Gambling Companies Warn of Earnings Hit From U.K. Tax Increases

By Najat Kantouar

Gambling companies including Flutter Entertainment and Entain said their earnings will take a hit in the coming years from the U.K. government's plans to hike taxes, and moved to put in place measures to soften the blow.

Britain's gambling industry is counting the costs of the country's budget, which included plans to increase levies for online gambling operators but provided some relief for betting shops as part of U.K. treasury chief Rachel Reeves's sweeping tax rises to patch up public finances.

FanDuel and Paddy Power owner Flutter and Ladbrokes and Coral parent Entain, as well as smaller companies such as William Hill owner Evoke and bingo and casino operator Rank Group, all warned late Wednesday that the tax increases would weigh on their results and said that they would take action to mitigate their effect.

London-listed shares in all four companies opened lower on Thursday, with Entain and Flutter down about 1% and Evoke down 7%, building on Wednesday's stock losses, before recovering somewhat. Rank's shares--which rallied Wednesday after the U.K. government said it would abolish a bingo duty--dropped 10% on Thursday after the company issued a profit warning.

Flutter said it anticipates adjusted earnings before interest, taxes, depreciation, and amortization to be reduced by about $320 million in 2026 and $540 million in 2027 before mitigating action. But the company said it expects to ease the hit to about $235 million in 2026 and $339 million in 2027, and that efficiencies and potential market-share gains will help it offset the impact over the medium term.

Entain, which co-owns U.S. operator BetMGM alongside MGM Resorts International, said expects the adjusted Ebitda hit to amount to about 100 million pounds ($132.4 million) in 2026 and 150 million pounds from 2027 after mitigating measures that will reduce the impact by about a quarter. The company also said it expects to gain market share as some competitors exit the U.K. market.

Evoke, formerly known as 888 Holdings, expects the new tax regime to increase annual duty costs by between 125 million pounds and 135 million pounds once fully implemented from April 2027. In 2026, the company expects a hit of about 80 million pounds before mitigation efforts. It aims to offset about half of the impact over time through savings, store closures and other measures.

Rank said the net impact of the tax changes will lead to a reduction of about 40 million pounds a year to its operating profit before mitigation. The company added that it is reviewing several mitigating actions for its U.K. digital business.

The British government on Wednesday detailed plans to raise its so-called remote-gaming duty to 40% from 21% from April 2026, and to hike its general betting tax for online operations to 25% from 15% a year later. However, self-service betting terminals, spread betting, pool betting, and horse racing were spared from the general betting duty due to take effect in April 2027, and a 10% bingo duty is set to be abolished, the U.K. fiscal watchdog said.

The tax increases in the U.K. budget are a mixed bag for the gambling industry, analysts at Berenberg wrote in a note to clients. While the online casino rate of 40% and the online betting duty of 25% are both higher than the market anticipated, the exemptions could offer some respite, the analysts said.

Over the medium term, the new tax regime could lead to greater consolidation among U.K. gambling operators as weaker profitability could prompt some to close or put their businesses for sale, Berenberg said.

Write to Najat Kantouar at najat.kantouar@wsj.com

(END) Dow Jones Newswires

November 27, 2025 04:51 ET (09:51 GMT)