The roulette wheel may be spinning again for gambling taxes.
At the Labour Party conference, the Chancellor signalled that betting companies could face higher levies in the November Budget, saying that while the sector contributes to the economy, firms “should pay their fair share of taxes”.
Citi notes the comments follow an August report from the IPPR think-tank that floated steep reforms, including raising machine and remote gaming duty to 50%.
That scenario, the bank estimates, would cut Flutter Entertainment PLC's (LSE:FLTR, NYSE:FLUT) 2026 earnings before interest, tax, depreciation and amortisation (EBITDA) by about 10% and Entain PLC's (LSE:ENT) by 18%, even after cost-cutting.
While Citi thinks such drastic moves are unlikely, the Chancellor’s words make some increase more probable. Its base case assumes a 5 percentage point rise in online gambling tax, which would trim Flutter’s EBITDA by roughly 2% and Entain’s by 4%.
The immediate worry for investors is the lack of clarity. With shares in both groups sensitive to regulatory risk, Citi expects a negative reaction until the Budget provides more detail.
For now, the sector’s rally may be on hold while the Treasury decides how much of the pot it wants to take.