Ladbrokes’ parent company, Entain, says a sharp rise in UK gambling taxes has already taken a heavy financial toll and could ultimately strengthen unregulated betting markets.

The FTSE-100 gambling group reported a £681 million ($907 million) statutory loss after tax for 2025, driven in large part by a £488 million ($650 million) impairment tied to higher UK gambling taxes announced in November 2025.

Chancellor Rachel Reeves introduced a steep rise in remote gaming duty from 21% to 40% from April 2026, and the creation of a new 25% general betting duty for online gambling from April 2027.

Entain CEO criticizes UK gambling tax decision amid Q4 losses

Chief executive Stella David used the company’s results presentation to voice strong concerns about the policy shift and its possible consequences for the regulated market.

“This is the first time I have spoken publicly since the UK Budget back in November,” David said during the company’s results presentation.

“The UK government’s decision to dramatically increase taxes on the gambling sector was extremely disappointing.”

David argued that heavier taxation could unintentionally push some customers toward unlicensed operators that operate outside regulatory oversight.

“It opens the door to the illegal black market who pay no tax, do not have a license, and have no player protections.”

Despite the criticism, the company says it will continue putting money into its UK business and sees potential to gain ground as the market adjusts to the new tax environment.

“During this period of turmoil, we will invest wisely in the UK and we will seize the opportunity to gain share from the longtail of subscale operators, who quite frankly are ill-equipped to withstand this impact.”

Financial impact of the tax increase

Underlying EBITDA reached £1.16 billion ($1.6 billion) in 2025, an increase of 7% from the previous year and ahead of company guidance. Online operations helped drive the improvement as scale and efficiency lifted margins.

However, the new UK tax framework forced the company to reassess the value of its domestic operations..

The UK and Ireland remain Entain’s largest market, with net gaming revenue in the region rising 6% year-on-year, supported by strong online growth.

The higher tax structure will start to affect operators more significantly from April 2026. Entain expects to offset roughly a quarter of the initial impact through operational adjustments, with mitigation rising to more than half by 2027.

Industry pressures extend beyond Entain

Across the sector, gambling companies are facing a similar mix of regulatory pressure and rising costs. Analysts at Bank of America recently lowered ratings on several major operators, including DraftKings and Flutter Entertainment, citing competitive threats and potential margin volatility.

Flutter has also been reshaping its operations, including plans to cut about 250 roles in Leeds while consolidating technology systems across the business.

Entain’s leadership believes larger operators may ultimately benefit from the tougher environment. Smaller companies with limited scale could struggle to absorb higher taxes, potentially leading to consolidation and changes in market share.

Looking further ahead, Entain says it still expects strong cash generation and is targeting at least £500 million in annual adjusted cash flow by 2028 despite the new UK tax regime.

Featured image: Entain

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