Flutter, Rank and Entain shares rise despite UK tax increase
Gambling stocks climbed in October even as the UK raised Machine Games Duty and operators absorbed job cuts and market exits, SBC News reports.
Shares in several major gambling operators rose through October, a month in which the UK increased a key betting tax and some firms continued to cut jobs and withdraw from markets, according to SBC News.
UK Chancellor of the Exchequer John Healey used the Autumn Budget to raise Machine Games Duty from 20% to 25%. Investors had feared a steeper rise to 40%, and the smaller-than-expected increase was reportedly greeted as good news across the sector.
Flutter Entertainment, listed on the New York Stock Exchange and headquartered in Ireland, saw its stock rise 8% to $82.59 (£61.61) despite facing all of the pressures affecting the wider industry that month. The company cut 1,400 jobs in the UK, wound down Betfair's operations in Italy and exited the Indian market entirely.
Early in October, Flutter's rating was lifted from 'neutral' to 'buy' by Citi analyst Monique Pollard, part of a broader pattern this year of analysts viewing the stock as undervalued following a 62% year-to-date decline. A Ninth Circuit Court of Appeals ruling that Nevada can regulate prediction market operator Kalshi's sports event contracts as gambling was also seen as favourable for Flutter's position.
Rank Group, owner of Mecca Bingo and Grosvenor Casino, faces an estimated £9m annual cost from the Machine Games Duty rise, coming on top of the earlier increase in Remote Gaming Duty from 21% to 40%. Rank chief executive Richard Harris has said a rise to 40% on Machine Games Duty would have forced the closure of around a third of the company's portfolio.
Rank's shares rose more than 10% immediately after the Budget announcement and finished October up 13.6% at 84.4p.
Entain, owner of Ladbrokes and Coral, saw its stock increase 14.5% to £4.71 over the month. The company faces an estimated £25m annual cost from the tax rise before any mitigating measures. Entain's own third-quarter results in mid-October produced little share price movement, but a trading update on its BetMGM joint venture with MGM Resorts drove a 5% intraday rise after adjusted EBITDA at the venture increased 112% year-on-year.
Entain shares remain down 38% for the year on the London Stock Exchange, despite the October uplift.
Other operators posted mixed results in October. Genius Sports rose 11.97% to $6.36 and Aristocrat Leisure gained 10.19% to AU$64.88, while DraftKings added 8.06% to $20.91. At the other end of the table, Rush Street Interactive fell 39.25% to $25.76 and Grandstand dropped 25.17% to $1.10, with Kambi Group down 12.02% to SEK150.8.