The Paddy Power and Betfair owner, Flutter Entertainment, has warned the budget move to increase UK gambling taxes will hit its annual profits by $860m (£650m) over the next two years.
The chancellor, Rachel Reeves, announced on Wednesday that remote online gaming duty would rise from 21% to 40%, while online sports betting – excluding horse racing – would increase from 15% to 25%.
Flutter, which also owns Sky Bet and the US company FanDuel, said the extra taxes will affect its underlying earnings by about $320m in 2025-26 and $540m in 2026-27.
It hopes to offset the hit by up to 40% by 2027 through cutting promotion and marketing spend and wider cost reduction efforts.
Shares in Flutter fell 1% in early trading on Thursday, while Rank’s stock dropped 10% and the William Hill owner, Evoke, fell by more than 5%, after an 18% slide on Wednesday.
Kevin Harrington, Flutter’s UK and Ireland chief executive, said the tax increases were “a very disappointing outcome and 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.
“These black market operators don’t pay tax and don’t invest in safer gambling.
“At 40%, the UK’s remote gaming duty is now above countries such as the Netherlands, where a recent tax increase saw a rise in illegal gambling and a fall in government receipts.”
He added that “through both our scale and leading position in the UK, as well as the proactive cost initiatives that we are taking” the company was “well placed to navigate” the changes.
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The chancellor spared the industry any tax rises for in-person gambling or horse racing in the budget after warnings of a jobs hit in the industry, while she said bingo duty would be abolished entirely from April next year.
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