British gambling operator Evoke is considering closing up to 200 William Hill stores in the UK, accounting for 15% of the total number of stores, which could result in the loss of 1,500 jobs. This move is in response to the UK government's expected increase in gambling taxes in the budget on November 26, according to the Sunday Times, confirmed by several sources at Evoke, the tax increase will force the company to assess the profitability of stores. Evoke currently operates about 1,300 William Hill stores in the UK, and its spokesperson said they are assessing the impact of different tax scenarios and warned that higher taxes could lead to reduced investment and an increase in the black market. In April this year, the government proposed a single tax rate for remote gambling to replace the current three-tier system, and in September, more than a hundred Labour MPs called for an increase in the tax rate to 50% to address child poverty.
Store Closure Plans and Potential Impact
British gambling operator Evoke is considering closing up to 200 William Hill stores, accounting for 15% of the total network, potentially resulting in the loss of 1,500 jobs. The exact number of store closures has not been finalized, with internal sources suggesting it could be between 120 and 200.
This decision is in response to the UK government's expected increase in gambling taxes in the November budget, reflecting the potential impact of the tax increase on the physical gambling business.
Tax Policy Background and Expectations
The UK government is expected to announce a new gambling tax plan in the budget on November 26, possibly increasing the current tax rate. In April, the government initially proposed a single tax rate for remote gambling, replacing the current three-tier tax rate system.
In September, more than 100 ruling Labour MPs called for an increase in the gambling tax rate to address child poverty, stating that the UK's current 21% gross gambling revenue tax rate is "light."
Company Statement and Industry Concerns
An Evoke spokesperson stated: "As part of ongoing planning, we are assessing the potential impact of different overall tax scenarios on our UK business. This includes the difficult but necessary consideration of store closures."
The company warned that higher taxes would affect investment in the UK and lead to more customers entering the black market, ultimately reducing tax revenue and weakening player protection measures.
Overall Industry Reaction and Precedents
Evoke is not the first major operator to warn of possible store closures. In recent weeks, Stella David, CEO of Entain, which owns Ladbrokes, also indicated that retail stores might be closed to save costs.
The industry is generally concerned about the impact of higher taxes, believing that excessive tax rates will lead to the growth of the black market, thereby reducing government tax revenue, which runs counter to policy objectives.
Proposal Content and Tax Rate Adjustments
In July, the Social Market Foundation (SMF) proposed raising the remote gaming tax from 21% to 50%, aligning the UK with tax rates in other jurisdictions in Europe and the United States. These regions have online gambling tax rates reaching or exceeding 50%.
The tax increase would supplement the new statutory tax that took effect on April 6 this year, representing a further increase in the tax burden on the gambling industry.
Evoke's Current Operations and Challenges
Evoke's mid-August half-year report showed a 2.4% decline in retail revenue in the UK and Ireland. Part of the reason is the year-on-year decline after the 2024 European Football Championship and the "severe situation on the high street."
As of the end of the first half of the year, the total number of William Hill stores had decreased by 2.2% to 1,302, reflecting the ongoing pressure on physical retail business.
Business Improvements and Investments
Despite facing challenges, Evoke has made improvements in retail real estate in the UK and Ireland, including the launch of 5,000 gaming machines in March. The company reported a 15% increase in total revenue per machine compared to the third quarter of last year.
The introduction of new machines has attracted more customers, and the company plans to further improve equipment and replace old machines to enhance store attractiveness.
Black Market Risks and Lessons from the Netherlands
Evoke CFO Sean Wilkins warned: "If taxes exceed a certain level, it will lead to the growth of the black market. This will lead to reduced tax revenue, and player protection will also disappear, which contradicts the government's goals. The situation in the Netherlands is a clear example."
The company hopes the government will take a balanced approach between obtaining more cash and protecting the regulated market, avoiding repeating the mistakes of other markets.
Political Environment and Legislative Pressure
More than 100 Labour MPs co-signed a call for higher gambling taxes, indicating increasing political support for higher taxes. MPs believe that increased tax revenue can be used to address social issues, such as child poverty.
This political environment makes it more likely that taxes will increase, forcing operators to prepare countermeasures in advance.
Future Outlook and Industry Adaptation
Evoke CEO Per Widerström stated: "We are confident that our retail stores can continue to survive in the challenging high street environment in the UK and Ireland. We will closely monitor the profitability of the entire network."
The company plans to cope with challenges through equipment upgrades and operational optimizations, but the ultimate coping ability depends on the specific content and implementation schedule of the tax policy.
Market Impact and Consumer Behavior
Higher taxes may lead to higher prices for gambling products, affecting consumer behavior. Some customers may turn to black market operations, avoiding the tax burden of regular channels.
This change in behavior may ultimately reduce the income of the regular market, contrary to the government's initial intention to increase tax revenue.
Regulatory Balance and Policy Considerations
Ideal regulatory policies need to find a balance between increasing tax revenue and maintaining a healthy market environment. Excessive tax rates may have the opposite effect, pushing consumers towards unregulated markets.
Policy makers need to consider the multiple impacts of tax rate adjustments on employment, investment, and market order.
