During the recent SBC Summit in Lisbon, Josh Hodgson of H2 Capital set the stage for a panel focused on the UK's remote gaming tax, which increased from 21% to 40% on April 1. Hodgson noted that leading operators currently control about two-thirds of the UK market, a share that could potentially grow to 80%. He questioned whether this shift signifies that "scale and balance-sheet strength become the decisive factor."
Flutter's Richard Clarke, managing director of Paddy Power and Betfair, warned of a significant impact ahead: "We’re expecting a £500 million impact from next year. That impact has already started to come through this year, so it has to be managed, and we’re working on that."
While Clarke refrained from disclosing specific details about Flutter's response, he indicated that restructuring may be in the works, particularly as larger operators like Entain have announced job cuts as a reaction to the tough tax landscape.
Entain Plc revealed plans to cut roughly 400 customer care positions across 11 countries, including the UK and Europe, marking a significant reduction in its workforce, which follows an earlier cut of 500 roles in corporate, product, and technology sectors. The industry-wide effects of the tax increases have pressured profit margins, prompting structural changes and reductions in staff at competitors like Evoke and Bet365.
In an interview after the panel, which also featured Andy Wright from LeoVegas Group, Clarke mentioned, "We’re not ready to share any of our plans. I talked on stage earlier about the four dimensions we can optimise around, and we’d like to see that play out over the next few months.”
Clarke noted that smaller operators are likely to bear a heavier burden due to the UK’s regulatory and tax environment, stating, "Some of those costs don’t scale. We’re a big business, and there are things we can do with one or two million that give us an advantage. I’d agree with the general point that scale matters here, and we’d expect to take market share as a result of the squeeze."
He was asked if he felt pleased about the tax, given that it allows Flutter to capture market share from exiting operators. Clarke emphasized, "Absolutely not. If we end up in a situation where Flutter grows market share while the black market grows faster than the regulated industry, that can’t be something anyone should be happy about. We should be focused on addressing what drives the black market."
The potential shift toward the black market is concerning. Clarke reiterated Flutter’s commitment to responsible regulation: "We’re big supporters of well-thought-out, proportionate regulation. The risk at the moment, and it’s more of a risk than a tax concern, is that the balance starts to tip in favour of the black market."
Flutter employs 550 individuals dedicated to promoting safer gambling. Clarke pointed out that the company's strategy aims to illuminate the weaknesses of the black market’s customer protections. Speaking on the upcoming Financial Risk Assessments, he asserted that operators need to collaborate with the Gambling Commission to ensure effective customer safeguards. "But the jury’s still out until we get through the next phase,” he added.
Clarke maintained that the experience for consumers engaging with black-market sites is dire. He referenced research conducted by Flutter UK&I, revealing alarming insights. Convicted fraudster Alex Wood, who has since transitioned to a counter-fraud adviser, tested unlicensed gambling sites without needing a VPN, easily finding them via app stores and social media.
Wood recounted his experience with GodOdds, where he created accounts with false identities and encountered considerable difficulty withdrawing his funds after losing bets. He urged the Gambling Commission to enhance its efforts and called on the Financial Conduct Authority to hold payment providers accountable for facilitating black-market gambling in the UK.
To ensure the regulated market thrives, Clarke outlined three necessary steps: improving customer protection, maintaining proportionate regulation, and making tangible progress against unlicensed operators. He noted that recent discussions with the Gambling Commission displayed a "different tone from the past," highlighting a recent £26 million grant awarded to combat illegal gambling.
