Evoke, the parent company of William Hill and 888, has unveiled plans to implement store closures and significant cost-cutting measures in response to increased gambling taxes announced in the November Budget. The company, facing a challenging financial landscape, is also considering a potential sale as part of its strategic review initiated last December.
Financial Fallout from Tax Increases
The recent budgetary changes, spearheaded by Chancellor Rachel Reeves, have compelled Evoke to reassess its operational strategy. The Chancellor’s decision to raise remote gaming duty from 21 percent to 40 percent, effective April next year, and introduce a new 25 percent online sports betting tax, set to commence in 2027, has raised alarm bells within the gambling sector.
Evoke had previously warned that these tax adjustments could inflate annual duty costs by as much as £135 million, starting in 2027. In a bid to mitigate this financial hit, the company has opted to close retail betting shops and implement broad cost-saving initiatives. Although the exact number of closures has not been confirmed, it was suggested that up to 200 locations could be at risk if the tax increases proceeded.
Strategic Measures in Response
Per Widerstrom, CEO of Evoke, expressed disappointment over the November Budget’s implications for the company and the wider regulated gambling industry. He stated, “We continue to believe these tax increases will negatively impact the industry’s economic contribution, customer protection, and will ultimately serve to support further growth in the illegal black market.”
In light of the tax hikes, the board is actively exploring strategic options while aiming to maximise shareholder value. Widerstrom emphasised the urgency of action, saying, “We have moved quickly and decisively to execute on our mitigation plans including the closure of retail stores that are no longer sustainable.”
Revenue Trends and Market Response
In a recent trading update, Evoke reported a 4 percent decline in fourth-quarter revenues on a constant currency basis compared to the previous year. However, revenues of £464 million showed a 7 percent increase from the prior quarter. Betting revenues were particularly impacted, down 22 percent year-on-year, while gaming revenues saw a 9 percent increase.
Despite these challenges, the firm projects a modest rise in full-year revenue, forecasting an increase of approximately 2 percent to £1.79 billion. Nevertheless, the announcement of cost-cutting measures and store closures led to a 7 percent drop in the company’s shares during morning trading on Tuesday.
Why it Matters
The decisions made by Evoke highlight the precarious position of the regulated gambling industry in the UK in the face of rising taxation. These developments raise important questions about the sustainability of retail betting operations and the potential for increased illegal gambling as higher taxes may drive customers away from regulated services. The outcome of Evoke’s strategic review and its long-term impact on the sector will be closely monitored, as it sets a precedent for how other companies in the industry navigate similar challenges.
