At last Wednesday's SBC Summit in Lisbon, H2 Capital’s Josh Hodgson introduced a panel discussion centered on the UK’s remote gaming tax, which recently increased from 21% to 40% as of April 1. Hodgson highlighted that tier one operators already command about two-thirds of the UK market, suggesting that this share could grow to 80%. He posed the question of whether this shift marks a crucial moment where "scale and balance-sheet strength become the decisive factor."
Richard Clarke, managing director at Flutter-owned brands Paddy Power and Betfair, painted a grim forecast, stating, “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 he didn’t reveal specific strategies his company might employ, he pointed to Entain's actions as indicative of potential restructuring that could lead to job reductions.
Entain Plc has announced plans to eliminate approximately 400 customer care positions across 11 countries, including the UK, Gibraltar, Ireland, and mainland Europe. This accounts for about 20% of its customer support workforce, marking the second significant cut in its staff following the loss of 500 corporate, product, and technology roles in a previous restructuring.
The challenges are not unique to Entain and Flutter; the steep tax hikes have squeezed profit margins for many in the sector, prompting job cuts and branch closures at competitors like Evoke and Bet365. Following the panel discussion, which featured Andy Wright, MD for UK and Ireland at LeoVegas Group, Clarke noted, “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 emphasized that the regulatory and tax burden disproportionately affects smaller operators, explaining, “Some of those costs don’t scale.” He pointed out, “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.”
When asked if he was optimistic about Flutter’s potential to fill the void of exiting operators due to the new tax, Clarke firmly rejected the notion, expressing concern over the expanding black market in the UK. “Absolutely not,” he said. “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.”
Clarke reiterated Flutter’s support for well-considered regulation. He warned of a significant risk, stating, “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 people dedicated to safer gambling initiatives, and Clarke described this strategy as "holding up a mirror to the lack of protection in the black market."
Regarding the upcoming Financial Risk Assessments, he urged operators to collaborate closely with the Gambling Commission to ensure these checks effectively serve customers: “But the jury’s still out until we get through the next phase.”
Clarke lamented the dire customer experience in the black market. Research commissioned by Flutter UK&I last year highlights the dangers. Alex Wood, a former fraudster and now a counter-fraud adviser, tested unlicensed sites for two weeks without using a VPN, easily discovering them through app stores, social media, and search engines.
For instance, using Curaçao-based GodOdds, Wood created an account under the fictitious name of a 213-year-old Charles Dickens and placed a £50 bet on a horse. A second account registered to a seven-year-old “Bo Peep” was used for a £50 basketball bet, resulting in hundreds of pounds lost in minutes without the ability to withdraw funds.
He urged the Gambling Commission to take more decisive action and called on the Financial Conduct Authority to target payment providers enabling UK black-market gambling.
Clarke outlined three conditions necessary for the regulated market to thrive: enhancing customer protection, implementing proportionate regulations, and making substantial progress against unlicensed operators. He noted that discussions with the Gambling Commission have recently reflected a different tone compared to previous conversations. Earlier this year, the regulator was awarded a £26 million grant aimed at combating the rising threat posed by illegal gambling.
