Betting Companies Under Tax Pressure in Europe

In recent months, attention in the global betting and gaming industry has mostly focused on the rapid rise of prediction markets in the US and local challenges in Brazil. The European market, meanwhile, appears to have been pushed to the side. Yet for companies such as Flutter Entertainment, Lottomatica, FDJ United and Entain, Europe still holds a central importance for their future.

Third-quarter results showed that these companies are facing rising tax burdens. During the period, football matches that went favorably for customers pulled sports betting revenues down across Europe. In contrast, online gaming revenue continued to grow at many operators. Management teams described the different approaches they are taking to absorb tax increases and fund new investments.

Flutter's new CEO, Dan Taylor, said on the company's first earnings call since taking over that it had decided to cut fixed costs while maintaining customer spending. As part of the restructuring of its UK&I business, around 1,400 job cuts were announced. Taylor said there were two options as taxes rose. One was to cut marketing and generosity, the other was to use its scale to protect investment in customers. The company chose the second path.

Flutter's UK&I revenue rose 4% to $889 million. Online casino revenue increased 12% to $540 million. Growth was driven by a 20% rise in average monthly players, cross-selling during the World Cup and new product launches. Sports betting revenue, however, fell 6% to $309 million even though betting volume rose 5%. The company also said it aims to achieve an additional $500 million in gross operating cost and capital expenditure savings by 2029. International adjusted EBITDA fell 14%, mainly due to high gaming taxes in the UK.

Entain's UK&I online net gaming revenue rose 14% at constant currency. Gaming revenue increased 17% and sports revenue rose 3%. CFO Michael Snape attributed this performance to product improvements and disciplined investment amid market turbulence caused by high gaming taxes. CEO Stella David pointed to the revamped Ladbrokes app and changes to the coin economy at Foxy and Gala. David warned against drawing early conclusions about the full impact of taxes on competition. She said she did not currently see any major change in the UK market. The gaming tax increase began in April, while the sports betting tax increase will not be fully implemented until April 2027.