Flutter Entertainment Faces Tax Hike Challenges

By Greg Peters • Friday, November 28 10:24 • Permanent Link

Flutter Entertainment PLC, a leading online sports betting and iGaming operator, is set to face significant challenges due to changes in UK gaming taxation. The UK government has announced increases in online gaming taxation, with iGaming set to rise by 19 percentage points to 40 percent from April 2026, and sports betting (excluding horseracing) increasing by 10 percentage points to 25 percent from April 2027.

The impact of these changes on Flutter's adjusted EBITDA is expected to be approximately $320 million in fiscal 2026 and $540 million in fiscal 2027, before mitigation. The company anticipates that the overall mitigation opportunity will be similar to recent precedent, with a greater relative opportunity for second-order mitigation offsetting a moderately lower relative level of first-order mitigation.

In the first six months post-implementation, direct first-order mitigation, including reduced operational, promotional, and marketing spend, is expected to be approximately 20% of the gross impact, rising to approximately 40% thereafter. This would result in an expected approximate first-order mitigation impact by year, with $85 million in 2026 and $201 million in 2027.

The net impact after mitigation is projected to be $235 million in 2026 and $339 million in 2027. Flutter expects an exit percentage mitigation of 40% in 2027.

Kevin Harrington, Uki CEO, expressed disappointment at the tax increases, emphasizing that they will have a significant adverse impact on the industry. He noted that the changes may inadvertently benefit illegal, unlicensed gambling operators, making them more competitive overnight.

Despite the challenges, Harrington remains confident in Flutter's ability to navigate through the changes, citing the company's scale, leading position in the UK, and proactive cost initiatives as factors that will help mitigate the impact.

These changes in UK gaming taxation are expected to have a substantial impact on the overall market, with Flutter aiming to deliver material second-order mitigation benefits, including market share gains, and operational efficiencies to offset the impact in the medium term. As a result of these announcements, the company's shares have moved 2.04% on the market, and are now trading at a price of $199.92. For more information, read the company's full 8-K submission here.

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