Inspired Entertainment Cuts 2026 EBITDA Guidance to $109–112M as Brazil Ban and UK Duty Weigh
Inspired Entertainment lowers its 2026 adjusted EBITDA target to $109–112M as Brazil's online ban hits Virtual Sports; Q3 revenue falls 29% to $61.4M.
Inspired Entertainment lowered its fiscal 2026 adjusted EBITDA target to $109–112 million from $112–118 million on 5 November 2026, blaming primarily the shutdown of regulated online gambling in Brazil, as it reported third-quarter revenue down 29% to $61.4 million.
The Nasdaq-listed supplier of gaming machines, Virtual Sports and interactive content filed the figures as Exhibit 99.1 to a Form 8-K with the US Securities and Exchange Commission (SEC). The release also carried a UK tax warning: Machine Games Duty is set to rise again in April 2027.
Guidance cut: Brazil is the main driver
The new range sits entirely below the old midpoint. Inspired said the Brazil shutdown affects a business representing about 5% of total revenue. On the earnings call, management said the impact falls predominantly on Virtual Sports, according to Seeking Alpha's call summary.
In a September update, Inspired said substantially all of its Brazil revenue would be affected while the ban lasts. It estimated Q4 revenue would be about $3 million lower if the ban runs through 2026, and said trade associations were weighing legal challenges, including injunction requests. That outlook did not assume a reversal. Management now expects only modest growth in 2027 on the assumption that Brazil stays closed.
| Guidance item | Previous | Current |
|---|---|---|
| FY2026 adjusted EBITDA | $112–118 million | $109–112 million |
| Full-year free cash flow conversion | 20% target | Slightly below 20% |
| Free cash flow conversion, year to date | n/a | About 22% |
Free cash flow conversion measures how much of adjusted EBITDA turns into free cash. Free cash flow was $17.6 million year to date, according to the call summary. The outlook assumes the GBP:USD exchange rate stays broadly at current levels.
Q3 2026 results: revenue down, margin at a record
Revenue for the three months to 30 September 2026 fell to $61.4 million from $86.2 million. Adjusted EBITDA, which strips out items such as share-based compensation and one-off costs, fell 13% to $28.2 million, but margin widened nine points.
| Metric | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
| Total revenue | $61.4m | $86.2m | -29% |
| Retail Solutions revenue | $37.4m | $61.8m | -39% |
| Virtual Sports revenue | $8.5m | $9.3m | -9% |
| Interactive revenue | $15.5m | $15.1m | +3% |
| Adjusted EBITDA | $28.2m | $32.3m | -13% |
| Adjusted EBITDA margin | 46% | 37% | +9 points |
| Net operating income | $10.3m | $9.7m | +6% |
| Net loss | $0.1m | $1.9m | Narrower |
| Adjusted net income | $2.8m | $8.2m | -66% |
Adjusted EBITDA rose 4% from the second quarter. Inspired calls the 46% margin a record, excluding periods that included the UK VAT rebate.
By segment, adjusted EBITDA was $19.6 million in Retail Solutions (down 13%), $5.7 million in Virtual Sports (down 14%) and $10.2 million in Interactive (down 5%), with corporate costs of $7.3 million. Nine-month revenue was $179.4 million, down 21% from $226.9 million, while nine-month adjusted EBITDA was $78.9 million against $79.1 million.
Portfolio changes explain most of the revenue fall
The headline decline is largely structural. Inspired sold its UK Holiday Parks business on 7 November 2025 and restructured its Pubs business. Excluding those two items, revenue rose about 4% year on year.
That growth came despite a tax increase: UK remote gaming duty, the levy on online casino and slots operators, rose from 21% to 40% in April 2026. Adjusting for that as well, revenue grew about 9%, and adjusted EBITDA grew at roughly twice that pace, according to the company.
The pattern is familiar across operators reporting this season, as tax and regulatory costs reshape guidance. DraftKings, for example, cut its 2026 EBITDA outlook for a different reason, while Rush Street Interactive's Q3 results showed how a US-focused operator is tracking.
UK Machine Games Duty rises to 25% in April 2027
Inspired said the UK Budget confirmed that Machine Games Duty (MGD), the tax on gaming machine takings, will rise from 20% to 25% from April 2027. Retail and land-based machine operators carry the most direct exposure.
CEO Brooks Pierce called the increase "disappointing but manageable". Inspired said it would pursue "disciplined mitigation measures" against the UK duty change. The company did not detail those measures in the release.
Launches and operational progress
The release listed several commercial milestones that sit outside the Brazil and UK tax pressure:
- Virtual Sports launched on the Massachusetts Lottery's new iLottery platform, powered by Aristocrat Interactive, in Q4 2026.
- Inspired expanded its partnership with FanDuel to bring Virtual Sports to FanDuel's online customers in Q4 2026.
- Interactive and Virtual Sports went live on day one of the newly regulated Alberta market, a province whose gambling policy has shifted in recent years, as covered in Alberta's gambling support funding cuts.
- More than 200 of 310 Velos electronic table game terminals have been delivered to Genting Casino.
- 300 lottery terminals were installed for LEIDSA in the Dominican Republic, part of a programme of about 3,000 terminals.
The Genting and LEIDSA work continues Inspired's hardware-led expansion in regulated markets, following earlier deals such as its VLT fleet expansion with OPAP and its bet365 partnership in Mexico.
What operators and suppliers should watch
Two regulatory variables now drive Inspired's numbers: whether Brazil's regulated online market reopens, and how the UK duty increases feed through to machine and remote revenue. The company's 2027 outlook assumes Brazil stays shut, so any reversal would be upside to that view. The April 2027 MGD change is a fixed cost that mitigation, rather than market recovery, must address.
Status reviewed on 6 November 2026. Figures come from Inspired Entertainment's third-quarter 2026 results release filed with the SEC, with call and Brazil background from Seeking Alpha and Stock Titan. More finance news and EMEA coverage.
Frequently asked questions
What is Inspired Entertainment's new 2026 EBITDA guidance?
Inspired now expects fiscal 2026 adjusted EBITDA of $109 million to $112 million, down from a prior range of $112 million to $118 million. The company says the cut is primarily due to the shutdown of regulated online gambling in Brazil, which affects a business representing about 5% of total revenue.
Why did Inspired's Q3 2026 revenue fall 29%?
Revenue dropped from $86.2 million to $61.4 million mainly because Inspired divested its UK Holiday Parks business on 7 November 2025 and restructured its Pubs business. Excluding those changes, revenue rose about 4% year on year, even with UK remote gaming duty rising from 21% to 40% in April 2026.
What is the UK Machine Games Duty rise?
Machine Games Duty is the UK tax on gaming machine takings. According to Inspired, the UK Budget confirmed it will rise from 20% to 25% from April 2027. CEO Brooks Pierce called the increase disappointing but manageable, and the company says it will pursue disciplined mitigation measures.
How is the Brazil ban affecting Inspired's business?
Brazil's shutdown of regulated online gambling hits a business that makes up about 5% of Inspired's revenue, mainly Virtual Sports. In September the company estimated Q4 revenue would be about $3 million lower if the ban lasts through 2026. Management expects only modest growth in 2027 if Brazil stays closed.
What was Inspired's Q3 2026 adjusted EBITDA margin?
Adjusted EBITDA was $28.2 million on $61.4 million of revenue, a 46% margin versus 37% in Q3 2025. Inspired describes it as a record, excluding periods that included the UK VAT rebate. Adjusted EBITDA rose 4% from the previous quarter but fell 13% year on year.
