Ballys Intr Ord Company Research (0KA1)

Intralot’s Q325 results indicate revenue growth weakened in the period but profit margin increased as a result of good cost control. The key focus of the presentation and conference call was management’s response to the increase in remote gaming duty in the UK to 40% from 21% from April 2026, announced in the UK budget the day before. This was significant given the UK represents c 63% of the pro forma FY25 adjusted EBITDA of the newly combined group of Intralot and Bally’s International Interactive (BII). Management is confident its higher UK profitability, an EBITDA margin of c 42%, provides a competitive advantage versus the high number of competitors (over 1,000) that are currently less profitable and are likely to be unprofitable as a result of the proposed duty increase. Management believes many competitors will likely exit the market, and therefore Intralot will likely take share in the longer term, and by definition, the costs of competing will reduce. It also believes its UK-based players are unlikely to move to the black market in response to the proposed duty increase, as they have relatively low ARPU.