Entain (LSE: ENT), the global sports betting and gaming company, currently trades at a level that 18 covering analysts say represents a 97% discount to their 12-month price targets.
That striking figure would technically make Entain the cheapest stock on the entire FTSE 100 index, an eye-catching claim that nevertheless demands serious scrutiny.
The Coral and Ladbrokes owner has seen its share price collapse by 37% following Chancellor Rachel Reeves’ 2025 Budget, which introduced sweeping increases to gambling taxes.
Reeves stated in her Budget speech: “I will also reform gambling taxes in response to the rise in online gambling. Remote gaming is associated with the highest levels of harm and so I am increasing Remote Gaming Duty from 21% to 40%, with duty on online betting increasing from 15% to 25%. I am making no change to the taxes on in-person gambling or on horse-racing.”
Entain, which operates more than 30 brands worldwide, has estimated that these changes will cost the business approximately £200m every single year.
The company’s price-to-earnings ratio has been in freefall since the announcement, making it appear cheap on traditional valuation metrics, though analysts caution against reading too much into that.
A low P/E ratio in isolation does not necessarily indicate a bargain, particularly when a stock is trading at a depressed multiple for clear and identifiable structural reasons.
There are also reports that further tax rises could be unveiled in this year’s Autumn Budget on 28 October, which would add yet another layer of uncertainty for investors already sitting on significant losses.
Adding political pressure to financial strain, Greater Manchester Mayor Andy Burnham posted on X in August, grouping betting shops alongside vape shops and “dodgy businesses,” a signal of the broader political mood surrounding the gambling sector.
Entain did manage to deliver better-than-expected results for the six months to 30 June, reporting EBITDA of £479m, which came in £24m ahead of analyst forecasts.
Large reductions in staff numbers and the boost provided by the football World Cup helped cushion some of the impact from higher levies during the period.
Further job cuts were announced on 16 September, as the group continues to strip out costs in response to the tougher operating environment it now faces across the UK.
The Gambling Commission’s latest annual survey found that 2.7% of adults scored eight or more on its problem gambling severity index, a figure that has pushed the industry further toward pariah status among ethical investors.
Not everything points downward, however, as Entain’s US joint venture BetMGM, operated alongside MGM Resorts International, has now reached what the company describes as “sustainable profitability.”
The group’s falling share price has also pushed its dividend yield above 4%, though shareholders should bear in mind that dividend payments are never guaranteed and can be cut at short notice.
Analysts point to the low valuation multiple, ongoing cost-saving efforts, debt reduction plans, and the strong US performance as reasons for their relatively optimistic longer-term price targets.
Despite those positives, the direction of travel in the UK remains firmly towards higher taxes and tighter gambling restrictions, leaving little room for a near-term recovery in the domestic business.
For investors willing to stomach considerable regulatory and political risk, Entain offers a compelling surface-level valuation, but the headwinds facing the group make that apparent cheapness difficult to act on with confidence.