iGaming Daily

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The subject on every industry executive's mind, and the one that will dominate proceedings until the close of the year, kicks off the iGaming Daily's August agenda. Once more, tax reverberations are being felt right across the industry, and no more so than in the UK, where anxieties are mounting ahead of Chancellor Rachel Reeves' autumn budget statement. And as European PLCs publish their interim results, all leaders so far have cited precaution in response to upcoming controls.

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aiming to navigate tax impacts on profitability. In short, we might as well be talking about death itself, death and taxes. Welcome back to iGaming Daily, brought to you by Optimove, the number one CRM marketing solution for the iGaming market. I'm Charlie Horner and today I'm joined by Ted Memur, editor at large for SBC and Ted Osei, Ted Onklay, the editor of SBC News. Ted, Ted, thanks for joining me. How are you both doing?

00:57
Yeah, very well, very well. And looking forward to this one. I think it's the subject matter that's kind of just intertwining everywhere in the iGaming sector. Yeah, Ted OC. We seem to be talking about tax quite a lot on the podcast. So are you looking forward to this one? Yeah. I mean, tax isn't always the most thrilling topic in our day-to-day lives. Obviously it's usually a bit of a grind, but

01:27
There's a lot going on, there's a lot at stake at the moment in the betting and gaming industry in the UK and in other markets that makes this quite an interesting one to break down, particularly in the middle of financial reporting season with all the interim reports coming out for a of the big public companies, as you said, Charlie. So yeah, this is going to be quite big topic for us all to keep an eye on over the coming weeks and months. Yeah, definitely. So we've got industry CEOs giving comments to analysts, investors.

01:57
us in the press as well about about tax. Ted Menmer, could you give us a bit of an overview of what's happening here? Is the sector hitting a peak anxiety when it comes to tax rises? Yes, I think it's quite clear it is and this is going to be kind of a long-term symptom till the end of play in 2025. There's just no escaping this. It will be the dominant subject matter till the close of the year.

02:23
And even as we speak, we're kind of seeing all Europe PLC's kind of revise their long-term strategies because we're not talking about a tax increase in one or two markets. We're talking about it across multiple markets at a point of about five to six percentage points on bottom line. So that's taking a lot of kind of cash off your bottom line, it beats your bottom line profits. And it comes at a time.

02:52
When you go to kind of put the industry's context forward where you have leadership and the board demanding that all kinds of margins be squeezed. So cost controls, your marketing campaigns, your compliance. I think everyone's kind of feeling the stretch at the moment. Yeah. Yeah. Certainly there's a lot, a lot of cost cutting going on just to combat these, these tax rises.

03:17
Ted Osea, you've written an op-ed on SBC News which will link in the show notes and just gathering together not only your thoughts but some of the thoughts of other people in the industry and some comments from different stakeholders. What are you thinking about these tax rises and the way that the industry is starting to react to them as well? Well, obviously I think it's important that we specify that obviously this isn't like, I don't think this isn't guaranteed, is it? It's not like the government has said this is 100 % going to happen.

03:46
But in my opinion, I think a lot of people's opinion, it is going to happen. I think it's incredibly likely. mean, the government is in a position where they've kind of got a double-edged sword in this respect. They're facing a bit of a double-edged sword and they're under pressure to raise public finances to support a lot of the infrastructure investment projects we've got going on to kind of revitalise the British economy, get growth again. And then they're also facing pressure to

04:15
They seem to be a bit tougher on the industry, think, in lot of areas. Some of the ones Ted just pointed on around compliance and marketing and things like that. raising tax on the industry, even though in the grand scheme of things, the money raised will be a bit of a drop in the ocean as to what the government needs to raise, it's still going to be something, it's still going to fill a gap. And they're going to also, they could potentially get a bit of a PR win from it of, we're taxing them, we're making sure that the money's going towards.

04:44
healthcare or whatever or education things like that, grassroots sports, all this sort of stuff that the industry is usually sort of connected to regarding levies and tax contributions and things like that. So yeah, so we should expect it to happen I think in some form. What's been widely touted at the moment as to what the government are considering, what HM Treasury has kind of recommended of a consultation is

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for the three types of gaming duties to be rolled into one. Obviously for the industry, that's not a great prospect because it's going to be a, well, a heavier tax contribution, which as we've said, as Ted mapped out, so it could bite into bottom lines, particularly on EBITDA. It's not great in the middle of financial reporting season either. Obviously you wouldn't feel the impact in the current interim reports because this tax change will be in the autumn.

