 | 55% | 342,073 | 42% | 88,209 | 27% |
| Gross profit | 957,416 | 45% | 478,435 | 58% | 244,455 | 73% |
Prima facie, the gross profit margin should not have decreased significantly over the last decade – from 73% to 45% – because cost of sales is limited to the direct costs attributable to the provision of gambling services. These costs include GST, taxes paid to state revenue authorities, product fees to State racing and Sporting bodies for their information, the cost of streaming payable to relevant parties, and bank fees and charges on customer transactions.
What are you shovelling in there Sportsbet so that the cost of sales percentage has plunged from 73% to 45%? What extra costs?
Related party charges
Over the six-year period from 31 December 2019 to 31 December 2024, a foreign related party charged Paddy Power Australia Pty Ltd a total of $623.5m for ‘operational support services’ and a total of $427.1m for ‘value-added services’. Presumably, these charges have been claimed as tax deductions to reduce the income tax of the company.
The charges incurred by Paddy Power Australia Pty Ltd for value added services have increased by 207% since 2019.
| Related party charges | 2024 | 2019 | Increase |
| $000 | $000 | ||
| Operational support services | 85,400,606 | 79,992,480 | 7% |
| Value added services | 94,459,605 | 30,724,651 | 207% |
| 179,860,211 | 110,717,131 | 62% |
Note 13 to the financial statements of Paddy Power Australia Pty Ltd for 31 December 2014 states that the items included in value added services are guidance and provision of policies relating to risk management, technology development, marketing strategy and executive management.
Imagine a $95m tax deduction for ‘guidance and provision of policies’.
Perhaps they are claiming thousands of dollars for every email. Is it lobbying? One of the greatest risks is that the government might finally regulate gambling advertising. Are Australian taxpayers subsidising Sportsbet’s lobbying?
Note 20 to the financial statements of Paddy Power Australia Pty Ltd for December 2020 states that the company is also charged for operational support services along with the supply of odds for non-domestic sporting events.
Apparently, the more exotic the odds that Sportsbet displays on non-domestic sport – for example, the Premier League – the less tax it has to pay in Australia.
They are funnelling money out of the country by paying for odds.
It would be nice to have more disclosure about operational support services. Do those services include the transfer of risk on gambling activities to foreign related parties? Is Sportsbet laying off bets from Australian punters overseas and are they doing this before or after the gambling event.
And the winner is …
And the winner at under-regulating Sportsbet is?
It’s a close-run affair. ASIC by a nose over the NTRWC. Both bodies don’t seem to bother much.
ACMA comes in for a place for its arrogant instructions on how to complain to somebody else about gambling advertisements targeting children.
And the ATO is at the rear of the pack. At least they seem to be trying. They just need to redouble their efforts.
The federal Labor government
A final message for Prime Minister Albanese.
Maaaaaaaaaaate . . . . . it appears Australia is getting ripped off by Sportsbet on four fronts of regulation.
Maaaaaaaaaaate . . . . . . Whip it out!
Maaaaaaaaaaate . . . . . . you need to look out for Australia’s interests instead of a multinational bookmaker’s interests.
Tell your Labor Party to stop taking Sportsbet money and respond to, and act on, the 31 recommendations in the Murphy report from 2023.
Sportsbet Ads, Netflix Laws, and the Lobbyists Who Run Canberra | The West Report
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.
Wally the Chartered Accountant (not his real name) is a veteran of the accounting profession who is concerned about dishonesty and falling professional standards. Wally's true identity is known to MWM.