The City broker Sanlam reckons the UK government’s move to equalise the tax regime for remote gambling may have a considerable influence on the quoted sector.

It could lead to a marked lower in advertising and promotions, although the program will hit the smaller sized operators disproportionately, in accordance with analyst Amisha Chohan.

Sanlam estimates 85% of remote gambling in the UK requires location with organizations which have operations in low-tax jurisdictions which include Alderney, Antigua, the Isle of Man and Gibraltar.

The plan is the fact that all on-line betting firms will pay 15% tax on gross earnings from December 1 next year. This can be in line with the levy on home-grown bookies and closes a loophole costing the Treasury £300mln a year.

It signifies firms including Betfair (LON:BET), Bwin.party (LON:BPTY), Ladbrokes (LON:LAD), William Hill (LON:WMH), 888 (LON:888), NetPlayTV (LON:NPT), Probability (LON:PBTY) and 32 Red (LON:TTR.L) with overseas operations will see their tax bills increase, Sanlam said.

Providers that fail to adhere towards the UK’s new technique could face unlimited fines, prison terms of as much as seven years as well because the revocation of their remote gambling licenses, the broker pointed out.

“The raise in tax liabilities will in most instances encourage businesses to cut down promoting expenditure, potentially reduced player promotions and increase their exposure outside from the UK,” explained analyst Chohan.

“We think that the impact with the tax could be detrimental for smaller players with low margins, as significantly less lucrative operators might be forced to exit the industry.”

Separately, there was some great news for one in the significant boys of the sector as Ladbrokes was upgraded to ‘buy’ from ‘hold’ by Deutsche Bank.

Analyst Richard Carter reckons the ‘headwinds’ affecting the group’s current performance are now factored in to the bookmaker’s valuation. It believes the stock is worth 232 pence, providing some upside from present levels.

“We assume the historical operational challenges of inadequate sports trading capabilities, weak client threat management, lack of on the web client relationship management insight and limited product offering happen to be addressed and using the Playtech advertising and marketing agreement about to be leveraged, we count on sustainable medium term on line market place share gains, group earnings recovery and strong money generation,” Carter mentioned inside a note to clients.