How the UK’s New Gambling Tax Could Reshape the Online Casino Market

The UK government’s plan to raise the Remote Gaming Duty from 21% to 40% starting April 2026 is set to become one of the most significant regulatory shifts in the country’s online gambling industry. While the measure aims to increase tax revenue and strengthen oversight, global examples show that sharp tax hikes often lead to unintended consequences — including shrinking legal markets, operator withdrawal and growth of offshore gambling.

Impact on Operators: Lower Profitability and Exit Risks

A near-doubling of the tax rate will directly reduce operator margins, forcing companies to adjust business models, cut marketing budgets, reduce bonus offers and potentially leave the UK market altogether. Similar trends have already been observed in Europe.

• In the Netherlands, after taxes were raised to 34.2% in 2025, the government expected an additional €200 million in revenue, but instead recorded a €30 million shortfall compared with 2024.

• A PwC report shows that in European countries where gambling taxes exceed 25% of GGR, operator revenues grow only 9% annually, compared with 13% in countries with moderate taxation.

These examples suggest that UK-licensed brands may face declining profitability and higher operational risks after the tax increase.

Impact on Players: Fewer Bonuses and Migration to Offshore Sites

With tighter margins, operators are expected to reduce welcome bonuses, cashback and promotional campaigns. Players may increasingly turn to offshore platforms offering better offers — but with significantly lower consumer protection.

Global data reinforces this concern:

• France’s high tax burden contributed to 57% of all online gambling activity shifting to the black market.

• Sweden faces a 35% offshore rate, while the Netherlands reports 37%, according to PwC.

• In Germany, up to 80% of online slots play occurs through unlicensed sites, despite strict regulation and high taxation.

These figures highlight a clear pattern: when legal operators cannot compete with offshore alternatives, players naturally migrate to unregulated platforms — increasing risks of fraud, non-payment and problem gambling.

Impact on the UK Economy: More Tax Revenue vs. Shadow Market Growth

The government expects billions in additional revenue from the tax increase, but international experience suggests that expectations often exceed reality. If even a fraction of UK players shifts to offshore sites, the economic result may mirror the Netherlands’ decline in tax receipts or Sweden’s persistent struggle with channelisation rates.

There is also the risk of job losses among UK-licensed operators, reduced investment in technology and compliance, and overall reduction in market competitiveness.

Risks and Side Effects: Shadow Market Expansion and Lower Consumer Safety

Higher taxes historically correlate with:

• an expanding shadow gambling sector,

• weakened competitiveness of local operators,

• lower transparency and poorer consumer protection.

This has already been confirmed across multiple European markets analysed by PwC.

Conclusion: What to Expect

If the UK raises the duty to 40%, the market is likely to undergo structural change. Operators will tighten bonus policies, some may leave the market, and players could increasingly turn to offshore sites — reducing the effectiveness of the reform. While higher taxes may initially boost revenue, long-term outcomes could include a shrinking regulated sector and weaker consumer protection.