Introduction to Evoke’s Contingency Plans
The owner of William Hill, Evoke, has drawn up contingency plans to find a buyer for its market-leading Italian business. This move aims to strengthen its balance sheet as the company prepares for a massive crackdown on gambling tax in the upcoming budget. Evoke has appointed bankers at Morgan Stanley to explore options for selling its Italian branch, which could bring in hundreds of millions of pounds.
Potential Sale of Italian Business
The plans to sell the Italian business would only proceed if the Chancellor highlights the gambling sector in the budget statement. An auction of the Italian business is likely to generate strong interest from other industry players across Europe. Evoke’s Italian business is one of four core markets within its international division, which operates exclusively online. The other key trading countries are Spain, Denmark, and Romania.
Impact of Tax Increases
Reports have speculated that gambling taxes will be raised to bring in £1 billion to £3 billion in additional revenue to the exchequer. In response to the growing tax threat, Evoke and its rivals, such as Betfred, Flutter Entertainment, and Entain, have drawn up plans to close a significant number of UK betting shops. The company has publicly stated that any tax increase in the Budget would inevitably lead to the closure of retail stores in the UK.
Financial Performance
In its half-year financial results, Evoke said the international unit now accounted for just under a third of total revenue and about half of group earnings before interest, taxes, depreciation, and amortization (EBITDA). The company’s Italian business has been performing well, with 888casino continuing to outperform both local and omni-channel competitors.
Potential Consequences of Tax Rises
A recent EY report suggests that tax rises advocated by left-wing think tanks would put more than 40,000 jobs at risk, divert £8.4 billion in wagers onto the black market, and weaken the sector’s economic contribution to the UK by £3.1 billion. Evoke employs more than 7,600 people in the UK, including almost 6,500 in retail, and paid almost £330m in taxes last year, which was over 60% of its UK profits.
Conclusion
Evoke’s contingency plans to sell its Italian business are a strategic move to strengthen its balance sheet in the face of potential tax increases. The company’s financial performance and the potential consequences of tax rises highlight the need for careful consideration of the impact of tax changes on the gambling industry.
