Paddy Power and Betfair owner Flutter Entertainment has warned that the UK government's dramatic gambling tax hike will slash its earnings by hundreds of millions of pounds over the next two years.
Chancellor Rachel Reeves announced Wednesday that remote online gaming duty will surge from 21% to 40%, while online sports betting taxes will jump from 15% to 25%. The move will hit Flutter's underlying earnings by around $320 million (£241.7 million) in 2025-26 and $540 million (£407.9 million) in 2026-27, the company said.
Flutter – which also owns Sky Bet and US giant FanDuel – plans to offset up to 40% of the impact by 2027 through cuts to marketing spend and wider cost reductions.
Industry warns of black market boost
Kevin Harrington, Flutter's UK and Ireland chief executive, called the tax increases "a very disappointing outcome" with "a significant adverse impact on our industry".
«The Chancellor rightly wants to address harm, but these changes will hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight,» he said. «These black market operators don't pay tax and don't invest in safer gambling.»
He warned that Britain's 40% remote gaming duty now exceeds countries like the Netherlands, «where a recent tax increase saw a rise in illegal gambling and a fall in government receipts».
Share prices tumble
Gambling stocks suffered sharp falls on the London market Wednesday. William Hill owner Evoke plunged 18%, while Ladbrokes parent Entain initially dropped before recovering to close higher.
Entain separately warned the tax changes will add £200 million to its annual costs in the UK and Ireland. The company expects to mitigate around 25% of the impact, partly by reducing marketing and promotions.
«These disproportionate tax increases will have a detrimental impact on the economic contribution of the gambling industry, put jobs at risk, reduce funding for sports, and benefit the black market,» Entain said.
Flutter, which switched its primary listing from London to New York last year, saw its shares edge higher thanks to its more global operations.
What was spared
The Chancellor avoided raising taxes on in-person gambling or horse racing after industry warnings about job losses. Bingo duty will be abolished entirely from April next year.
Note: This article was created with Artificial Intelligence (AI).
