With last year’s increase in Remote Gaming Duty (RGD), the UK gambling sector was once again put in a position to prove it is resilient.
Seven months into the new tax regime, this has rang true for some companies like B2B technology firm Inspired Entertainment, which reported Q3 growth in the UK despite the headwinds.
While directly impacted by RGD going up from 21% to 40% this April, for the three months ending 30 September Inspired reported like-for-like UK revenue increasing by 4% YoY.
Leadership added that this was primarily driven by a strong operational volume growth that managed to successfully absorb tax drags resulting from the higher RGD, effectively generating net positive revenue growth.
Total reported revenue for the quarter did fall 29% YoY from $86.2m to $61.4m, but rather than the tax increase, this was mainly due to Inspired’s November 2025 divestment of its UK Holiday Parks division and restructuring of its UK Pubs business.
Inspired added that it will look to consolidate its UK business even further with cost optimisation strategies already being developed following last month’s government announcement of more tax increases, where Machine Games Duty (MGD) will go up from 20% to 25% in April 2027.
Brooks Pierce, President and Chief Executive Officer of Inspired, said: “The UK Budget removes a major overhang and gives us and our customers a clearer foundation for investment and planning.
“The increase in Machine Games Duty from 20% to 25%, effective April 2027, is disappointing but manageable and we will pursue disciplined mitigation measures to limit the effect on our business.”
As a games and machines supplier, Inspired has a vested interest in the land-based UK gambling sector, working with major clients like Labdrokes- and Coral-owner Entain, and Rank Group-owned Mecca Bingo.
The increase in MGD prompted an industry-wide pushback in the lead up to the October announcement, with operators warning that it will cause mass closure of betting shops across the UK.
Entain, alongside Betfred and Flutter, were among the businesses most concerned about eventual retail and job losses. If the warnings do become reality, Inspired will also need to adapt to a potential shrinking of the UK retail offer.
The company does have a diversified portfolio of target markets, with Greece, Canada and the US key contributors to its FY revenue.
“Retail Solutions delivered another strong performance in the UK and Greece, with further opportunities to refresh our installed base in Greece next year,” Pierce added.
“In Interactive [iGaming], revenue grew 3% year over year as UK volume growth offset the higher gaming tax and our U.S. business outpaced the U.S. iGaming market.”
Brazil was also a focus for the firm prior to gambling being banned by President Lula earlier in September, with the country of football accounting for 5% of Inspired’s total revenue.
Following the ban, however, Pierce added that Inspired’s FY26 outlook has been updated, with Adjusted EBITDA guidance now sitting between $109m and $112m as opposed to the $112-$118m prior to the Brazil shutdown.
“As we look toward 2027, we will allocate capital with discipline, prioritizing investments with attractive returns and sustainable cash generation, alongside expected continued debt reduction and share repurchases,” concluded Lorne Weil, Executive Chairman of Inspired Entertainment.
“We believe this approach will build long-term shareholder value and demonstrate the earnings potential not reflected in Inspired’s current valuation.”
