Gambling tax pressure reshapes operator marketing strategies

Gambling tax pressure reshapes operator marketing strategies, Pexels CC0
Key Takeaways
- Rising taxes are pushing operators to cut marketing budgets
- Shift from brand to performance marketing is accelerating
- Smaller operators face growing pressure to compete
The increase in gambling taxes mean that operators are now looking at their marketing. Spending cuts are one of the quickest ways they can protect margins. In a recent column for iGaming Expert, former 888 CEO Itai Pazner discussed how these changes are already changing strategy across the sector. This is particularly pertinent for the UK because tax pressure has intensified. Pazner’s analysis suggests that while reducing spend may offer short-term relief, it could also have longer-term consequences for competition and growth.
Marketing spend under pressure from tax increases
According to Pazner, higher tax rates are tightening margins and leaving operators with fewer levers to pull. Marketing is one of the most immediate areas for adjustment. Marketing budgets can be reduced quickly. This is unlike staffing or infrastructure costs. However, this comes with obvious disadvantages. Spending less means being less visible. In turn, that affects customer acquisition and long-term revenue.
Historically, operators used around 20–30% of net gaming revenue to acquisition marketing. Bonuses and incentives were a further 20–25% of gross gaming revenue.
Under previous tax regimes, this meant EBITDA margins of 15–25%. Tax rises put strain on these margins.
Shift toward performance marketing accelerates
Pazner said many are moving away from brand-led marketing towards performance-driven channels. These include paid search, affiliates and programmatic advertising. This is where returns can be tracked more directly.
Brand marketing, like sponsorships and large-scale campaigns, is often harder to measure and more expensive to maintain. We can see this is being scaled back. Operators have reduced or withdrawn from high-profile sponsorships, particularly in horse racing. One example of this is Bet365’s withdrawal from sponsoring several horse racing events like Cheltenham, the Craven Meeting and the Old Newton Cup.
Making these changes can improve short-term efficiency. However, Pazner warns it may weaken long-term brand strength. Brand campaigns tend to drive awareness, loyalty and organic traffic. These are harder to replicate through purely transactional marketing.
Competitive gap between large and small operators
The impact is not uniform across the market. Larger operators with established brands are better positioned to reduce spend without losing visibility.
Retail presence also plays a role. High street operators benefit from constant physical exposure. They can reinforce brand recognition with no additional marketing cost. Smaller operators, though, may need to cut more aggressively. Some may end up having to exit the market entirely as costs rise.
Should this happen, there will be increased concentration of larger brands.
AI and data reshape customer marketing
Artificial intelligence is also being used to improve marketing efficiency. AI-driven CRM systems mean more personalised offers and communication.
Operators can tailor incentives to individual behaviour instead of being broader. This can improve engagement and reduce unnecessary bonus spend.
Automation is also reducing manual workloads. This helps in areas like player management and campaign execution.
Pazner notes that some of the most advanced performance marketing techniques are already being used in social gaming. This suggests that real-money operators may look to adopt similar approaches.
Balancing retention and black market risks
Bonus strategies are also changing as operators try to cut costs. New bonus rules in the UK are also part of the change. Reducing incentives can improve margins. But, it may also push players toward unregulated platforms that have more generous promotions.
Operators are exploring gamification and loyalty systems to maintain engagement and to try and counter the black-market offers available.
Pazner concludes that while rising taxes create immediate financial pressure, they may also drive greater efficiency and innovation across the sector.
For operators that adapt, the changes could strengthen their long-term competitiveness. For others, the new environment may prove more challenging to navigate.
Paul Skidmore is a content writer specializing in online casinos and sports betting, currently writing for Casino.com. With 7+ years of experience in the iGaming industry, I create expert content on real money casinos, bonuses, and game guides. My background also includes writing across travel, business, tech, and sports, giving me a broad perspective that helps explain complex topics in a clear and engaging way.
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