UK gambling tax hike raises risk of offshore market growth

The UK government’s proposed overhaul of gambling duties has triggered fresh debate across the industry. While ministers argue the changes will strengthen public finances and rebalance land-based and online taxation, operators and analysts are questioning whether the scale of the increases could destabilise the regulated market. With Remote Gaming Duty set to almost double, attention is now turning to how businesses and consumers will respond — and whether unintended consequences may follow.

Remote Gaming Duty set for sharp increase

From April 2026, Remote Gaming Duty (RGD) will rise from 21% to 40%. The duty applies to online casino products:

• Slot games.
• Table games.
• Newer formats like crash games.

Online Betting Duty will increase from 15% to 25% in 2027. However, certain verticals like remote horse racing, spread betting and pool betting aren’t included in the rise.

Exchequer impact (£ million)

Estimates suggest these changes will generate an additional £1.1bn annually by the end of the decade. Officials have framed the reform as a necessary fiscal adjustment. They argue that the gambling sector can absorb higher taxation due to continued digital growth.

Margin pressure on operators

However, the size of the RGD increase has raised concerns. Operators are facing tighter compliance requirements, affordability checks and higher operational costs this year. A near doubling of RGD significantly compresses margins. This is particularly a problem for online casino verticals.

If companies want to save, their pricing structures might be affected. Attempts to offset these higher tax liabilities might come through in reduced promotional spend, lower bonus values or less competitive odds.

Industry stakeholders caution that the cumulative effect of regulatory tightening and taxation may narrow the commercial viability of certain products.

Channelisation and offshore risk

One of the core risks commentators warn of is the potential impact on channelisation. The UK has historically maintained strong consumer participation within the regulated framework.

If regulated operators become materially less competitive, there is concern that players may migrate to offshore platforms. These often offer higher returns, have fewer restrictions and more aggressive incentives.

Naturally, this shift would undermine consumer protections. And it could ultimately weaken long-term tax receipts too. Higher headline rates do not guarantee higher revenue if market participation declines or activity moves beyond regulatory reach.

Investment outlook under scrutiny

The proposed rates would position the UK among the higher-tax online gambling jurisdictions globally. That may influence future investment decisions.

Large incumbents are unlikely to exit the market. Smaller operators and new entrants, though, could reassess expansion plans. Reduced profitability may also slow innovation. Product development and safer gambling technology might take a hit.

The challenge for policymakers is in striking the right balance between fiscal objectives and keeping the regulated market competitive.

It’s high stakes for all

The new tax rates aim to increase public revenue, all while keeping a safe and structured gambling environment. The scale of the proposed increases, though, is huge. It’s one of the most severe tax adjustments in recent UK gambling history.

Whether it achieves its aims and strengthens public finances remains to be seen. It could unintentionally increase offshore growth. This will all depend on how operators and consumers respond once the new duties take effect.