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but it could come into play further down the line in like Q4s, maybe Q3s as well. And then you've got the other voice involved in this is obviously the sporting voice, particularly horse racing. They've been incredibly vocal about this. I think on the day that I wrote that article, they launched a petition which carries the same...

06:00
Branding I guess is the campaign that they launched a couple of weeks earlier acts the racing tax their branding this partly as like attacks on racing They consider the concern that racing is going to attacks to the same level as other forms of gaming With like swats and casinos which racing believes are have a more harmful societal impact that it does because obviously is a sport So yeah, so they're very concerned about that

06:26
Understandably, racing has been struggling for quite a few years now. We've had attendances down a lot of the time. They were hit very hard by Covid and they've got quite a big over reliance really on the horse racing betting levy and bookmaker sponsorships. any threat to their bottom lines through taxation is not going to go down well. And then on top of that, obviously the final voice to consider is the reform advocacy groups themselves, lot of whom feel that as

06:56
we said earlier that betting should make a bigger societal contribution, particularly because of how much money it makes in this country. know, we're talking billions of pounds of revenue and one that is often connected to, as is the kind of push to the forefront in this whole debate about gambling as a public health issue, some societal impacts, problems with addiction, problems with gambling harm.

07:21
And it seems that they've been getting a lot more vocal lately. We've talked about this on the podcast before. We've got a group of MPs who are pushing for another look at regulatory reform. So yeah, I've rambled on quite a bit here, but those are the three main viewpoints we've got here and they're all clashing in different ways. No, it's important to raise all the opinions of all those voices because they all matter and they all tell a different story.

07:48
But I think that political context is really important, that the economy is struggling, the government needs to raise cash. It's also clashing with the fact that the Labour Party's manifesto pledge in the campaign was that they wouldn't raise taxes on working people. I wonder whether they might revisit that. But in the interim, sectors like gambling seem like an easy target for...

08:14
attack rises. Ted Memur, it looks like this is going to be the big battleground, the PR debate as industry reformists try and shape the debate really as we close out 2025. What's your take on this? Yeah, so you're right to certain degree. think kind of the APBG or kind of the newly reformed APBG and the reformists who are not kind of directly involved, but I think that

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They would have kind of taken on the recommendations of kind of the think tanks of the social market foundation and the institution for public policy research. And the most extreme case here is that gambling faces a polluted tax at 50 % plus, especially on high risk games. So you can see the games and your online slots. was, this was what was proposed last year. Now.

09:06
I also think kind of the consultation period of the government has undertaken. I don't think that it's again, very much kind of the same arguments are being presented as to how you tax the industry and what direction of governance tax will impose on how the industry is reshaped.

09:29
I think that even in the reformist camps, they know that if they push too hard on 50 % tax, opens up the market up to illicit gambling. But not only that, it just makes tax kind of no longer effective, dysfunctional. And the other factor here is that everyone in government knows that the number one priority now is to raise funds.

09:56
I think that's the case in the Labour camp. And okay, fine. You might be anti-gambling. You might push for the highest kind of tax rates, but I just don't think that those are going to pull through. Yeah, sure. And we were talking about this, I think this time last year or certainly last autumn that tap tries might have been on the way. We're talking about it again. So if it doesn't happen this autumn, it's just good. We're going to...

10:24
live on with this sort of uncertainty that will taxes rise? Will they not? You know, surely that can't be healthy in the long term. Okay. So I think, look, you're to look at the context of how, you know, Labour's first year in government. Now, if we go back to Rachel Reeves's first budget, the, you know, the number one, you know, Labour straight away pulled out the line that they had a 25 billion black hole.

10:52
deficit to fill in left by the conservative government. think we now come to this budget, which they use these terms like responsibilities, sticking to a plan. The context here is that labor has to control its budget, but it's much more about balancing out its spending ban and fiscal plan in which the majority of auditors now think that they are between 10 to 12 billion behind budget as to

11:20
They need to kind of plug these holes, right? And actually the spending is out of line. I don't think there's much room for maneuver for Rachel Reeves. I think she has to find a way of finding new cash, new cash resources and tightening up the purses. It's not a position that any government wants to be in. I think whatever direction she takes, she will be criticized by the opposition for not keeping up with their manifesto pledges. It's the other factor here is that.

11:48
What condition is the UK state, the economy in, what the OBR are going to push out? Because even if they say, okay, the economic situation isn't as bad, we go to 1 % growth, it really, really is all kind of accountable about where kind of the government wants to be in this kind of long-term project. The UK is becoming a stagnant economy. It needs a lift. And I don't think this government understands where it's going to come from.

