Gambling Stocks Continue to Slump as Budget Comes Into View

UK betting companies are bracing themselves for the worst as reports have emerged of gambling stocks continuing to tumble. Indeed, it is thought that almost a quarter of the value of leading betting stocks have been wiped off since August, prompting tangible worry.

The November budget, naturally, is coming into sharp focus. It is widely expected that Rachel Reeves will announce a tax raid on betting companies as she seeks to plug a black hole in the UK economy.

Speculation has been rife about what may happen, with the Treasury in consultation about how to tax the gambling industry. However, it seems gambling companies have been down on their luck lately.

Gambling companies pay a price

A prospective hike in gambling tax has prompted bookmakers to worry punters will flock to black market sites. Judging by the share prices, the concern is substantiated, with Evoke, Rank, and Entain seeing their share prices tumble by 42, 21, and 29% respectively over the past three months.

Prominent think tanks, such as the Institute for Public Policy Research (IPPR), have hinted the Remote Betting and Gaming Duty (RBGD) rate could be bumped up from 21% to 50%. This, in turn, could generate an extra £3 billion a year to bolster the Government’s coffers.

Interestingly, Evoke, the parent company of William Hill, revealed earlier this week that UK retail revenue jumped by 6% for Q3. That said, UK and Ireland online retail revenue is lagging a bit, which is a bit disconcerting.

What has happened to Entain and Rank?

Like Evoke, Entain, and Rank have been left a bit battered by the economic headwinds, noting a significant drop in their share prices. More significantly, Rank CEO John O’Reilly recently expressed his concern over the potential tax increases.

Indeed, O’Reilly has been in discussions with the Treasury, and he is adamant that Rank is already paying its ‘fair share’. He said: “Speculation regarding tax changes in the upcoming budget is, inevitably, hanging over the business. We are engaged with the Treasury on the implications of tax changes on future investment and the customer.

“Last year the group generated £44.6m in profit after tax, having paid HMRC and local authorities £188m in taxes. The Rank Group, with its strong UK focus, is certainly paying its fair share.”

Indeed, Entain and Rank are weighing up the prospect of re-evaluating their UK investment strategy. This isn’t an uncommon thought among those within the betting fraternity.

Betting shop closures highly anticipated

Concern about the mass closure of UK betting shops has heightened in recent weeks. Paddy Power has intimated that it could close up to 57 shops across the UK and Ireland, while Betfred has conceded it could shut all 1,287 betting establishments, and its CEO has admitted the ‘alarm bells are ringing’.

Leading accounting firm Ernst & Young (E&Y) has also added some doom and gloom with its recent research. They have forecasted that as many as 40,000 jobs could be cut if a hike in gambling taxes materialises.

Analysts try to remain hopeful

Entain have also claimed that Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) could be knocked by 2% in 2026, and Rank’s revenue is more skewed towards in-person betting. However, private bank Berenberg has tried to strike a more positive note.

They said: “If the UK Government remains rational, the shares could re-rate. In any case, until we know how the cards will fall, it would take quite an optimist to place a bet.

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