Gambling operator share prices fall sharply following reports of potential tax hike

Shares in gambling giants Flutter, Entain and Evoke dropped sharply on Monday following reports of a potential hike in gambling rates in next month's budget.

Treasury officials are said to be considering a tax raid on the gambling sector and are weighing up proposals from think tanks to increase gambling duties and raise up to £3 billion to help tackle the £22bn 'black hole' chancellor Rachel Reeves says has been found in the UK's finances.

Following the news, shares in Flutter, the parent company Betfair, Paddy Power and Sky Bet, fell by 7.52 per cent to 17,145p on the London Stock Exchange on Monday morning, having dropped by eight per cent on the New York Stock Exchange on Friday evening.

Shares in Entain, the parent company of Coral and Ladbrokes, dropped by 12.65 per cent to 670p, while shares in Evoke, the parent company of William Hill and 888, also fell by 11.92 per cent to 57.25p.

• 'It will derail racing' - industry sounds stark warning following report Treasury is considering gambling tax hike 

• Tom Kerr: a high-regulation, high-tax environment would spell disaster for British racing 

A report from equity research company Jefferies said: "The proposals apparently being considered would all but wipe out bookmaker profitability in the UK, per our estimates.

"In the event of a tax rise, we would expect operators to mitigate via reduced marketing and promotional activity, cutting sports sponsorship and offering less favourable odds to customers."

One of the proposals, by the Institute for Public Policy Research, calls for general betting duty, charged on bookmakers' profits from sports betting, to be doubled to 30 per cent and for remote gaming duty to rise from 21 per cent to 50 per cent.

There are fears a significant rise would lead to higher margins on racing odds, worse value for punters and less income for the sport, which would come as a major blow following the financial impact already caused by affordability checks.

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