During its investor call following the publication of its FY25 results, Entain leadership has backed the city analysts’ view that its UK brands are continuing to outperform competitors. However, the upcoming changes to UK taxes could prove challenging in 2026.
The previous 12 months have been earmarked as a formative year for Entain by both Chief Executive Officer Stella David and Chief Financial Officer Rob Wood. However, the next 12 months will be dedicated to restoring stability, investor trust and long-term shareholder value.
Though FY2025 accounts closed with Entain reporting a third consecutive year of statutory losses, with this year’s losses totalling £680m, both the CEO and CFO stressed that the result was primarily driven by a £480m pre-emptive impairment that had been booked on account for forthcoming adjustments to the UK’s new 40% tax on remote gaming duties (RGD).
Rob Wood: Yes to tax reality… No to hysteria
Prior to opening questions to analysts, Wood sought to clarify Entain’s position in the “40% era”. He explained that management had deliberately refrained from issuing early forecasts on the tax impact before fully modelling the numbers, choosing to avoid hysteria on the prolonged tax judgement.
“When the tax rates first went up, we said that was the right thing to say because we hadn’t done the work at that stage,” Wood told analysts.
“You need to take the time to add up the numbers and go through the figures to have confidence. Coming out of the blocks shouting that the impact was going to be 50-60 % would, quite frankly, have been a made-up number.”
Having completed a deep internal analysis, management believes that Entain can absorb the tax shock in 2026 without derailing long-term expectations.
But despite the statutory losses, the company has pointed to stronger operational performance across the portfolio, with David welcoming analyst observations that Entain is now outperforming the competition on growth metrics across its brands.
“The revitalisation we’ve seen in the UK has been great,” David said. “We’ve improved customer journeys, and we’ve innovated, and there’s more innovation to come. There’s a lot of focus and a lot of energy in the business and that belief makes a difference to how you perform.”
David argued that Entain’s scale and diversified brand portfolio position the company to benefit as higher tax rates reshape the competitive landscape. She complemented the UK team for delivering first-of-a-kind innovations such as a bet builder for UK racing, noting that it is ”a great tool that others don’t have”.
Wood concurred with the assessment and warned competitors that “growth is not about Ladbrokes and Coral, we have expanded targets for Foxy and Gala”.
Stella David: No country for small brands
From 2027 onwards, David expects Entain to target more aggressive market share gains in the UK, noting that many smaller operators may struggle to survive the new fiscal environment that could see the “bottom 20% of market share become soft”.
“If you look at the shape of the market, the bottom quarter of operators have around one percent share each,” she said. “They are simply not equipped to ride the storm of these tax increases. We believe that creates an opportunity for operators with scale to gain meaningful share.”
A key pillar of Entain’s recovery strategy is the ambition to generate at least £500m in annual adjusted cash flow by 2028, a target that management has described as a “building block for the company’s next phase of growth”.
Wood told analysts that operational improvements across the business are already delivering meaningful margin benefits. Though operating margins underwhelmed on year accounts, Woods noted that impacts were due to bottom-line impacts of Brazil and Netherlands attributing a £54m impact.
He observed: “If you move the gross profit margin by just one percentage point across the online revenue base, that’s around £40m – and actually closer to £50-60m on an underlying basis. That’s where the catch-up against NGR came from. It wasn’t marketing – we spent exactly what we planned to spend.”
The CFO added that efficiency programmes, including improvements in payment processing costs and operational automation, mean the group has not needed to revise its marketing investment plans despite the higher tax burden.
New Zealand comes into play
Beyond its home and European markets, Entain also highlighted New Zealand as a significant future opportunity, won through its new partnership with the government-owned TAB system.
As such, Entain is currently the exclusive sports betting operator in the country and operates two brands in the market TAB and Betcha.
With the government expected to issue 15 online casino licences in 2026, Entain believes that it can secure three of those licences, giving it the ability to combine sports betting and online casino cross-selling.
Providing a sense of the opportunity, Wood said that the market could expand rapidly, but only if the strategy is executed correctly.
“We estimate the opportunity is around a £600m marketplace and currently we’re less than £200m,” he said. “If we have all of sports and a reasonable share of gaming, why can’t that below £200m number go to £300m? There is an opportunity for significant growth over a number of years.”
While New Zealand has not been factored into Entain’s 2026 financial guidance, leadership expects the market to become an increasingly important growth driver from 2027 onwards.
Looking to the other side of the world, the US remains a big focus for Entain, particularly its BetMGM venture. Just last month, BetMGM CEO Adam Greenblatt told investors and analysts that online casino was the biggest driver of growth for the company, helping it achieve its best year to date.
Summarising the outlook, Wood concluded that despite the step-up in UK taxation, the group’s outlook remains intact – especially when it comes to international markets.
“When you combine BetMGM and Entain we expect to deliver a stable set of numbers in 2026 versus 2025,” he said. “From 2027 onwards, organic growth and optimisation initiatives mean that we will grow both EBITDA and cash flow year on year, with the building blocks in place to reach at least £500m in annual adjusted cash flow.”