Inspired Entertainment (NASDAQ: INSE) is significantly enhancing its focus on the UK online gaming sector, reporting impressive growth in the region despite the recent rise in remote gaming tax obligations.
The company disclosed that its UK interactive gross gaming revenue rose by 40% year-over-year in the second quarter, even as the remote gaming duty surged from 21% to 40% starting April 1.
Brooks Pierce, President and CEO, stated that Inspired is gaining market share despite the increased tax obligations.
“Our growth trajectory in the UK has been consistently strong,” noted Pierce. He highlighted that Inspired’s market share within the UK has expanded from 3% to over 11% in recent years.
Pierce remarked that while other firms may be scaling back due to challenging economic conditions, Inspired continues to “significantly invest in the UK market.”
For the second quarter, Inspired reported a revenue of $60.8 million, a decrease of 24% year-on-year. However, this decline is largely attributed to the divestment of its UK holiday parks division. Adjusted EBITDA reached $27.1 million, down 5%.
The interactive segment remained the strongest performer, with revenues climbing 15% to $15.7 million, and adjusted EBITDA increasing by 13% to $10.3 million.
Executive Chairman Lorne Weil expressed that the increase in UK taxes overshadowed what would have otherwise been even more robust growth for the interactive segment. “The core business is thriving,” Weil said.
He pointed out that the combination of 40% GGR growth and the elevated duty rate led to an approximately 2.5-fold increase in Inspired’s UK tax impact compared to the previous year.
“It’s remarkable that we see positive revenue from the UK,” Weil added, while also noting that growth in international markets was considerably stronger.
Inspired Anticipates Further Interactive Growth
Management predicts that the second quarter will be the lowest point for interactive performance this year, emphasizing that the full effects of the new UK tax are already evident in the results.
“We believe the second quarter is a low point,” Weil commented. “The outlook for the third and fourth quarters looks promising.”
Pierce mentioned that the interactive division has historically seen improvements in the latter half of the year, with the fourth quarter often experiencing heightened performance due to seasonal game launches. Last year, Q4 interactive revenue surged over 17% compared to Q3, with adjusted EBITDA increasing by 23%.
Inspired is also ramping up its game development. The new Bee Reel Games studio in Manchester is slated to unveil its first game by year-end and aims to contribute approximately one new title each month to the lineup.
Management believes that Inspired’s extensive retail presence in the UK significantly benefits its online operations, as customers recognize and seek out familiar games they’ve played in betting shops and arcades.
“A key factor driving our online success is the multi-channel approach,” Weil said.
Pierce added that Inspired’s online market share in the UK has now exceeded double that of its North American market share, although both regions continue to grow.
Inspired has maintained its full-year adjusted EBITDA projection for 2026, ranging from $112 million to $118 million.