Losing hand: William Hill owner Evoke slides after UK gambling tax hikes

(Reuters) -Shares of betting firm Evoke tumbled near record lows on Thursday, after the William Hill and 888 owner withdrew its medium-term targets, warning of a hit to profits and thousands of potential job cuts after tax hikes on online gambling.

Finance Minister Rachel Reeves on Wednesday increased taxes on online gaming such as casino games and slots to 40% from 21% and on sports betting to 25% from 15% in her latest budget.

While other betting firms will also take a hit to earnings, smaller UK-focused Evoke is likely more impacted than others as the tax hikes could see a big increase in its leverage, Jack Cummings, a Berenberg analyst, said in a note.

"We will begin immediately on executing our mitigation plans, which involve a significant reduction in investment into the UK," Per Widerstrom, CEO of Evoke, said in a statement after the budget was revealed.

"And, very regrettably, the likely need for thousands of jobs to be cut up and down the country."

Evoke, already worth less than a tenth of what it was when its shares hit a peak four years ago, expects the tax hikes will increase annual duty costs by 125 to 135 million pounds from April 2027, half of which it expects to mitigate with reduced marketing, store closures and job cuts.

The company also withdrew medium-term targets as it reassesses investment plans.

Evoke's shares were down 3.3% at 29.55 pence by 1315 GMT.

Rank Group, which has more of a focus on physical casinos and bingo halls and expects a roughly 40 million pounds ($52.9 million) annual hit, dropped 7% on Thursday, giving up gains made a day earlier.

Analysts expect larger players Entain and Flutter to absorb the margin pressures better than their smaller rivals through their international exposure and benefit from market share gains if smaller players exit.

Entain, which expects about 200 million pounds of additional costs, was up around 1%, while FanDuel-owner Flutter Entertainment was up around 2%.

Flutter expects the higher taxes will hit its adjusted EBITDA by about $320 million in fiscal 2026 and $540 million in 2027 before it can mitigate the impact.

($1 = 0.7562 pounds)

(Reporting by Yamini Kalia in Bengaluru; Editing by Sonia Cheema, Nivedita Bhattacharjee, Alex Richardson and Jane Merriman)