Entain Divests Central and Eastern Europe Stake Amid UK Tax Hike and Polish Regulatory Hurdles
2026-07-06
Source: iGaming Business
Entain is divesting its stake in the high-performing Entain CEE unit, including SuperSport and STS, a move largely driven by significant UK tax increases and long-term regulatory hurdles in Poland. The €425 million initial sale to EMMA Capital aims to reduce company debt and streamline operations, despite the CEE division's strong revenue and EBITDA growth.
Entain has initiated a full exit from its Central and Eastern European (CEE) operations, agreeing to sell a 20% stake in Entain CEE back to joint venture partner EMMA Capital for approximately €425 million. This transaction, announced on June 25, represents the first phase of a planned complete divestment from the unit, which includes leading brands SuperSport in Croatia and STS in Poland.
Despite the impending sale, the Entain CEE unit has demonstrated strong financial performance. In 2025, it generated £522 million in net gaming revenue, marking a 7% year-on-year increase, with EBITDA also rising by 7% to reach £183.7 million. Both STS and SuperSport have consistently maintained their market-leading positions within their respective countries. The implied enterprise value for the CEE sale stands at £1.83 billion, or 9.3 times EBITDA, according to analyst Andrew Tam of Rothschild & Co Redburn.
The primary driver behind this strategic shift appears to be intensified financial pressure on Entain in its home market. The UK government's recent increase in remote gaming duty from 21% to 40% and sports betting duty from 15% to 25%, effective April, has significantly impacted the operator's profitability. This tax hike has led to an effective tax rate on Entain's UK profits exceeding 80% and has seen its shares decline by roughly 30% since the announcement. CEO Stella David stated the deal reflects "robust capital allocation discipline" as the company aims to reduce debt, anticipating annual interest savings of £20 million.
While the CEE unit's overall numbers were positive, specific market conditions in Poland presented long-term challenges. A key factor was the unfulfilled expectation of online casino liberalization for private operators in Poland, which Entain had anticipated when acquiring STS for £750 million in 2023. Dr. Gabriele Stark-Lütke Schwienhorst of CMS Law highlighted that the legal constraints prevented Entain from fully replicating a multi-product sportsbook-plus-casino model, limiting potential synergies.
Furthermore, Poland's demanding tax environment, characterized by a 12% betting tax calculated on stakes since 2009, compresses margins and necessitates extreme discipline from operators. While this regime has paradoxically fostered a strong local betting product, it deters global players. Entain's CFO Rob Wood acknowledged increased promotional intensity from competitors in Poland, leading to some market share loss for STS in Q2 2025, with Poland's H1 2025 online revenue growth at just 2% compared to Croatia's 14%. Legal expert Marek Plota also noted that competitors like Betclic and Superbet may be challenging STS's market dominance.
The existing put-and-call option structure with EMMA Capital and the Juroszek family facilitated a swift exit strategy. Upon completion, expected in Q4 2026, Entain's stake will decrease to 47.5%, while EMMA Capital's will rise to 42.5%, and the Juroszek family's 10% stake will see its voting rights pass to EMMA, giving it effective control. The move signals a broader trend where London-listed operators may divest even profitable, cash-generating assets to address domestic tax burdens and streamline their balance sheets, potentially focusing on key assets like BetMGM.