The Budget brought plenty of political theatre, but for the gambling sector the headline was blunt: a steep rise in taxes on online betting and gaming.
Chancellor Rachel Reeves set out a two-stage overhaul that lifts the tax burden on the industry far beyond what many investors had pencilled in.
From April 2026, the Remote Gaming Duty, the levy on online casino-style games, will jump to 40% from today’s 21%.
A year later, the Online Betting Duty, which covers online sports wagers but excludes horse racing, will rise to 25% from 15%. Duties on betting shops and gaming machines stay where they are.
Citi's analysts think the changes will land hard on the sector's two big UK-listed names, Flutter Entertainment PLC (LSE:FLTR, NYSE:FLUT) and Entain PLC (LSE:ENT).
The bank reckons the higher duties would trim adjusted earnings before interest, tax, depreciation and amortisation by around 5.7% to 6.4% for Entain in the 2026–27 financial year, and by roughly 4% for Flutter over the same period, even after allowing for cost-cutting and other mitigations.
Earnings before interest, tax, depreciation and amortisation, or EBITDA, is a standard measure of a company's operating performance.
The sting, as Citi sees it, is that few in the market were expecting anything like a 40% rate for online gaming. Investors had broadly assumed the government would push rates into the high 20s.
Citi's own estimate of the new effective tax rate from April 2027 is 27.5% for Entain and 31.8% for Flutter.
Both companies have been grappling with tightening regulation, slower growth in parts of the online market and, in Entain's case, a strategy reset after a turbulent period.
A jump in tax at this scale piles on another challenge. The expectation in the City is that share prices will take a knock as analysts rework their models.
The detailed numbers will emerge over the next few days as companies and brokers crunch the Budget changes. For now, the message from Citi is that the rise in gambling taxes is sharper than anticipated and that investors in the sector will need to adjust accordingly.