Flutter UKI Contemplates Closing 100 Paddy Power Shops Due to Tax Increase

Flutter UK & Ireland (UKI) is considering the closure of up to 100 Paddy Power betting shops in the UK and Ireland, in response to the material impact of recent increases in gambling taxes. This review of its retail network, confirmed by the operator, threatens nearly 400 jobs across both jurisdictions and is set against a backdrop of rising operational costs and new tax burdens.

Impact of Tax Increases on Flutter UKI

Flutter UKI’s assessment of its retail estate comes after the rise in remote gambling levies, implemented on April 1. Rachel Reeves, then Chancellor of the Exchequer, increased the remote gambling tax from 21% to 40%. Additionally, the general betting duty (GBD), excluding for national horse racing, will rise from 15% to 25% starting in April 2027. These tax hikes, compounded with higher energy costs, rents, and business rates, significantly pressure the viability of parts of the network.

The company indicated that its adjusted EBITDA impact in 2026, after applying mitigation measures, will be $235 million (without mitigation, the hit would have reached $320 million). For 2027, an impact of $339 million is expected post-mitigation, compared to a potential $540 million without corrective actions.

“Unfortunately, we have had to make the difficult decision to undertake this review. [...] We are also facing a material impact from the gambling taxes announced in last year’s UK Budget,” a spokesperson for Flutter UKI stated.

Employment and Retail Network Consequences

If Flutter UKI proceeds with the closure of the 100 stores under review, it would result in the shutting down of one-fifth of its current outlets in the UK and Ireland. In total, the retail division employs over 2,000 people and operates just over 500 shops across both countries. The affected workers, the company states, will have "relocation opportunities where possible" and specific support during the process.

In November of the previous year, Flutter UKI had already closed 57 Paddy Power stores, motivated by increasing costs and adverse market conditions.

Industry-Wide Repercussions

The new tax burdens do not solely impact Flutter UKI. In July, Betfred announced the closure of over 130 shops, an 11% reduction in its retail network, due to the rise in taxes on online activity, jeopardizing approximately 600 jobs. Betfred's CEO, Joanne Whittaker, stated that the "current fiscal and regulatory environment has made it impossible to keep all our stores open."

Meanwhile, Evoke, parent company of William Hill, plans to close 270 outlets. Entain expects to eliminate 500 jobs globally. The impact is felt throughout the UK and Ireland's retail betting industry.

Regulatory Outlook and Additional Risks

The new Prime Minister, Andy Burnham, has pledged to initiate a consultation to eliminate the 'aim to permit' clause of the Gambling Act 2005, which could generate additional effects on the retail sector. Concurrently, anti-gambling groups are calling to double the duty tax on Category B gaming machines in betting shops, casinos, bingo halls, and adult gaming centers, from 20% to 40%. According to a report by Regulus Partners, if the MGD reaches 40%, over 4,000 of the just over 5,000 betting shops in Britain could be forced to close. In 2019, there were about 8,300 betting shops, a figure significantly lower than the 16,000 in the 1960s following the sector's legalization in 1961.

Mitigation Strategies and Staff Support

Flutter UKI has implemented measures such as reducing operational, promotional, and marketing spending to mitigate the fiscal impact. The company emphasizes its commitment to communities and its team, stating that the immediate priority is to assist employees affected by the reorganization. Management highlights that despite the complexity of the environment and the increasing shift of consumption towards online gaming, they consider the retail channel an essential part of their business.

Final Considerations for the Sector

The potential closure of up to 100 outlets at Flutter UKI underscores the pressure on operators with a physical presence in the UK and Ireland. The weight of taxation, combined with other costs, accelerates the restructuring of the sector and fuels concerns about the future of the retail channel in the face of digital growth and regulatory changes. Ongoing regulatory responses and business strategies will shape the pace of adaptation in the coming years.