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Shares of UK-based bookmakers fell sharply on Monday on concerns that the government could raise taxes on gaming companies in this month’s Budget.
Entain, the London-listed gambling group that owns Ladbrokes, plunged 14 per cent in early trading after The Guardian reported on Friday that chancellor Rachel Reeves was weighing possible tax increases on the sector worth up to £3bn.
London-listed shares of rival Flutter, which owns brands including Betfair and Paddy Power, slipped 7 per cent, while Evoke, owner of William Hill and 888, lost nearly 15 per cent. Casino operator Rank Group fell 7 per cent.
Entain, Flutter, Evoke and Rank have lost a combined £3.25bn of market capitalisation.
However, one government figure told the Financial Times that ministers were not planning such a tax raid on the gambling industry in the Budget on October 30.
The Guardian reported on Friday that the government was weighing an increase in gambling taxes, based on proposals by think-tanks including the Institute for Public Policy Research, which has estimated that the government could raise £2.9bn next year, and up to £3.4bn by 2030.
The IPPR has suggested doubling the duty on high street bookmakers to 30 per cent and increasing the online casino gaming duty from 21 per cent to 50 per cent. “Gambling harms are increasing,” due to the rise of online casinos, said the report.
It cited new research from the Gambling Commission that found 2.5 per cent of the adult British population may be suffering from problem gambling, “far higher” than previous estimates of about 0.3 per cent.
Roberta Ciaccia, an analyst at Investec, said the reported proposal to sharply raise gambling taxes was “not realistic at all, as it will not allow any operator to be profitable”.
Ciaccia said such an increase would wipe out companies’ profit, as most large operators in the UK generated core profit margins of about 20-25 per cent online and 15-20 per cent from betting shops.
Additional reporting by Jim Pickard
