Paddy Power and Betfair owner Flutter Entertainment has warned that the UK's government's Budget move to hike gambling taxes will hit its annual earnings by hundreds of millions of pounds over the next two years.
The Chancellor announced yesterday that remote online gaming duty will rise from 21% to 40%, while online sports betting - excluding horse-racing - will increase from 15% to 25%.
Flutter - which also owns Betfair, Sky Bet and FanDuel in the US - said the tax increase will impact its underlying earnings by around $320m in 2025-26 and $540m in 2026-27.
It hopes to offset the hit by up to 40% by 2027 through efforts to cutting promotion and marketing spend and wider cost reduction efforts.
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," he said.
"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 stated.
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 firm is "well placed to navigate" the changes.
Some gambling stocks suffered hefty share price falls on the London market yesterday after the tax blow, with William Hill owner Evoke sliding 18%.
Other gambling firms with more global operations were sheltered from the worst of the share price declines.
Flutter, which switched its primary listing from Dublin and London to New York last year, saw its shares in London edge higher, while Ladbrokes rival Entain, which also has a more diverse global exposure, recouped initial losses and also closed higher.
The Chancellor spared the industry any tax rises for in-person gambling or horse racing in the Budget following warnings of a jobs hit in the industry, while she said bingo duty would be abolished entirely from April next year.