12:15
Ted, I'll see if you've got anything to add. Yeah, I mean, think Ted's hit the nail on the head there really, sort of looking at what Labour's motivations are with this and what challenges they're facing. Yeah, I mean, to sort of go back to your question about, you know, this debate has been re-raised countless times, it's probably going to keep being re-raised in the future. I think, yeah, your point there that this clearly isn't healthy for the industry to have this constant arguing going on.

12:44
Really what we do need is just sort of a finalisation and some sort of stability. I know the UK is already one of the, yeah, it's a very sound regulatory framework. Lots of countries look to us as an example of that when sort of developing their own regulations, particularly like more emerging markets. But we've seen in recent years how much it has become maybe unstable is not the right word, but just often the argument is the debate around it has not been consistent, has it?

13:13
We had the gambling app review for however long that was, two years, two and a half years. I can't remember now. We saw multiple prime ministers, multiple secretaries of state, multiple undersecretaries all taking charge of overseeing that, taking charge of it. We had the debate around taxation throughout that. There's going to be constant push, pushes in favor of higher taxes from the reformists. going be constant pushes, push back from the industry. I think this just needs to be finalized and set and

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whatever it may be and the industry needs to adapt to that for it to then move on to address other issues. Sort of on the topic of key battlegrounds as well, this obviously, like you said, has become a very important new key battleground over the past couple of years and particularly this year. But we've also got to remember that there are other battlegrounds and points of contention that are going to keep getting played out as well. Marketing is going to be the big one.

14:08
well not the big ones, sorry, one of the big ones, that's not gone away. There's still a lot of kind of resentment among a lot of reform advocates, I think, that the gambling act review white paper didn't go far enough on marketing in their view and particularly on the relationship between bookmakers and sports. There's still going to be a lot of pressure on that even after this Premier League voluntary ban on shirt sponsorships come in.

14:33
And then the other big one that we've talked a lot about on the podcast and we've kind of alluded to on this episode as well is the whole idea of gambling as a public health issue. We're seeing a lot more pressure on that. We're seeing the APBG, the All-Party Parliamentary Group on gambling reform, I should clarify, getting very vocal on that, calling in experts on it. We're seeing pushback from the industry on that as well. We've got to remember that there's lots of different elements to this argument.

14:58
Yeah, absolutely. great analysis, Ted. We'll go to a quick break now and then we'll come back and talk about a more wider European level. Welcome back to iGaming Daily where we are talking all about Taks and at the minute we talked about it at the start of the show, Ted, Ted, you know, we're in the thick of H1 reporting season. You guys are reporting on this every day at the moment. So how is Taks?

15:25
currently affecting the underlying performance of these European PLCs. Ted Mamour, do want to take this one? I think you're going to look at these individually. It's not pretty out there. And if you take, for example, FDJ following their merger with Kindred, the exposures that they're having in the Netherlands, in France, France will from pretty much the end of the month, will be operating at a 50 %...

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plus 50 % tax on lotteries and online sports betting. Now that is a treatment that's going to be adjusted for, I don't think not only on a 12 month basis, but I think they're going to have to account for that on a four year plan. It completely kind of offsets any kind of prospectus growth that they had with their Kindred merger. And then.

16:22
You also have to look at where they kind of view the growth profiles coming in. It's going to be, you know, again, tax increases in Sweden that have gone up about four percentage points. That market's been stagnant since post COVID. And then the Netherlands has had like a very kind of rough transition from its co-regulation to today in a market that again will be kind of relaunched by the end of the year.

16:52
You can make a lot of adjustments here, but at the end of the day, know, tax is a bottom line impact and it's what you're going to go back to invest the base. And someone raised this point with me that still demands 10 % year on year growth for these operators. It's no longer sustainable, feel. Not certainly. And Ted, I'll say there's surely been quite a few

17:19
sound bites from industry leaders over the last couple of weeks about tax. Is there any particular quotes or comments from leaders that have stood out to you? Oh mate, I'm going to have to rack my brains on that one to remember what people have specifically said. mean, obviously a bit of a cheat code I've got here is the fact obviously Pontus Lindwall from CEO of Betts and AB was on the podcast a couple of weeks back, wasn't he?

17:43
And he spoke to us about just sort of ignoring that, yeah, taxation will always have that impact on your margins and your bottom lines. I think they've seen it in some Latin American markets, I think, is what he noted, as well as some European ones. Yeah, and then obviously, like Ted said, I think one of the most striking ones we've seen recently in terms of the impact shown was with FDJ. However, I think what will happen here, I think, is operators...

