Evoke, a prominent player in the online gaming industry, has confirmed that it is in discussions with Bally’s Intralot regarding a potential all-share combination, valuing each Evoke share at £0.50 ($0.67). The announcement, made on Monday in the United Kingdom, comes as part of Evoke’s strategic evaluation of its business amid significant regulatory changes in the gambling sector. This proposed transaction features an all-share combination with a partial cash alternative, and the companies have set a deadline of May 18 to finalize the deal. The outcome could have substantial implications for market dynamics, given the recent tax increases affecting the industry.
The strategic review, initiated by Evoke in December, sought to explore various options, including the partial or full sale of the company. This move was largely prompted by the UK government’s decision to increase the Remote Gaming Duty (RGD) from 21% to 40%, effective this month, and a subsequent rise in Remote Betting Duty scheduled for next April. These fiscal shifts are expected to impact significantly the operational costs for gambling operators in the UK, thereby influencing market strategies and financial forecasts.
In response to these regulatory adjustments, Evoke announced the closure of 200 William Hill betting shops in the UK, starting in May. This strategic decision aligns with similar actions taken by industry peers such as Entain and Flutter, as operators seek to mitigate increased costs and maintain market viability under the new taxation regime. The closure of these retail locations highlights the shifting focus towards online operations as companies adapt to a changing regulatory landscape.
Following the announcement of the potential sale, Evoke’s share price saw an uptick, opening at £0.43 on Monday, up from its previous close of £0.38 on Friday. Despite this positive market reaction, Evoke has faced challenges, notably a downgrade of its shares to “hold” by Deutsche Bank in January. The bank cited the disproportionate impact of the UK budget on Evoke, particularly concerning its online operations, and adjusted its EBITDA forecasts for fiscal years 2026 and 2027 downward by 12% and 18%, respectively.
Industry analysts have speculated on the future direction of Evoke, with some suggesting that a private equity takeover might alleviate its debt situation. In a February interview with iGaming Business, Ben Robinson of Corfai emphasized the potential benefits of structural cost reductions through operational consolidation, automation, and AI-driven efficiencies. He argued that such measures could yield sustainable savings without compromising growth, offering a strategic pathway for Evoke amid evolving market conditions.
Bally’s Intralot, having confirmed its interest, noted that any firm offer would be contingent upon customary conditions and approvals, and it reserved the right to adjust the terms, including price and transaction structure. The specifics of which divisions of Evoke might be sold remain under consideration, but there have been reports suggesting the potential divestment of its Italian operations. This move would ostensibly counterbalance the financial strain imposed by heightened taxation.
As Evoke navigates these strategic discussions and the broader regulatory environment, the company’s financial advisers, Morgan Stanley and Rothschild & Co., are actively involved in evaluating the proposal’s merits. The outcome of these talks will likely have significant repercussions for both companies and the broader gaming market, potentially affecting competitive dynamics and operational strategies across the sector.
The industry continues to watch closely as the deadline for the potential deal approaches, with implications for regulatory compliance and market access looming large. Should the transaction proceed, the integration process, alongside any necessary regulatory approvals, will be a critical next step, shaping the future landscape of the iGaming industry in the UK and beyond.
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