Bally’s Intralot CEO: UK consolidation has been “slower to arrive than we anticipated”
Robeson Reeves says initial expectations around exits and pull backs in light of new tax regime have not come to pass, but he expects those “sweating the assets” to exit eventually
Bally’s Intralot CEO Robeson Reeves has said consolidation in the UK has been “slower to arrive than we anticipated” since the hike in remote gaming duty to 40% on 1 April.
Since the tax rate was announced it would change from 21% in then-Chancellor Rachel Reeves’ Autumn Budget last year, the CEO has been insistent longtail operators would depart the market.
In May, speaking on the operator’s Q1 earnings call, Reeves said the “smaller operators are pulling away” and the firm was “seeing the start of consolidation”.
However, four months later, Reeves admitted the pace of consolidation has not met initial expectations.
The likes of GG.BET, Small Screen Casinos, Lottomatrix and Aristocrat Interactive’s white-label brands are the major brands to exit the UK in recent months.
Not all of those exits were predicated on the tax hike, with Aristocrat citing a change in company strategy as the reason behind pulling its white-label offering.
Speaking on the Bally’s Intralot Q2 earnings call, Reeves said: “I would like to make one further observation on consolidation. It has been slower to arrive than we anticipated.
“Competitors have been more willing to absorb margin compression for longer than their arithmetic suggests they should.
“I am not troubled by that for two reasons. First, our own growth momentum has more than covered the softer consolidation upside.
“We have achieved these results through sustained focus on our products, customers and execution, not by waiting for favourable market conditions.
“Second, deferred is not cancelled. A 20% to 25% margin business paying 40% of its revenue in duty does not have an indefinite runway.
“People haven’t started to leave; they’re almost just sweating the assets and seeing if they can extract anything. But if you sweat something and don’t invest in it, eventually it dies anyway.”
Robeson Reeves
Bally’s Intralot is due to acquire William Hill, 888 and Mr Green parent evoke in a £225m deal. Evoke shareholders backed the transaction last month overwhelmingly.
Reeves said acquiring evoke would allow it to deploy Bally’s Intralot’s existing “operating model that has proven itself under the hardest fiscal conditions this industry has faced in the UK” at a “significantly greater scale”.
The transaction is expected to close in Q4 2026 or Q1 2027.
Bally’s Intralot pointed to an 11.6% year-on-year increase in Q2 revenue, while the €34m hit from the increase in remote gaming duty was offset by 65%.
This was done via a series of operating cost optimisations and pull backs on marketing spend.
When questioned whether he feared more tax hikes are on the horizon given the manner in which businesses had been able to mitigate thus far, Reeves said another grab on online would be unlikely.
He said: “I do suspect if they’re going to look at anything, they might look at machine games duty.
“But, it would be pretty crazy to come back and look at anything else in the online sector given the degree of trauma that’s already happened.”
Think tank Social Market Foundation has proposed upping machine games duty on Category B machines from 20% to 40%.