Flutter, Entain: Trump's Big, beautiful bill has blowback for UK gaming stocks

A proposed US tax law change, effective 2026, would limit gamblers' loss deductions against winnings to 90% from 100%, potentially dampening high-stakes betting activity. This adjustment, part of a broader bill, is viewed by Citi as a modest headwind to overall US wagering volumes, particularly impacting UK-listed Flutter Entertainment (44% of 2026 revenue from US via FanDuel) and Entain (25% of forecast earnings from BetMGM). While not a major blow, it presents an additional risk for the maturing US gambling market.

Analysis

A proposed change to US tax law, slated for 2026, introduces a new regulatory risk for UK-listed gaming operators with significant American exposure. The proposal would reduce the deductibility of gambling losses against winnings from 100% to 90%, a measure likely to disincentivize high-stakes bettors who contribute disproportionately to industry revenues. According to Citi, this represents a modest headwind to overall US wagering volumes, a notable development as the market transitions into a more mature growth phase. The impact is not uniform across operators; Flutter Entertainment, via its FanDuel subsidiary, is identified as most exposed, with the US market projected to constitute 44% of its group revenue by 2026. Entain's exposure, through its BetMGM joint venture, is also material, representing around a quarter of the company's forecast earnings. While current stock movements are positive, this legislative risk warrants careful monitoring as it could temper future growth expectations for the US online betting sector.

Key Decisions for Investors

• Investors should monitor the legislative progress of the proposed US tax bill, as its passage would be a negative catalyst for US-exposed gaming stocks.
• It is crucial to differentiate exposure levels, recognizing that Flutter's valuation is more sensitive to this headwind given its projected 44% revenue dependency on the US market by 2026, compared to Entain's 25% earnings exposure.
• Consider modestly adjusting long-term growth models for the US gaming market to factor in a potential dampening effect on high-value player activity if the bill is enacted.
• Listen for commentary from Flutter and Entain management during upcoming earnings calls for their official assessment of the financial impact and any potential mitigation strategies.