UK operators are faced with a significant conundrum in the upcoming 12 months, as they decipher how much capital, if any, they should invest in UK assets before and beyond crippling tax hikes, which are set to squeeze the profitability of the market.
Many companies have already provided clarity on their roadmap for the market, surveying the land to determine how aggressive or subdued their strategies should be.
Big decisions undertaken
Several operators have already decided to leave other regulated markets to mitigate the impact, as LiveScore has cited the UK as a reason behind its exit from Bulgaria.
Other operators have departed the UK market entirely, such as GGBet at the beginning of January, although the company cited a “planned platform closure” as the reason for its exit. Several smaller operators may depart the market as they deem their operations unmanageable if they were to continue.
However, investment and continued confidence in the UK market could fuel opportunistic players in the space to capitalise on market share left by departing operators.
In December last year, broadcaster ITV went against the grain and announced its intentions to enter the UK iGaming market alongside Richmond Atlantic, bringing real-money bingo and slots to its ITV Win platform.
ITV’s move was one that initially raised eyebrows, with their perception that they were entering a space set to feel the wrath of tax hikes. Yet, upon further inspection, the media giant may well be set to take advantage of a new avenue forged by the complete abolition of bingo duty.
This month, Midnite completed a Series C funding round, raising $35m, bringing the online casino and sportsbook operator’s total equity funding to over $75m, on top of the $100m credit facility secured earlier this year for marketing initiatives and business development.
Will some of the larger operators invest to swallow an even more substantial UK market share? Some companies appear to have already ruled themselves out.
evoke, which operates William Hill, 888 and Mr Green, initiated a strategic review of its operations in December last year in response to the UK tax increase, with all options on the table, including the potential sale of the group.
CEO Per Widerström recently noted that its board “is assessing its strategic options, with a resolute focus on maximising shareholder value”.
Time to flex the investment?
A tougher UK climate could present an opportunity for tier one operators like Flutter Entertainment and bet365 to grow market share.
The challenges of evoke indicate that tier one operators could still have obstacles to overcome later this year, but some operators appear to be willing to flex their investment muscles, with their eyes on growth as other companies leave market share behind.
When the UK budget was announced, Ladbrokes and Coral operator Entain noted that it would mitigate approximately 25% of the tax increase’s impact through actions such as reduced marketing and promotions, but it also expects to capture market share as others leave the market.
Sky Bet, Paddy Power and Betfair parent company Flutter also stated there is an “opportunity to deliver material second-order mitigation benefits, including market share gains”, providing “substantial opportunities to help offset the impact in the medium-term” when combined with additional operational efficiencies.
Kevin Harrington, CEO of Flutter UKI, said: “I am confident that through both our scale and leading position in the UK, as well as the proactive cost initiatives that we are taking, we are well placed to navigate through today’s changes.”
Licence fees consultation
Alongside the increase in remote gaming duty, another tripping point for operators that could stop invest in the UK market could be annual gambling commission fees being increased from the start of October later this year.
In late January, the Department for Culture, Media and Sport (DCMS) proposed three possible options as part of a consultation on the matter for stakeholders to provide their opinion.
- Option one: 30% fee increase
- Option two: 20% fee increase
- Option three: 20% fee increase plus 10% ringfenced for tackling illegal markets and protecting licensed operators’ revenue from criminal activity.
The UK Gambling Commission (UKGC) recommends option one, with options two and three pitched as alternatives by the government. Option three was the preferred option of the government.
The consultation is currently scheduled to close at 11:59pm on 29 March 2026.
Any increase in fees would be a significant contributing factor to the future direction of operators and their investments in the UK market.
Not long to wait
While investment could help operators gain more market share, there’s a very realistic prospect that the market share of smaller operators may dissipate.
Many players hold multiple accounts with multiple operators, so the player-base of departing platforms could very well be existing customers with larger operators.
There is also a very real fear that the black market will benefit the most from the duty changes, with players seeking out offers and prices that are no longer available with licensed platforms, turning to unlicensed operators in the hunt for such offerings as a result.
Uncertainty reigns at the current time, but with fourth-quarter and full-year financial reporting just around the corner, we should soon receive a much stronger indication of the direction of travel licensed operators will take down the investment highway and keep customers away from the black market.
