Entain downgrade by Peel Hunt and UK public health risks

When the Entain downgrade by Peel Hunt hit the market, it landed as more than a routine broker note. It was a clear signal that, in the UK, the investment story for major gambling operators is becoming increasingly tied to a single, difficult theme, gambling is being reframed as a public health issue, not simply a consumer pastime.

In its note published 13 January, Peel Hunt cut Entain’s target price to £8.50 from £11 and reduced its recommendation to Add from Buy. While the analysts acknowledged multiple moving parts, including a recently announced UK tax hike and improving trading at BetMGM, the message that stood out was that the UK narrative around gambling harms is swinging in a direction that may be hard to reverse.

For industry watchers, this is not just about Entain. It is about how UK regulation, political framing, and public sentiment can compress valuation, change strategic priorities, and reshape what “good performance” looks like for operators, even when parts of the business are growing.

What Peel Hunt said and what it implies

Peel Hunt analysts Ivor Jones and Douglas Jack described an “unhealthy pendulum”, arguing that the UK increasingly treats gambling as a public health issue rather than “a fun pursuit”, and they added it was hard to see what would halt that swing. That framing matters because it suggests risk is not only regulatory detail, it is the underlying direction of travel.

In practical terms, a public health lens tends to widen the number of stakeholders who feel entitled, or mandated, to shape gambling policy. Peel Hunt pointed to how much of the UK state engaged with gambling, including regulators, gambling harms treatment and research organisations, and the health ministry, has in recent years included more individuals who hold this view. For operators and investors, that translates into longer cycles of scrutiny and potentially tighter expectations around customer outcomes.

Taxes, trading, and the bigger narrative shift

Peel Hunt referenced several factors impacting Entain, including the recently announced UK tax hike. Even without extra detail in the note, the existence of a tax increase is itself an important reminder that the UK operating environment can change in ways that directly affect margins and planning assumptions.

At the same time, the analysts also noted improving trading at BetMGM, where Entain owns a 50% stake. That duality is key. Entain has growth engines and improving performance in parts of its footprint, but the UK backdrop can still dominate the investment conversation when the country’s policy framing is shifting.

This is where the downgrade becomes an industry case study. In mature regulated markets, operators can execute well commercially and still face valuation pressure if the market perceives structural headwinds, especially when those headwinds come from government, regulators, and public health institutions rather than from competitors.

Regulus Partners adds weight to the public health argument

Peel Hunt’s view did not emerge in isolation. The note sits alongside a broader debate that has been gaining momentum, including commentary from Regulus Partners. In an influential blog post published during the Christmas period, partner Dan Waugh argued that the UK industry risks being buried by the public health lobby, with gambling potentially placed in the same bucket as tobacco.

That comparison is stark, but it captures a fear many executives and investors recognise. If gambling is framed primarily as a harm product, rather than entertainment that requires safeguards, then policy outcomes can become more severe, public communication becomes more difficult, and the room for nuance narrows.

Waugh’s proposed response was not to avoid the debate, but to engage it with a different posture. He argued the solution was to put customer care at the centre of operator strategy, approach the debate from a position of expertise, respond constructively even if the subject matter is difficult, and reclaim the centre ground in the conversation. In today’s UK context, that is less a public relations exercise and more a strategic operating model question.

Entain’s UK and Ireland online performance looks better but the mix is shifting

One of the most important pieces of detail in Peel Hunt’s note is that it still credited progress. The analysts said Entain’s UK&I Online business “had turned a corner” in H1 2025, with revenue up 21% year on year and representing 25% of group adjusted EBITDA.

That should matter to anyone following operational momentum. However, Peel Hunt estimated this proportion will fall to 14% by 2027 due to UK duty increases. Meanwhile, the more diverse International Online business is expected to account for around 45% of group EBITDA by that time. The story here is not just growth, it is earnings mix under pressure in the home market and shifting toward international exposure.

