Key Moments:
- Flutter forecasts a £650 million EBITDA reduction over two years due to increased UK Remote Gaming Duty
- Remote Gaming Duty will rise from 21 percent to 40 percent starting April 2026
- Retail gambling sectors secure relief, with bingo duty abolished and horserace betting duty unchanged
Fiscal Shifts Reshape UK Gambling Landscape
Flutter Entertainment now anticipates a drastic cut to its adjusted EBITDA in the wake of the UK Government’s decision to raise Remote Gaming Duty from 21 percent to 40 percent, effective April 2026. The company projects the new online gaming tax regime will reduce its adjusted EBITDA by $320 million (£241.7 million) in fiscal year 2026, escalating to $540 million (£407.9 million) in fiscal year 2027, before any mitigation efforts are applied.
This significant tax move, partly disclosed in advance after an inadvertent publication by the Office for Budget Responsibility, stands as the largest increase in UK online gambling taxation on record. Chancellor Rachel Reeves has characterized the rise as a public health response specifically addressing the risks posed by online casino-style gaming, asserting that these products pose “the highest levels of harm”.
Retail Operators Receive Favorable Outcomes
While online-focused businesses must brace for steeper duties, land-based gambling segments receive notable relief. Machine gaming duty will remain unchanged, horserace betting duty stays fixed at 15 percent, and bingo duty is set for elimination beginning in 2026. These measures spare physical venues from the impact felt in the remote sector.
| Tax Type | Current Rate | New Rate / Change | Effective Date |
|---|---|---|---|
| Remote Gaming Duty | 21% | 40% | April 2026 |
| Machine Gaming Duty | Flat | Unchanged | — |
| Horserace Betting Duty | 15% | Unchanged | — |
| Bingo Duty | N/A | Abolished | 2026 |
| Remote General Betting Duty | 15% | 25% | April 2027 |
Flutter’s Strategy to Offset the Impact
To combat the financial consequences, Flutter has outlined a multi-pronged response. The company indicates it will immediately implement first-order mitigation, including a 20 percent reduction in operational, promotional, and marketing costs within the first six months of the tax hike, which will increase to 40 percent after that period. Flutter also expects to leverage its scale for additional “second-order” advantages, such as increased market share and improved operational efficiency.
Kevin Harrington, UK & Ireland CEO at Flutter, said: “Today’s tax increases are a very disappointing outcome and will have a significant adverse impact on our industry. These changes will hand a big win to illegal, unlicenced gambling operators who will become more competitive overnight.”
Harrington highlighted that the new 40 percent UK rate now exceeds that of the Netherlands, where increased taxes have reportedly led to more illicit gambling activity and declining government revenues.
Sector Reactions and Industry Turmoil
The Budget announcement has caused widespread disruption throughout the industry. Remote operators now face tighter margins, while retail betting venues, bingo halls, and casinos receive greater stability in the new fiscal environment.
Adam Rivers, Managing Director and Global Head of Betting & Gaming at Alvarez & Marsal, told SiGMA News, “While this is painful for the online sector, not all business models have fared badly. Scrapping bingo duty and holding machine gaming duty steady gives land-based bingo operators breathing space.
“Perhaps the most unexpected shift is the inversion of the tax balance between online and retail sports betting. A decade ago, online enjoyed the lighter burden; now the tilt moves back towards bricks-and-mortar.”
Additionally, remote General Betting Duty is set to climb from 15 percent to 25 percent, scheduled for April 2027.
Horseracing Duty Maintained; Industry Voices Mixed Relief
After extensive lobbying, the Treasury confirmed that Horserace Betting Duty will not increase and will remain at 15 percent. BHA Acting Chief Executive Brant Dunshea welcomed the outcome: “The Chancellor has listened to our concerns and rightly recognised that racing is a unique national asset culturally, socially and economically, and we welcome this support.
“Betting on racing is an integral part of the enjoyment of our sport, and maintaining the rate of horserace betting duties is an important step by the Government to help preserve revenue streams and protect the 85,000 jobs supported by the racing sector across the country.
However, racing bodies cautioned that financial strain on online operators could still affect levy payments and sponsorship.
Market Fallout: Guidance Suspended and Share Prices Fall
Immediate repercussions followed the tax announcement:
- Flutter started cost reduction measures
- Evoke Holdings (William Hill) withdrew its medium-term financial guidance and is considering a sale of its Italian business as its annual duty costs increase to between £125 million and £135 million. Shares declined 18 percent on Budget day
- Entain anticipates an annual cost rise of £200 million and has issued a profit warning
- The Betting and Gaming Council described the tax hike as “a devastating blow” and sounded alarms over growth in the unregulated offshore market
In total, industry market capitalization decreased by more than £8 billion in one trading day.
Migration Risks as Unlicensed Gambling Surges
Industry analysts caution that higher taxes could simply alter player behavior, not curtail demand. If regulated companies reduce offerings, customers may shift to offshore platforms, especially in the online casino market, where profit margins are already strained.
Illegal online gambling has become so prevalent in 2024 that it is now seen as one of the major economic and regulatory challenges facing the European Union. The report ‘EU 27 Europe: Online Gambling 2024‘, commissioned by the European Casino Association (ECA) and conducted by Yield Sec, provides the industry’s most comprehensive look at the EU’s digital gambling market.
According to the report, operators without licenses secured 71 percent of Europe’s online gambling revenue, totaling €80.6 billion ($87.85 billion), while licensed operators took in €33.6 billion. Altogether, the online gambling market hit €114.3 billion, with the vast majority operating outside formal regulation.
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- Author
Daniel Williams
