The UK government decided to increase duties on remote gaming and gambling as part of its autumn budget on Wednesday, a decision that “disappointed” both Flutter Entertainment (FLTR.L) and Entain (ENT.L).
Acknowledging the role of online gambling in generating revenues and increasing social harms, Chancellor of the Exchequer Rachel Reeves resolved to boost taxes on online gaming to 40% from 21% from April 2026, while raising those on sports betting, excluding horse racing, to 25% from 15% from April 2027.
Ireland’s Flutter expects the higher taxes to affect its total adjusted EBITDA by $320 million in fiscal 2026 and $540 million in fiscal 2027, before mitigation. After reduced operational, promotional and marketing spend, among other mitigation efforts, net impact is projected at $235 million for fiscal 2026 and $339 million for the subsequent year.
At the same time, Entain, based in the Isle of Man, estimated additional annualized cost of 200 million pounds for its UK and Ireland online business, before mitigations. The sports betting and gaming group said it will immediately scale back marketing and promotion activities, which is expected to offset 25% of the tax impact. Entain projected EBITDA impact at 100 million pounds in 2026 and 150 million pounds from 2027.
Both gambling companies emphasized the benefits of the higher taxes on the black market, with Flutter Chief Executive Officer Kevin Harrington describing the budgetary changes as “a big win to illegal, unlicensed gambling operators.” Entain warned that the move could negatively impact the gambling industry’s contribution to the UK economy, threaten jobs, reduce sports funding, and make black market operators more competitive.
At the same time, both scale operators anticipated the upside from capturing market share as the incremental taxes potentially drive out their competition from the UK market. “As the largest scale operator, Flutter has the opportunity to deliver material second order mitigation benefits, including market share gains. We believe this, combined with additional operational efficiencies, will provide substantial opportunities to help offset the impact in the medium-term,” said the Dublin-based company.
“So, the usual playbook is taxes reduce margins initially and drive a wave of exits and consolidation,” Berenberg said. “Exiting operators then drive a redistribution of market share to those companies with scale that choose to remain in the sector. Marketing spend is then usually reduced, allowing for margins to be recovered. Given the fragmented nature of the online casino market, we think Entain and Flutter remain well positioned to benefit from this.”
The new tax regime for the gaming industry is intended to generate over 1 billion pounds sterling annually for the government, which vowed to protect in-person gambling for horse racing and scrap bingo duty in recognition of their cultural value.