18:10
We're going to see different operators getting impacted basically just almost like look of the draw on where they happen to have been active, right, on what their international presence is. With FDJ, they've just sort of been almost unfortunate that two of their key markets, especially after the Kindred acquisition, are France, obviously their home nation, and the Netherlands, where the market that is quite key to Kindred, they've suffered because of the tax exposures there.

18:38
A different kind of case I think we saw last week was the parent company of BetClick Group, obviously they admittedly they benefit from being not just active in gambling, they're active in like media and entertainment aren't they Ted? But their gaming segment, which is chiefly BetClick Group, did alright in the grand scheme of things and I think even though they count France as one of their active markets, I think some of their activity in places like Portugal and some other

19:07
some of the solid European betting markets where there haven't been as like brutal tax increases that have been in France have kind of compensated for that. So I think what we're going to see a lot of differences depending on where different companies are active, what their international exposure is. I mean, that's stating the obvious, but I do think it's going to be interesting to see. no doubt.

19:31
At the boardroom level, at the investor level, there's going to be lots of demand for change, for adjustments, for cuts. All of these are on the table, just because of the sheer number of markets where these rises as high as five percentage points are expected to be seen. So where do we see these adjustments coming from? Where do people have to cut or make big decisions? If I can just jump in, I mean, I think...

20:01
Ted might be, Ted's a more voice of experience than me. He'll have more to say on this thing. But I think an interesting area to watch will be marketing spend. Companies have to spend a lot of money on big mass market advertising campaigns, hiring in third parties for that, money on production, paying for spots on TV, billboards, whatever, depending on what market you're in and what's allowed. Obviously another big one would be sports sponsorships, paying a lot of money to

20:31
put your logo and your branding on a prominent club or a league or whatever brand ambassador it was as well. These are obviously a lot of big budget things that drive up costs. I think we might see a bit of a review of that. Companies will be saying, which one's the most efficient? Which ones have the most exposure for the least amount of money? And then that could in turn kind of almost help the industry inadvertently in some sense because that might...

21:00
kind of reduce some of the pressure we're getting on the marketing and advertising and sports sponsorship side of people, of lot of reform advocates who think that there's too much, the industry has too much exposure out there, too much visibility. So I think that could be kind of an interesting theoretical, hypothetical scenario to watch where if as a result of these tax raises companies cut down on marketing, they therefore start getting less flack.

21:28
as a result of this marketing from public and political spheres. Tax rises to the rescue then. Maybe not, maybe not quite, but yeah, I'm just throwing stuff at the wall and seeing what sticks on that one. Just a weird mental game I'm playing up there. Go on Ted, be the of How would you see Voice of reason from Ted Membiar, please. I think, the reality here is, I mean, there's a lot of European PLCs that...

21:56
I kind of overexpose the market. So yeah, after the FDJ, the other ones that are going to be, you your likes will evoke and then take. And I think now if you're on the C-level team and the board, I think you have to do market by market revision. There's tough decisions, especially in Western markets, know, be it the Netherlands, Germany.

22:24
And even Sweden itself and the UK, if it proceeds to, to, to, know, to put another, another 5 % percentage points on, on tax. I think the way these guys operate and their mentality, I think it comes down to what's the quickest way to expand your meter the most efficient. That could be kind of really kind of downsizing the marketing teams or kind of downsizing, downsizing your plays up.

22:53
markets, which you thought you were previously active in and then refocusing on like core markets. don't necessarily think that it's just a case of turning down the volume or anything. think there's going to be kind key, one of the key periods we're going to see next series is the World Cup coming into play. How operators kind of respond to a period in which

23:23
Commonly they've gone and really amped up the profile, really got off from kind of market share and player profile. If they're still going to have maintained that appetite for them or they take a kind of more conservative approach. I think everything's really going to start to change in the next 12 months or so. Yeah. Well, it's look, this, this storyline is going to rumble on and on. And I'm sure that we'll talk about this again on the podcast soon. But in the meantime.

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Thanks Ted and Ted for your sharp analysis and thanks to the listeners for tuning in. Please do make sure you read the op-ed that we mentioned earlier from Ted O.C. We'll have a link to that in the show notes. And don't forget to come back to SBC News because we'll have all of the Q2 and H1 reports coming in. And please do come again and join us again for another episode of Our Gaming Daily.