Flutter's Richard Clarke: scale favours big UK operators, but the black market is the bigger risk

Speaking at the SBC Summit in Lisbon, Richard Clarke, managing director of Flutter-owned brands Paddy Power and Betfair, said the group expects a £500 million impact from next year following the increase in the UK remote gaming tax from 21% to 40% on 1 April. He added that the impact has already started to come through this year and has to be managed.

Panel moderator Josh Hodgson of H2 Capital noted that tier one operators already hold around two-thirds of the UK market, and that share could rise to as much as 80%. Clarke declined to say how Flutter will respond, saying the company was not ready to share plans and pointing to four dimensions it can optimise around. Entain, by comparison, has announced plans to cut roughly 400 customer care roles across 11 countries, about 20% of its support workforce, after an earlier round of 500 corporate, product and technology job cuts. Evoke and Bet365 have also made job cuts or closed branches.

Clarke agreed that scale matters, because some regulatory and tax costs do not scale down for smaller businesses. He said Flutter expects to gain market share from the squeeze. However, he rejected the suggestion that the company welcomes the tax because it creates room in the market. If Flutter grows while the black market expands faster than the regulated sector, he said, nobody should be happy about it.

He described the balance tipping towards the black market as a bigger risk than the tax. Flutter has 550 people working full-time on safer gambling, and Clarke said its strategy is to hold up a mirror to the lack of protection in unlicensed markets. Research commissioned by Flutter UK&I last year, first reported by the Racing Post, saw counter-fraud adviser Alex Wood test unlicensed sites for two weeks. He found them through app stores, social media and search engines, and opened accounts under fictitious identities, including one for a seven-year-old. He placed bets easily but struggled to withdraw funds. Wood urged the Gambling Commission to do more and called on the Financial Conduct Authority to target payment providers that enable unlicensed gambling.

On Financial Risk Assessments, expected shortly, Clarke said operators must work closely with the Gambling Commission, adding that the jury is still out. He set three conditions for the regulated market to keep winning: better customer protection, proportionate regulation and real progress against unlicensed operators. He noted a different tone in recent talks with the regulator, which earlier this year received a £26 million grant to tackle illegal gambling.