Inspired Doubles Down on UK Online Market Despite Tax Hit

Inspired Entertainment (NASDAQ: INSE) says it is “doubling down” on the UK online gaming market after reporting strong growth in the country despite the recent increase in remote gaming duty.

The supplier said its UK interactive gross gaming revenue increased 40% year-on-year during the second quarter, even as remote gaming duty rose from 21% to 40% from April 1.

President and CEO Brooks Pierce said Inspired continued to take market share despite the higher tax burden.

“We’ve shown pretty consistent growth in the UK,” Pierce said. According to Pierce, Inspired market share in the UK has increased from 3% to more than 11% over the “last few years”.

He added that while some companies may be pulling back because of the tougher economics, Inspired was “pretty much doubling down in the UK.”

Inspired reported second-quarter revenue of $60.8 million, down 24% year-on-year. However, the comparison was heavily affected by the sale of its UK holiday parks business. Adjusted EBITDA was $27.1 million, down 5%.

The company’s interactive division was its strongest. Revenue increased 15% to $15.7 million, while adjusted EBITDA rose 13% to $10.3 million.

Executive Chairman Lorne Weil said the UK tax increase masked what otherwise would have been substantially stronger growth for its interactive division. “The underlying business is growing like crazy,” Weil said.

He noted that the combination of 40% GGR growth and the higher duty rate meant Inspired’s absolute UK tax impact increased roughly 2.5 times year-on-year.

“The revenue was positive in the UK, which is a miracle,” Weil added, noting that growth outside the UK was significantly stronger.

Inspired Sees Further Interactive Growth

Management expects the second quarter to mark the low point for interactive performance this year. It said the full impact of the new UK tax is already reflected in the period.

“The second quarter is definitely a trough,” Weil said. “And the third and fourth quarter should look very good.”

Pierce said the interactive division has historically improved during the second half of the year. He noted that the fourth quarter tends to be particularly strong due to seasonal game launches. Last year, fourth-quarter interactive revenue increased more than 17% from Q3, while adjusted EBITDA rose 23%.

Inspired is also increasing its content output. Its new Manchester-based Bee Reel Games studio is expected to release its first title by the end of the year. It will eventually add around one additional game per month to its pipeline.

Management believes Inspired’s large UK retail footprint also helps its online business, with customers recognizing games they have previously played in betting shops and arcades.

“One of the major drivers of online performance is the multi-channel effect,” Weil said.

Pierce said Inspired’s UK online market share is now more than double its North American share, although both markets continue to grow.

Inspired maintained its full-year 2026 adjusted EBITDA target of $112 million to $118 million.