Budget 2019: “Gaming tax rise to spark second wave of large-scale M&A”

Specialist gaming industry brokerage says RGD rate increase to 21% will see dominant operators claim even more market share

The government’s plans to “end austerity” by further taxing the gaming industry will “spark a second wave of large-scale mergers and acquisitions” according to RB Capital, the specialist gaming industry brokerage.

Julian Buhagiar, co-founder RB Capital, called the rate rise announcement “inevitable but disruptive” as the Chancellor looks to both make up for the shortfall in tax receipts from the decrease in Fixed Odds Betting Terminal stakes and raise more funds to spend in other areas following several years of austerity measures.

“The rise was not unexpected but this doesn’t take away from the further pain many UK-facing operators are going to have to prepare for. In addition to the fallout from changes in Brexit-related legislation, this industry is constantly adapting to wave after wave of regulatory changes and, because of today’s announcement, some operators will feel like throwing in the towel.

“We’ve already seen a spate of mega deals with the likes of GVC and the Stars Group completing major M&A transactions. Today’s rate rise will only mean one thing: that life will get tougher for smaller operators and they will either be forced to downsize UK operations, shift market focus elsewhere or sell to the highest bidder.

“We fully expect this Budget decision to be a catalyst for increased M&A which will start as early as the first quarter of next year, and for already dominant brands to further strengthen their positions by capitalising early on these buy-side opportunities.”

About RB Capital:

RB Capital Advisors is a specialist M&A and funding brokerage, combining best-in-breed expertise for growth, investment and M&A across gaming, fintech and media verticals. Our investment partners have combined experience of funding, building and selling businesses, having held significant strategic and investment positions in several key blue-chip verticals. This high-level knowledge is combined with in-depth expertise of the key issues within sub-verticals such as affiliate networks, blockchain and digital rights management. This enables us to combine strategic vision with structured investment, acquisition and exit strategy to assist with the challenges of funding and growing smaller businesses into profitable cash generative entities. We work with people, products and ideas we believe to be truly disruptive and unique.