UK tax hikes prompt Evoke to scale back operations and cut jobs

Evoke plc, the owner of William Hill and 888, plans to cut thousands of jobs and scale back UK investment after the government raised taxes on online gambling.

UK Finance Minister Rachel Reeves increased remote gaming duty on online casinos and slots to 40% from 21% and raised taxes on online sports betting to 25% from 15%. Horseracing was excluded from the tax changes. The measures, announced in the latest budget, have been described as a £1.1 billion hit to the British gambling sector.

The company said the new duty rates will raise its annual tax bill by £125 million to £135 million. Evoke has withdrawn its medium-term financial targets as it reassesses its business strategy.

Evoke, which is more heavily focused on the UK market than some of its competitors, expects a rise in leverage as a result of the tax increases. Its shares fell 4.09% to 29.30 pence in Thursday trading and are now valued at less than one-tenth of their peak four years ago.

“We will begin immediately on executing our mitigation plans, which involve a significant reduction in investment into the UK,” Per Widerstrom, CEO of Evoke, said in a statement. “And, very regrettably, the likely need for thousands of jobs to be cut up and down the country.”

The company plans to offset around half of the additional duty costs through reduced marketing spending, store closures and workforce cuts. Widerstrom added: “These tax changes will reduce the overall level of tax the regulated industry pays in the UK.”

Evoke described the measures as “ill-thought-through, counter-productive, and highly damaging,” arguing they could weaken the regulated market while putting pressure on operators focused on the UK.

“It is clear these changes will significantly harm businesses, employees and customers,” Widerstrom said.

Analysts expect other gambling firms operating in Britain to face similar earnings pressures, though some with larger international operations may be less affected than Evoke.

Jack Cummings, analyst at Berenberg, said in a note that the increased tax burden could have a material effect on the company’s financial position due to its concentration in the UK online market.

Evoke said it will continue to review its business plan over the coming months and intends to provide further updates to investors as mitigation measures move ahead. The company is focusing on preserving profitability as the new taxes take effect beginning next April.