Inspired Entertainment posts UK growth despite higher gambling duty
The B2B gaming and machines supplier grew UK revenue in the third quarter even as a steep rise in Remote Gaming Duty took effect, though group-wide revenue fell on divestments.
Inspired Entertainment has reported a 4% year-on-year rise in like-for-like UK revenue for the three months to 30 September, even as the country's Remote Gaming Duty climbed from 21% to 40% in April, SBC News reported.
The B2B supplier of games and machines said volume growth across its operations had outpaced the drag from the higher tax rate, leaving the UK business in net positive territory for the quarter.
Group-wide, the picture looked different. Total reported revenue dropped 29% year-on-year, from $86.2m to $61.4m, a fall the company attributed chiefly to last November's sale of its UK Holiday Parks division and a restructuring of its UK Pubs arm rather than to the tax changes themselves.
Inspired said it is now developing further cost-optimisation plans for its UK business, a response to the government's announcement last month that Machine Games Duty will rise from 20% to 25% from April 2027.
Brooks Pierce, President and Chief Executive Officer of Inspired, said the UK Budget had removed "a major overhang" and given the company and its customers "a clearer foundation for investment and planning." He described the planned Machine Games Duty rise as "disappointing but manageable" and said Inspired would pursue "disciplined mitigation measures to limit the effect on our business."
Inspired's land-based footprint ties it closely to the fortunes of UK retail operators, with clients including Ladbrokes and Coral owner Entain and Rank Group's Mecca Bingo chain.
The Machine Games Duty increase drew heavy criticism from operators in the run-up to October's announcement, with Entain, Betfred and Flutter among those warning it could trigger betting shop closures and job losses. Should those warnings materialise, Inspired would face a shrinking UK retail base, though the company noted its revenue is spread across other markets including Greece, Canada and the US.
Pierce said Retail Solutions had delivered "another strong performance in the UK and Greece, with further opportunities to refresh our installed base in Greece next year." He added that Interactive revenue grew 3% year-on-year, with UK volume growth offsetting the higher gaming tax while the US iGaming business outperformed its market.
Brazil had also featured among Inspired's target markets before President Lula's ban on gambling took effect in September, with the country previously accounting for 5% of total group revenue.
Following the Brazilian shutdown, Inspired lowered its full-year Adjusted EBITDA guidance to a range of $109m to $112m, down from a prior forecast of $112m to $118m.
Executive Chairman Lorne Weil said the company would allocate capital "with discipline" heading into 2027, prioritising investments offering strong returns and sustainable cash generation alongside continued debt reduction and share repurchases. He said this approach would "build long-term shareholder value" and demonstrate earnings potential he believes is not yet reflected in Inspired's valuation.