UK gambling tax hike enters next phase despite stable early trading

Six weeks after the UK doubled its Remote Gaming Duty (RGD), the gambling industry is still waiting to see the full consequences. Major operators have avoided any immediate financial shock, but many experts think the real impact will emerge gradually. Companies will need to adjust their products, marketing strategies and customer acquisition models. Concerns are also growing over market consolidation and the risk of players choosing to use unlicensed operators.

Industry expects delayed impact

The increase in  RGD from 21% to 40% happened on 1 April. Operators like Entain and Evoke have acknowledged the additional burden. Public trading updates suggest the sector is relatively stable for now.

However, legal and regulatory experts believe it is too early to judge the true effect of the tax rise. Many operators are still within their accounting cycles. Also, customers have yet to fully feel changes to bonuses, promotions and product value.

Industry advisers argue that behavioural changes often take months to develop. Players may only gradually notice lower value through reduced bonus offers, shorter playing sessions or less generous return-to-player rates.

Operators face difficult choices

The higher tax rate is already forcing operators to review their business models. Potential responses include:

• Reducing marketing spend.
• Cutting promotional offers.
• Lowering RTPs.
• Investing more heavily in automation.

According to industry estimates, the new duty rate could account for around half of net gaming revenue after bonuses if existing promotional structures remain unchanged. This is expected to place significant pressure on profit margins.

Some consequences are already beginning to appear. Lottomatrix and Small Screen Casinos have reportedly exited the UK market. Larger operators have warned investors about the additional costs created by the tax increase. Evoke, for example, has projected between £125 million and £135 million in extra annual duty costs, with around £80 million affecting its 2026 financial year.

Consolidation and black market concerns grow

Many industry observers believe larger operators are better positioned to absorb rising costs. This is thanks to their scale and international diversification. Smaller and mid-sized businesses may face greater challenges as compliance costs and tax obligations continue to rise.

Concerns are mounting over channelisation too. The tax increase coincides with the Gambling Commission’s proposed financial risk assessments. This is creating fears that a combination of higher costs and increased regulation could encourage some players to seek alternatives outside the regulated market.

Several industry figures have pointed to examples in other European markets where tighter regulation and higher taxes were followed by growth in unlicensed gambling activity. Critics argue that lower RTPs, reduced bonuses and additional affordability measures could make licensed operators less competitive compared with offshore sites.

“Customers on offshore sites are getting RTPs of 96%-98%, features that they love like bonus buys, auto spins and turbo spins, and significant free spins and bonuses. The licensed alternative has worse RTPs, smaller bonuses, mandatory affordability checks, deposit limits and increasingly suspicious-feeling intervention prompts.” – Vaughn Lewis, managing director at Teise Advisory.

Industry awaits clearer picture

The UK is one of the world's most respected regulated gambling markets. Industry lawyers say that overseas operators are still pursuing UK licences despite the increased costs and regulatory requirements.

The Treasury expects the tax changes to generate more than £1 billion in additional annual revenue, while operators continue to assess how best to protect margins and maintain customer appeal.

The real test is likely to come later this year. This is when the combined impact of higher taxation, financial risk assessments and product changes becomes more visible in player behaviour and market performance.