The London-listed gambling giant Evoke plc is facing a perfect storm—the UK remote gambling tax has soared from 21% to 40%, compounded by its already high leverage and complex business structure, putting the company, which owns William Hill's UK retail outlets and online brands such as 888 and Mr Green, into a strategic dilemma. The management has initiated a strategic review, considering various options including selling off assets or even the entire group. Simply put, the tax burden is too heavy, the debt is overwhelming, and they must find a way to "rob Peter to pay Paul". The market generally believes that large private equity firms may be the most realistic buyers. Want to know how global gambling giants are coping with regulatory storms and financial pressures? PASA official website continues to track in-depth industry analysis.
First, the "heavy hammer" of tax reform and the "shackles" of debt
In December 2025, the UK budget will deliver a "heavy blow" to the gambling industry: from April 2026, the remote gambling tax will increase from 21% to 40%. Deutsche Bank analyst Richard Huber points out that this change will particularly impact Evoke, as about 40% of its revenue and EBITDA comes from its UK online business. Management estimates that before mitigation measures are taken, the annual impact could be as high as £125 million to £135 million, equivalent to 30% of the EBITDA expected by the market consensus for the fiscal year 2027.
Meanwhile, Evoke's balance sheet is already overburdened. The net debt to EBITDA ratio is expected to rise from 4.8 times in fiscal 2025 to 5.1 times in fiscal 2026, only slowly decreasing to around 4.5 times by 2028. The cumulative disposable cash over the next three years is only about £100 million, while a $575 million term loan B needs to be fully repaid by March 2028.
Second, strategic options: total sale, spin-off, or restructuring?
Facing difficulties, Evoke's board is weighing multiple possibilities. Industry experts have differing views on the best path:
• Total sale to private equity: Corfai managing partner Ben Robinson believes that large private equity is the only buyer financially capable of taking over the entire company. "They can absorb the leverage, privatize the company, and then carry out cost restructuring, simplify operations, increase technology investment, and expand internationally." In his view, spin-offs could bring execution risks, tax leakage, and a scarcity of buyers.
• Spin-off sale of the "crown jewels": The Italian business is generally seen as Evoke's highest quality asset, with an annual EBITDA of about £60 million, maintaining double-digit growth. If sold at 8 times EBITDA, it could reduce leverage by about 0.7 times. However, Tekkorp Capital CEO Robin Chhabra warns that this "would significantly dilute the group's growth," and if a good price cannot be obtained, the remaining UK business may struggle to support the debt.
• Retail store handling: The over 1300 William Hill stores are a focus of discussion. Keystone Law partner Richard Williams bluntly states, "Many stores may not be profitable and need to be closed or transformed." Deutsche Bank values them at only 4 times EBITDA, far lower than the 6-7 times for online business.
Third, mitigation measures and execution risks
Evoke management has proposed a series of mitigation measures, attempting to offset about 50% of the tax burden impact in the medium term, including supplier cost savings, marketing cuts, and store closures. However, Deutsche Bank estimates that only about £50 million in savings can be achieved in the first year, and the timing of execution is uncertain.
Robinson points out that the real opportunity lies in structural cost reductions, "Operational integration, automation, AI-driven efficiency improvements, and selective outsourcing can bring about a 10% sustainable saving without harming growth." In contrast, simply cutting marketing spending could damage long-term value.
Fourth, three possible outcomes
Overall analysis suggests that Evoke's future could head in three directions:
Gradualism: Gradually closing unprofitable stores, saving costs, selling marginal assets, hoping that mitigation measures and moderate growth can stabilize leverage before refinancing. However, models show that this can only slowly improve financial conditions.
Decisive spin-off: Selling high-growth businesses like Italy and UK retail separately, but this may make it difficult for the remaining business to survive independently.
Private equity or creditor-led restructuring: Large private equity taking over for deep restructuring, or capital restructuring under creditor pressure, existing shareholder equity may be significantly diluted.
As Chhabra says: "The UK tax reform has actually broken Evoke's capital structure. No matter who the potential buyer is, the debt burden makes a total sale mathematically challenging." Evoke's future may not depend on its brand or market position, but on its debt level and refinancing schedule.
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