According to Entain, the company took a £488 million non-cash impairment charge. 5 million. The widening deficit was largely driven by the impairment charge linked to tax changes announced in the Budget by Chancellor Rachel Reeves.
Rachel Reeves increased taxes on online gaming, such as casino games and slots, to 40 percent from 21 percent and on sports betting to 25 percent from 15 percent. The gambling industry has warned that higher taxes, which will be implemented from April, will add to costs and could lead to job losses. ' Despite the tax challenges, Entain reported some positive operational results.
The extremely disappointing decision to dramatically increase taxes would likely generate lower tax revenues and damage the industry.
Entain's total group gaming revenue rose 7 percent, driven by its joint venture with BetMGM. Entain's underlying group earnings rose 8 percent, beating expectations. 8 billion this year.
Tax receipts from gambling will rise to £6 billion by 2030/31, with two-thirds of that coming from the changes announced in the Budget. Paddy Power owner Flutter said that the tax changes were leading to slower growth in its UK business amid an overall slowdown in sales. Entain said it was among a handful of operators able to digest the dramatic increase in taxes and believes, in time, it will be a significant strategic opportunity.
Entain previously said it expected to mitigate about 25 percent of the impact of the levies through measures, which included a reduction in marketing and promotion costs. Entain said it now expects to offset over 50 percent of the taxes from 2027. Despite the looming threat of higher taxes, Entain reaffirmed confidence in generating £500 million annual adjusted cashflow from 2028.