Why Flutter Entertainment Could Leave the UK
Chancellor Jeremy Hunt recently completed one of the most significant budgets in recent memory, with numerous changes planned that could set the course for the future of the United Kingdom.
Amidst changes to the benefits system and the usual hike in cigarette duty, there was a confirmation that the corporation tax rate would increase from 19% to 25%. It’s a big jump, and it will almost certainly have a negative impact on many UK companies.
In response, it has been suggested that major gambling companies like Flutter Entertainment—the parent company of PokerStars, Betfair, tombola and Paddy Power—could jump ship and take their services elsewhere.
What’s the Problem?
The corporation tax hike was first announced in April 2021, and it will now take effect, despite criticism from many Conservative MPs.
It means that corporations like Flutter Entertainment will now be expected to pay 25% on their earnings. On the face of it, it’s great news for all non-corporate entities in the UK. But it could have some seriously negative consequences.
Gambling companies like Flutter don’t rely on the UK market. Not only do they make a lot of money in the EU and Asia, but there are emerging markets in the US and Latin America where they can focus their attention.
Reports suggest that Flutter could respond to this tax hike by cancelling their listing on the London Stock Exchange and focusing more on the New York Stock Exchange.
The group is valued at a massive £24 billion, and despite increased regulation and tightening rules, the gambling industry is flourishing right now. It’s a lot of potential money and opportunities that could be leaving the United Kingdom.
Flutter aren’t the only company to have threatened to leave the UK market.
Chip designer Arm recently snubbed the London Stock Exchange to focus on the US instead. Rishi Sunak, Boris Johnson, and Liz Truss had all lobbied to keep the company in the UK, but the trio of current and former PMs couldn’t make it happen and it dealt a major blow to their hopes of making the UK a “science superpower”.
It seems that some companies are no longer seeing the UK as a lucrative market, and the corporation tax increase won’t help.
Will There Be An Exodus?
The UK economy has been hit heavily over the last few years and it has struggled to find its footing as quickly as other developed nations. To make things worse, we’re still reeling from the effects of Brexit and trying to find our feet without the trade and economic benefits that the EU delivered.
It seems likely that a few more companies will follow Arm in listing outside of the US, and Flutter could be one of them.
Not only is the US looking like a better prospect for a major stock listing, but the US betting market is also on the rise. Mobile sports betting and localised online casinos are legal in a number of states, and brands like 888, Entain, and Flutter have already started carving themselves a niche.
Ultimately, these brands will go where the money is, and the UK is looking increasingly less like the best place to be.
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