Entain (ENT): FTSE 100 Exit Confirmed as Gaming Duty Hits 40%

FTSE Russell confirmed on 2 September that Entain will leave the FTSE 100 and drop into the FTSE 250, with the change applied after the close on Friday 18 September and effective from Monday 21 September. The shares stood at about 516p on 3 September, down roughly 2.7% on the session and about 30% this year, against a 52-week range of 500.40p to 915.60p. The Ladbrokes and Coral owner leaves the index with a market capitalisation of around £3.3bn — the smallest in the FTSE 100.

The cause is not disputed. UK remote gaming duty rose from 21% to 40% on 1 April 2026, and chief executive Stella David has said the increase will cost Entain £250m across 2026 and 2027 — an EBITDA impact of about £100m this year and about £150m from next. What is disputed, or rather what nobody has bothered to reconcile, is that the same company being ejected from the blue-chip index says it is gaining share, because mid-tier rivals cannot absorb the same tax.

What actually happened

The September 2026 quarterly review of the FTSE UK Index Series, announced on 2 September using 1 September data, removes Entain and Persimmon from the FTSE 100 and promotes easyJet and Ithaca Energy in their place. Entain and Persimmon join Pinewood Technologies, Seraphim Space Investment Trust and Volex as additions to the FTSE 250, while Aston Martin and GB Group leave that index.

Index membership is decided on market capitalisation, so relegation is a consequence rather than a judgement. Entain's capitalisation fell because its share price fell, and its share price fell because the UK fiscal treatment of online gaming changed materially in April. The duty on remote gaming — the online casino and slots revenue that carries the highest margins in the business — nearly doubled overnight.

Entain marked the consequences before the tax arrived. Its 2025 statutory loss of £681m included a £488m impairment tied directly to the coming duty increase, following a £461m statutory loss in 2024. That impairment is management's own written-down view of what the UK online business is worth under a 40% rate. It is the most honest number in the file, and it was booked pre-emptively.

Against that, the half-year results published in August were better than the share price implies. Group net gaming revenue rose 7% to £2.55bn, or 5% in constant currency. Underlying EBITDA fell 2% to £479.3m — a decline, but ahead of a market expectation nearer £455m. UK and Ireland online NGR grew 13% in constant currency, with the duty rise already in effect for most of the period. The statutory net loss narrowed sharply, to £11.4m from £85.8m. The interim dividend was raised 5% to 10.3p. Full-year guidance was left unchanged, with group underlying EBITDA expected at the midpoint of a £910m-£960m range and online NGR growth of 5-7% in constant currency.

Chief financial officer Michael Snape has been explicit that the business is taking market share as smaller operators struggle to mitigate the duty rise.

Why the market reacted the way it did

The market has priced the duty increase as a permanent margin transfer from operators to the Exchequer, and on the arithmetic alone that is correct. £250m across two years against a business guiding to roughly £935m of underlying EBITDA is not a rounding error, and the impairment says management agrees.

What the price has not obviously priced is the second-order effect, and it is the more interesting one. A tax that costs the market leader £250m over two years costs sub-scale operators their viability. Evoke, which owns William Hill and 888, has estimated annual duty costs of £125m-£135m, withdrawn its medium-term financial targets entirely and been reported to be weighing asset disposals. Flutter, the largest operator in the market, expects reduced operational, promotional and marketing spend to offset only about 20% of the gross impact in the first six months after implementation, rising to about 40% thereafter — and that is the mitigation available to the company best placed to attempt it. Rank Group, whose exposure runs through Grosvenor casinos and Gala bingo, has guided to an annualised hit of around £40m to operating profit before mitigation. Further down the scale, several mid-tier online operators are reported to be exploring partial or full exit from the UK market.

A duty rise that removes competitors is a forced consolidation. For the largest licensed operator with the deepest marketing budget and the most amortisable technology stack, that is not straightforwardly bad news — and the 13% constant-currency growth in UK and Ireland online NGR, achieved with the higher rate in force, is the first piece of evidence that the share-gain argument is more than management spin.

The index exit is separate from all of this, and mechanical. Funds tracking the FTSE 100 must be out of the stock by the 18 September close. That creates an identifiable, non-fundamental seller with a deadline, in a stock already trading near the bottom of its 52-week range. FTSE 250 trackers are buyers on the other side, but the two flows are rarely the same size and never perfectly timed.

