Weak betting sector in London; speculation mounts over a tax rise. Entain shares fall

(Il Sole 24 Ore Radiocor) – Speculation about a rise in gambling taxes in the UK is putting pressure on the betting sector on the stock market. In London, Evoke – which owns the William Hill and 888 brands – and Entain, which owns the Ladbrokes, Bwin and Eurobet brands, amongst others, are falling. The Irish company Flutter Entertainment is also losing ground in pre-market trading on Wall Street; it moved its primary listing from London to New York in August but continues to operate in the UK with brands such as Sky Bet and Betfair.

According to the Financial Times, British Chancellor John Healey is considering the possibility of raising taxes on gambling and slot machines in the forthcoming Budget Bill. The aim is to target betting agencies and so-called adult gaming centres (AGCs) specifically, without, however, penalising traditional venues such as pubs, bingo halls or amusement arcades. However, leaders in the country’s gambling sector believe this measure risks damaging the entire fabric of businesses linked to the sector, which are already struggling due to the sharp tax increases included in last year’s Budget.

To give an idea, according to a simulation by Ey commissioned by the Betting and Gaming Council lobbying group, the measure could lead to the closure of 1,470 betting shops and the loss of 15,900 jobs across the UK. Entain’s CEO Stella David shares this view; in a letter to Prime Minister Andy Burnham, she wrote that doubling the gambling tax in line with the Social Market Foundation’s proposals would cost her company around £100 million. The measure would thus hit ‘businesses that are already struggling to absorb the significant tax increases’ set out in the latest budget.

However, according to sources consulted by the FT, Healey and Burnham believe that AGCs — premises with slot machines that are generally open 24 hours a day — have become a scourge on high streets and have ruined the lives of many people. Furthermore, the benefits to the Exchequer would be considerable for the government. The Social Market Foundation, an influential non-partisan think tank, estimated in June that doubling the tax on so-called Category B slot machines — machines with higher stakes found in casinos and licensed venues — to 40 per cent would increase tax revenue by up to £458 million.

However, for the measure to go ahead, it will have to overcome opposition from the betting industry and trade associations. Last year, the then Chancellor of the Exchequer, Rachel Reeves, had already abandoned the idea of imposing a new tax on the sector — in addition to the tax increases already introduced on gambling during her term in office — for fear of harming pubs and bingo halls already under pressure. This may be one reason why the fall in the sector’s share prices today has remained limited.