Flutter Entertainment has revised its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for two years after the UK Government confirmed a steep rise in Remote Gaming Duty, which will jump from 21 percent to 40 percent from April 2026. The company estimates the raised online gaming taxes will hit its adjusted EBITDA by $320 million (£241.7 million) in the fiscal year (FY) 2026 and $540 million (£407.9 million) in FY2027 before mitigation.
The tax rise, partially revealed early when the Office for Budget Responsibility mistakenly published its outlook document, represents the largest shift in UK online gambling taxation to date. Chancellor Rachel Reeves has positioned the increase as a public health measure targeting online casino-style gambling, which she said carries “the highest levels of harm”.
Land-based operators, horseracing and bingo, however, emerge with significant relief: machine gaming duty stays flat, horserace betting duty remains untouched at 15 percent, and bingo duty will be abolished from 2026.
Flutter activates aggressive mitigation plan
Flutter said it expects first-order mitigation, cuts to operational, promotional and marketing spend, of 20 percent in the first six months after implementation, rising to 40 percent thereafter. The company believes its scale will help deliver additional “second-order” benefits from market share gains and deeper operational efficiencies.
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 noted the UK’s new 40 percent rate now exceeds that of the Netherlands, where recent tax increases coincided with a rise in illegal gambling and a fall in Government receipts.
Industry reaction: Retail respite, online pain
The Budget redraws the fiscal map for the gambling sector. While remote operators face sharply reduced margins, retail betting shops, bingo halls and casinos receive relative stability.
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.”
Remote General Betting Duty will also rise from 15 percent to 25 percent from April 2027.
Racing wins protection as government shields horseracing duty
Following months of lobbying from racing stakeholders, the Treasury confirmed that Horserace Betting Duty will remain at 15 percent. BHA Acting Chief Executive Brant Dunshea welcomed the move: “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.
But racing bodies cautioned that online operators’ financial strain may still affect levy flows and sponsorship.
Operator turbulence: guidance withdrawals and share price slumps
The fallout from the tax increase was immediate:
- Flutter began rolling out cost reductions.
- Evoke Holdings (William Hill) scrapped its medium-term financial targets and is exploring a sale of its Italian business as annual duty costs rise to £125–135 million. Shares fell 18 percent on Budget day.
- Entain expects a £200 million annual cost increase and issued a profit warning.
- The Betting and Gaming Council called the tax hike “a devastating blow” and warned it strengthens the unregulated offshore market.
Across the board, the sector lost over £8 billion in market capitalisation in a single trading session.
Risk of player migration grows as regulated margins narrow
Analysts warn that higher taxation shifts behaviour rather than eliminating demand. If regulated operators reduce bonuses, promotions and product depth, offshore sites may become more attractive, particularly in online casino, where margins are already tight.
Meanwhile, illegal online gambling reached such proportions in 2024 that it emerged as one of the most pressing economic and regulatory challenges facing the European Union. This is the central finding of the new study ‘EU 27 Europe: Online Gambling 2024‘, conducted by Yield Sec on behalf of the European Casino Association (ECA), the most comprehensive analysis ever carried out on the EU’s digital gambling landscape.
According to the report, unlicenced operators captured 71 percent of Europe’s online gambling market, generating €80.6 billion ($87.85 billion) in gross revenue, compared with the €33.6 billion reported by licenced operators. In total, the online market reached €114.3 billion, but the overwhelming majority is controlled by actors operating entirely outside any regulatory framework.
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