This kind of mix change can be interpreted in two ways. Optimists may see diversification and reduced reliance on the UK. Skeptics may see a forced rebalancing driven by domestic policy and sentiment rather than by pure strategic choice. Either way, it underlines how UK regulation and taxation can influence not just results, but corporate identity.

Why the public health lens changes the rules of the game

Public health framing tends to expand the conversation beyond compliance and into prevention, treatment, and societal cost. That often means more scrutiny of customer journeys, marketing norms, and affordability practices, even if those specifics are not laid out in Peel Hunt’s short note.

It also changes how success is judged. When gambling is viewed as entertainment, “responsibility” can sometimes be treated as a set of guardrails. When it is viewed as public health, responsibility becomes central to legitimacy, and companies can be asked to prove not only that they follow rules, but that their business model delivers acceptable outcomes.

Peel Hunt’s “pendulum” language is important because it implies momentum. The analysts are effectively warning investors that even if near term trading improves, the market should price in a UK environment that may keep getting tougher, and may do so in ways that are difficult to predict.

What investors should watch next from Entain

Peel Hunt noted that the impact of UK duty changes remains uncertain and that clarity will likely take time to emerge. That uncertainty itself becomes a valuation factor, because investors dislike open ended risk, especially where multiple scenarios are plausible and the timetable for clarity is unclear.

The note also said Peel Hunt expects further detail on Entain’s revised UK strategy with the 5 March prelims. For markets, that date becomes a focal point. It is an opportunity for Entain to explain how it plans to protect profitability, maintain compliance, and position its brands and products in a UK environment that is increasingly defined by health-related narratives.

From an iGaming strategy perspective, those prelims will likely be judged on whether the company can credibly balance growth with customer protection and regulatory expectations. In the UK right now, that balance is not optional, it is the basis of sustainable participation.

How operators can respond when sentiment shifts against the category

Entain is not the only operator facing this challenge, but its scale and visibility make it a useful lens for the whole sector. Based on the themes cited by Peel Hunt and Regulus Partners, there are several broad approaches that become more important when the public health view gains ground.

• Put customer care at the centre of operator strategy, as Dan Waugh argued, which positions safer gambling as core business design rather than an add-on,
• Engage the debate from a position of expertise and respond constructively, even when the subject matter is difficult, which helps prevent the conversation being defined only by critics,
• Reclaim the centre ground in public discourse by demonstrating what good looks like in practice, so the industry is not automatically framed alongside products like tobacco.

None of these steps guarantee an immediate improvement in sentiment. But they do influence whether regulators and policymakers view the industry as capable of self-correction and partnership, or as something that must be tightly constrained.

Why the downgrade matters beyond Entain

Broker actions are often treated as short-term market noise, but this one is rooted in a structural thesis. Peel Hunt is arguing that the UK is moving toward a public health framing of gambling, and that this shift can affect long-term value. That is a different type of downgrade driver than a single quarter miss or a one-off operational stumble.

It also reflects the reality that iGaming does not exist in a vacuum. The sector sits at the intersection of technology, consumer behaviour, and regulation. When the regulatory and social narrative changes, everything downstream changes too, from product design priorities to marketing constraints to investor expectations.

In that sense, the Entain downgrade by Peel Hunt is less about predicting next week’s share price and more about highlighting the contours of the next few years in the UK market.

The takeaway for 2026 and beyond

Peel Hunt still sees positive elements in Entain’s story, including signs that UK&I Online improved in H1 2025 and that BetMGM trading is improving. Yet the downgrade underlines that, in the UK, the biggest variable may now be how firmly gambling is anchored to a public health agenda.

If the pendulum continues to swing, operators will need to treat safer gambling not as compliance theatre, but as a strategic differentiator and a foundation for legitimacy. If they do that well, they may help slow or stabilise the narrative. If they do not, they risk a future where their market access, economics, and brand freedom are increasingly constrained.

For Entain, the next major test is whether it can articulate a UK strategy that fits this new reality, while continuing to build a more international earnings mix. For the broader iGaming industry, this episode is a reminder that public health framing is not just an advocacy talking point, it is now a material factor in valuation and long-term planning.