Following British Chancellor Rachel Reeves' announcement on Wednesday of a 40% tax on online casino gaming, nearly double the current 21%, shares of UK gambling companies plummeted.
In the meantime, the tax rate on online sports betting will increase from 15% to 25%. The chancellor's autumn budget did not address online spread betting, pool betting, horse racing betting, or in-person sports betting.
By 2029–2030, the modifications are anticipated to generate an additional £1.1 billion (US$1.5 billion) annually for UK coffers.
“Some parts of the gambling industry, such as racecourses and bingo halls, make a cultural contribution to our country,” Reeves said. “This is not the case, though, for online slots and other remote gaming, which can quickly drain the bank balances of vulnerable people after just a few clicks of a button on a phone.”
Evoke a Hard Hit
The company most severely impacted was Evoke, which controls 888 and the William Hill brand in the UK. By the end of trade on Wednesday, its shares had dropped 18%, then another 10% on Thursday before making a minor comeback.
Per Widerstrom, the CEO of the company, described the Reeves budget as "ill-thought-through, counter-productive, and highly damaging."
“It is clear these changes will significantly harm businesses, employees, and customers,” he said.
“We will begin immediately on executing mitigation plans, which involve a significant reduction in investment into the UK and, very regrettably, the likely need for thousands of jobs to be cut up and down the country,” Widerstrom added.
The CEO of Flutter in the UK and Ireland, Kevin Harrington, described the tax rises as "a very disappointing outcome [that] will have 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.”
FanDuel, Paddy Power, Betfair, and PokerStars are all owned by Flutter, which has stated that it anticipates the changes would cost the business some £650 million (US$860 million) over the course of the next two years.
Bullish analysts
On the other hand, some analysts were more optimistic about the UK gambling industry, claiming that the new tax system would lead to a wave of consolidation as bigger companies buy out smaller competitors that can't afford the increased expenses. As competitors are compelled to leave the UK, the major players are also expected to increase their market share.
Reeves' budget is "a clearing event which improves the near-term outlook of the UK gambling sector," according to Deutsche Bank. Purchasing UK casino stock was also recommended by UBS and Jefferies.