Jefferies sees ‘initial relief’ in UK-facing gambling group ‘morphing’ to worry

Jefferies notes that the United Kingdom budget headlines did not include any change or commentary on gambling taxes. However, the supplementary Budget documents have highlighted the prospect of gambling sector online tax reform and the firm sees “an initial relief in UK-facing gambling sector share prices morphing into a concern” around future tax harmonization, which is “a term that most infer means a tax rise.” The firm’s talks with investors have “typically landed on a 25% rate for both online sports betting and online casino taxes” and in such a scenario the firm’s estimates for the unmitigated Group EBITDA hit would amount to 8% for Flutter (FLUT), 6% for Entain (GMVHF) and 16% for Evoke (EIHDF), but the firm also notes that it has previously assumed that mitigation could reduce the year one impact by about 50%.