Tax Increases and Prediction Markets Impacting UK Operator Valuations

Impending online gambling tax increases and the rise in popularity of prediction markets in the US are significantly impacting the valuations of tier one UK operators.

In April, UK operators will have to start paying considerably higher rates of remote gaming duty, which covers bets on online casino games. The tax rate will rise from 21% of gross gaming yield (GGY) to 40%. In addition, general betting duty, paid on online sports betting, will go up from 15% of GGY to 25% in April 2027; bets on horseracing will be exempt from this increase.

Shares in Flutter, which owns Paddy Power, Betfair and Sky Bet, have dropped from £151.25 when the tax increases were announced by Chancellor Rachel Reeves on November 26, to £90.76 on the London Stock Exchange (LSE) at the time of writing. This figure is down from a high of £236.30 in February 2025.

Flutter is also listed on the New York Stock Exchange (NYSE), where its share price has fallen from $309.41 in August to $122.16 at the time of writing. Flutter owns FanDuel, the leading sports betting operator in the US, in terms of generated revenue. Flutter’s market cap on the NYSE is $21.41 billion (£15.9 billion). This is down from a significantly higher valuation of more than £42 billion in February 2025.

Prediction market growth

This drop has potentially been driven by the growth of prediction markets in the US. Prediction markets, provided by operators such as Kalshi and Polymarket, have rapidly become popular across the US, in part due to the simplified “Yes/No” form of bets they offer.  In the prediction market format, participants trade contracts where the payoffs are tied to a future event. The odds shift based on the betting activity from players.

An example of a prediction market bet would be a player betting Yes or No on whether President Donald Trump will attend another football game this year. If 80% of bettors vote Yes, then the Yes bet will likely cost $0.80 and the No bet will cost closer to $0.20. In January, Matchbook announced it would be the first operator to launch a regulated prediction market in the UK.

Entain and Evoke also struggling

Regarding share price, it has been a similar story recently for Entain, owner of Ladbrokes and Coral. Entain shares have dropped from £7.47 on November 26 to £5.78 at the time of writing. The share price has been falling steadily since last July, when it reached a high of £10.31.

Share prices were partially impacted prior to the online betting tax increases being announced.

Entain’s share price can also partially be impacted by its US operations. Entain operates BetMGM in the US as part of a 50/50 joint venture with MGM Resorts International. Entain’s current market cap is £3.75 billion, down from £6.38 billion last July. Entain’s market cap was as high as £12.49 billion in September 2021, prior to a market correction as the UK was exiting COVID-19 restrictions.

Meanwhile, shares in Evoke, owner of William Hill and 888, has a share price of £0.30 at the time of writing, down from £0.72 in July. Similarly to Entain, the share price reached a high in September 2021, when it was valued at £4.94. Evoke’s market cap is £134.96 million, down from £274.8 million in late 2024.

Following the announcement of the online betting tax increases, Flutter and Evoke both mentioned mitigation factors, including cuts to marketing spend, and Entain warned this could lead to a growth in black market activity.