Paddy Power and Betfair owner Flutter Entertainment has warned that a Budget move to raise UK gambling taxes will slash its annual profits by $860 million (£650 million) over the next two years.
Chancellor Rachel Reeves announced on Wednesday that the remote online gaming fee will rise from 21% to 40%, while online sports betting – excluding horse racing – will rise from 15% to 25%.
Flutter, which also owns Sky Bet and US company FanDuel, said the extra taxes would hit its underlying earnings by about $320m in 2025-26 and $540m in 2026-27.
It hopes to reduce this loss by 40% by 2027 through reductions in promotional and marketing spending and broader cost-cutting efforts.
Flutter shares fell 1% in early trading on Thursday, while Rank’s shares fell 10% and William Hill owner Evoque’s shares fell more than 5% after falling 18% on Wednesday.
Kevin Harrington, Flutter’s UK and Ireland chief executive, said the tax increase was “a very disappointing outcome and will have a significant adverse impact on our industry. The Chancellor wants to address harm in the right way, but these changes will hand a huge win to illegal, unlicensed gambling operators who will become more competitive overnight.
“These black market operators do not pay taxes and do not invest in safe gambling.
“At 40%, the UK remote gaming levy is now well above countries such as the Netherlands, where recent tax rises have seen a rise in illegal gambling and a fall in government receipts.”
He added that the company was “well prepared to navigate” the changes “through our scale and leading position in the UK, as well as the proactive cost initiatives we are undertaking”.
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The Chancellor spared the industry any tax increases for in-person gambling or horse racing in the Budget after warning that jobs in the industry would be hit, while he said bingo fees would be completely abolished from April next year.
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