Flutter Entertainment warned on Thursday that sharp increases to UK online gambling taxes unveiled in the government's Autumn Budget would materially hit profitability, though the company expected to offset part of the impact through cost cuts and market share gains.
From April next year, the UK's remote gaming duty on iGaming would rise by 19 percentage points to 40%, while the tax on online sports betting excluding horseracing would increase by 10 percentage points to 25% from April 2027.
Flutter estimated the adjusted EBITDA impact of the changes, before mitigation, at about $320m in the 2026 financial year, and $540m in 2027.
The group said it expected to offset a portion of the burden through operational savings and reduced promotional spending.
First-order mitigation was projected to total $85m next year and $201m in 2027, equivalent to 27% and 37% of the gross impact respectively.
Flutter said it anticipated the mitigation rate to rise to around 40% by the end of 2027.
After mitigation, the net adjusted EBITDA hit was expected to be approximately $235m in 2026 and $339m in 2027.
The company said it saw "very significant" consequences for the wider sector but believed its scale positioned it to benefit from second-order mitigation, including potential market share gains and operational efficiencies that could soften the blow over the medium term.
Kevin Harrington, Flutter's UK and Ireland chief executive, criticised the government's decision.
"Today's tax increases are a very disappointing outcome and will have a significant adverse impact on our industry," he said.
"The Chancellor rightly wants to address harm, but these changes will hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight.
"These black market operators don't pay tax and don't invest in safer gambling."
He added that, at a 40% duty rate, UK remote gaming taxation would exceed levels in jurisdictions such as the Netherlands, where recent increases coincided with "a rise in illegal gambling and a fall in government receipts".
Despite the pressure, Harrington 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."
Flutter operates brands including FanDuel, Sky Betting & Gaming, Paddy Power, Betfair and PokerStars, and reported global revenues of $14bn in 2024.
At 0934 GMT, shares in Flutter Entertainment were up 0.5% in London at 15,200p.
Reporting by Josh White for Sharecast.com.