BDO Director: UK Operators Rethinking Cost Structures and Eyeing M&A After RGD Hike

The April increase in the UK’s Remote Gambling Duty (RGD) has prompted both online and land-based operators to reassess their market positions and cost bases, according to Ollie Woodward, corporate finance director at BDO. Speaking during iGB Live’s inaugural M&A Summit, he noted that many firms are weighing the sustainability of their player bases amid tighter margins.

Cost Base Reevaluation and M&A Activity

Woodward observed that conversations with clients have shifted toward optimizing cost structures. “It’s a balancing act,” he said, adding that operators believe those who weather this period may find opportunities as smaller players struggle with the tax changes. He also highlighted the intersection of the RGD hike with broader industry trends, such as artificial intelligence, prompting established firms to scrutinize their people and technology expenses. BDO’s gaming M&A team is currently engaged with roughly five or six UK gambling businesses on “big transactional processes,” spanning B2C online, land-based, and supplier segments.

Notable moves include Entain’s restructuring, which may cut up to 500 global roles—though the company stressed it is not a direct response to the duty increase. Conversely, Bally’s Intralot seized the moment by acquiring Evoke following that operator’s struggles with the tax hike, with CEO Robeson Reeves citing European expansion plans.

Player Cohort Analysis Post-RGD

Woodward emphasized that operators are closely examining how player cohorts are evolving, focusing on return-to-player (RTP) rates, marketing mix, and spend. “Ultimately, it comes down to the sustainability of your earnings and your player base,” he noted. Despite the margin squeeze, the overall sentiment among BDO’s clients, he described as one of “resilience and bullishness,” as they explore ways to counter the strain.

Unregulated Revenue Under the Spotlight

Reporting regulated versus unregulated revenue has become a critical factor in today’s M&A landscape, Woodward explained during a panel at the iGB Live M&A Summit. From a sell-side perspective, buyers increasingly seek highly regulated opportunities, prompting firms like Bet365 and Yolo Group to exit or downsize black- or grey-market operations.

When asked about splitting unregulated revenue during due diligence, Woodward advised that the first step is to determine whether a company can legally ring-fence those operations. Operationally, most businesses already track individual KPIs, making it relatively straightforward to separate and value different parts of the business.

Regulated Revenues Command Premiums

Regulated revenues are more attractive in M&A, according to Woodward. “They’re easier to exit. They’re attracting higher multiples,” he said, noting that major groups are moving toward 90% or more regulated exposure. However, legacy unregulated activities do not automatically disqualify a company from a deal; the nature of those activities matters. Woodward noted that operating in grey markets before formal regulation, then securing a license once legislation passes, is perceived differently than operating in black markets where gambling is illegal. “It definitely is something that people look at and people want to understand what were the management decisions at that time,” he concluded.