UK gambling stocks fell sharply this morning on news that the chancellor of the exchequer could target gambling companies as part of efforts in her first Budget to fill a much-debated £22 billion “black hole” in the public finances.
According to the reports, the Treasury is considering fresh levies that could raise between £900 million and £3 billion via taxes on the sector.
This morning, UK gambling companies fell precipitously on the news, with shares in London-listed Entain ENT, which owns Ladbrokes, Coral, and Sportingbet, falling 13.46% to £6.71.
Evoke EVOK, meanwhile, which owns William Hill and 888, lost 11.5% and is currently trading at 57p per share. Shares in Betfair and Paddy Power owner Flutter FLTR also fell 8.78% to $219.50. Flutter is listed on the New York Stock Exchange following a listings transfer to the US that completed in May this year, but retains a secondary listing on the London Stock Exchange.
Casino operator Rank Group RNK also fell by 6.96% to 81p.
Russ Mould, investment director at AJ Bell, says the UK government is desperately searching for ways to raise revenues, without increasing taxes on “working people.”
“It’s notable that the speculation suggests so-called ‘lower harm’ activities like bingo and the lottery will be untouched by any tax changes,” he says.
“The betting industry will argue higher taxes could lead to an increase in illegal black-market gambling and firms may pass on any extra costs they incur to punters, potentially doing more harm.
“Today’s news is a salient reminder of the strengthening headwinds the sector faces in terms of regulation and tax and that this remains a live risk for investors to consider.”
The chancellor will present her first Budget on October 30, which could see substantial changes to inheritance tax, capital gains tax, and pension rules in the UK.