The Openbook read

Momentum is poor and there is no way to dress it up: down about 30% year to date, near a 52-week low, and about to be sold by a class of holder that has no discretion in the matter. The one nuance worth holding is that index-driven selling is momentum in the narrow technical sense without being information in the fundamental sense. It tells you about flows, not about the business.

Growth is close to unreadable on the revenue line, and this is the factor most likely to be scored wrongly. A 40% duty rate distorts reported net gaming revenue, margin and profit simultaneously, so year-on-year comparisons across April 2026 are comparing two different regulatory regimes. The Openbook approach is to score growth here on volumes and market share rather than on revenue: UK and Ireland online NGR up 13% in constant currency, group NGR up 5% in constant currency, and a management claim of share gains that the sector's distress makes plausible. On that basis growth is intact. On the reported profit line it plainly is not, and both statements are true.

Profitability has taken a structural, not cyclical, hit. Underlying EBITDA down 2% on NGR up 7% is the duty arriving. This is the factor where the bear case is strongest and where honesty is cheapest: a business that hands 40% of remote gaming revenue to the Treasury is a permanently less profitable business than one handing over 21%, and no amount of share gain fully offsets that — as Flutter's own mitigation arithmetic, which recovers at best about 40% of the hit, makes plain.

Solvency is the constraint that has to be examined rather than assumed, given two consecutive years of statutory losses. The mitigating facts are that both losses were driven substantially by non-cash impairments — £488m of the 2025 figure — that underlying EBITDA remains near £935m on guidance, that the statutory net loss narrowed to £11.4m in the first half, and that the board raised the interim dividend 5%. A board cutting a dividend is telling you about solvency; a board raising one is telling you something too. This does not look like a balance sheet in difficulty, but it is the factor to keep monitoring rather than the factor to wave through.

Reward/Risk and momentum point in opposite directions, which is the specific setup where the five-factor framework earns its keep. On one side: an identifiable forced seller with an 18 September deadline, a stock near a 52-week low, an impairment already taken, guidance reaffirmed, and a competitive field being thinned by the same tax that hurt the leader. On the other: a permanent margin reduction, two years of statutory losses, a regulatory regime that has already proved willing to change sharply, and no guarantee that mid-tier exits convert into share for Entain rather than into a smaller regulated market with more leakage to unlicensed operators — a risk Stella David herself has been vocal about. The ratio has improved. The uncertainty has not narrowed. Those are different things, and conflating them is how index-exit stories get written badly. The factor history is on the Entain equity page.

The read-across

The duty rise sorts the UK-listed gambling sector by scale, and the reshuffle sorts it by index. Both are worth tracking.

For Rank Group and evoke, the question is mitigation capacity against a fixed cost base. Evoke's withdrawal of medium-term targets is the more serious signal of the two: a company that cannot forecast three years out under a known tax rate is telling you its model is being reworked, not merely squeezed.

For suppliers rather than operators — the platform, content and payments businesses selling into UK-facing operators — the duty rise shifts where the margin sits. Operators under a 40% rate renegotiate supplier terms, and consolidation reduces the number of counterparties. That is a slower-burning read-across than the operator story but a more durable one.

For the index itself, the September review is a snapshot of a rotation. Persimmon leaves alongside Entain after a difficult year for housebuilders, while Ithaca Energy joins after a 64% rise on the back of firm crude, and easyJet returns while under a recommended cash offer. Consumer-facing and rate-sensitive UK domestics are being replaced by energy. Anyone screening the UK market on our screener is looking at that same rotation from the bottom up.

What to watch next

• 18 September 2026, close of business — index changes are applied. FTSE 100 tracker selling must be complete by then; the FTSE 250 effective date is Monday 21 September. Trading around this date is flow, not fundamentals, and should be read as such.
• Full-year underlying EBITDA against the £910m-£960m range — management has guided to the midpoint with the higher duty already in force for three quarters of the year. Whether that midpoint holds is the cleanest single test of the mitigation story.
• UK and Ireland online NGR growth — 13% in constant currency in the first half. If that rate is sustained into the second half, the market-share argument becomes hard to dismiss. If it decays, the duty is simply shrinking the market.
• Evidence of actual mid-tier exits — reported exploration of exits is not the same as exits. Confirmed withdrawals from the UK market would convert a plausible argument into a measurable one.
• The 2027 duty impact of about £150m — the larger of the two annual hits lands next year. Watch how much of it management claims to have offset when full-year results are published, and against what baseline.

Relegation from the FTSE 100 is a fact about market capitalisation. It is not a fact about whether a business is winning or losing its market, and in Entain's case the two are pointing in opposite directions.