Gambling: UK&I Field Trip Feedback & Assessing Machines Tax Risk

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Gambling: UK&I Field Trip Feedback & Assessing Machines Tax Risk

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July 2, 2026 04:00 AM GMT

Morgan Stanley & Co. International plc+MGambling | Europe Ed Young

Equity Analyst

UK&I Field Trip Feedback & Ed.Young@morganstanley.comJamie Rollo +44 20 7677-1761

Jamie.Rollo@morganstanley.com +44 20 7425-3281

Assessing Machines Tax Risk David Nolan

David.Nolan@morganstanley.com +44 20 7425-4297

This week, we conducted a field trip seeing group and divisional

Leisure and Hotels

management from leading operators and suppliers, focused on Europe

Europe's largest online market. We discuss detailed takeaways Industry View Attractive

inside the cover, as well as assessing potential regulatory risk in

UK retail and sensitivities for Entain.

A large shock to a large market. UK & Ireland together comprise the largest

regulated online market in Europe at ~£8bn in NGR, growing at a 9% CAGR over the

past 3 years. Operators we spoke to described the online tax increase (effective

April '26) as the largest regulatory shock to the market in its history, with

potentially significant consequences on market dynamics and profitability. We came

away with a more nuanced view on the areas in which scale, brand resonance and

operating momentum would matter most.

Is the tail wagging the dog? Q2 trading appears to have been counter-intuitively

strong (see What Are The Implications of Strong UK Trading in Q2?), even before a

World Cup boost from June. On a headline basis, this presents a challenge to the

consensual view that the new operating environment will be unsustainable for many

smaller operators. Management teams generally felt this impact would be seen

towards the end of the year: in the meantime they expected the tail to compete for