The owner of William Hill has drawn up contingency plans to seek a buyer for its market-leading Italian operation to fortify its balance sheet as it braces itself for a swingeing gambling tax raid in this week’s budget.
Sky News has learnt that Evoke has appointed bankers at Morgan Stanley to assess options for selling its Italian arm in a move that would raise hundreds of millions of pounds for the company.
Industry sources said on Tuesday, the eve of Rachel Reeves’s budget, that the plans would only be activated if the chancellor hammered the gaming sector in her statement this week.
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An auction would be likely to generate significant interest from other industry players across Europe.
Reports in recent weeks have speculated that gambling taxes will be hiked far enough to generate an additional £1bn-£3bn in revenue for the exchequer.
Along with rivals such as Betfred, Paddy Power-owner Flutter Entertainment and Ladbrokes’ parent, Entain, Evoke has already responded to the growing tax threat by drawing up plans to close significant numbers of UK betting shops.
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Evoke’s Italian business is one of four core markets within its international division, which is an online-only operation.
The other key countries in which it trades are Spain, Denmark and Romania.
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In its half-year financial results, Evoke said the international unit now accounted for just under a third of total revenue and roughly half of group earnings before interest, tax, depreciation and amortisation (EBITDA).
“888casino continues to outperform both local and omni-channel competitors, supported by new supplier integrations and the roll-out of our proprietary content,” the company said in relation to Italy in the statement.
At its quarterly market Q3 update in October, Evoke added that it had seen “continued market share gains in casino in Italy, driven by 888, with a strong brand and continued focus on localised product features”.
The company has said publicly that any tax increases in the budget would inevitably result in UK retail shop closures.
“We are mindful of potential tax increases in the forthcoming budget which would impact investment in the UK and drive more customers to the black market,” Evoke said last month.
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“As part of our ongoing planning, we are assessing the potential impact of different overall tax scenarios on our UK operations.
“This includes the difficult but necessary consideration for shop closures.”
A recent EY report for the Betting and Gaming Council, the industry’s leading trade body, suggested that tax increases being championed by left-wing think-tanks would put at risk more than 40,000 jobs, channel £8.4bn in stakes to the black market, and wipe £3.1bn off the sector’s UK economic contribution, while raising a fraction of the sums forecast.
Evoke employs more than 7,600 people in the UK, with nearly 6,500 of those employed in its retail operation.
It also has a workforce of nearly 800 people in Leeds, its main UK office.
Last year, the company said it paid close to £330m in taxes, which equated to over 60% of its UK profits.
An Evoke spokesman declined to comment on the contingency plans for its Italian arm.
