New analysis from H2 Gambling Capital (H2GC) suggests that planned UK gambling tax increases may generate roughly £800 million ($1.06 billion)—only half of the Treasury’s forecasted windfall. At the same time, H2GC warns that the UK’s black market could more than double in size by FY28 if the tax rises go ahead.
Previously, the Office of Budgetary Responsibility (OBR) projected up to £1.6 billion in additional tax income. This estimate was later adjusted to £1.1 billion, accounting for expected changes in player behaviour—reduced bonuses and some users migrating to unlicensed platforms. H2GC’s analysis indicates the actual increase may be even lower, around £800 million, once behavioural changes are factored in.
In short
- UK gambling tax rise may generate only £800M by FY28—about half of the Treasury’s original £1.6B forecast, according to H2GC.
- iGaming hit hardest: GGR could drop 25%, while sports betting may fall 11% due to higher duties and behavioural changes.
- Black market could more than double, as players move to unlicensed sites in search of better bonuses and promotions.
- Industry warns of reduced bonuses, spending cutbacks, and potential job losses, highlighting broader risks to the UK gambling market.
iGaming to Bear the Brunt
The biggest impact is expected in the iGaming sector, which faces a new 40% remote gaming duty from April 2026. H2GC’s “static” calculation—before player behavioural adjustments—estimated a £1.35 billion increase in tax receipts by FY28. After factoring in changes, this drops to £649 million, almost half the initial projection.
Sports betting will also see a rate rise, from 15% to 25% in April 2027. Static estimates put extra revenue at £204 million, but behavioural changes reduce this to £149 million.
Chancellor Rachel Reeves confirmed the changes in the autumn budget. The adjustments include:
- Remote gaming duty: 21% → 40% (April 2026)
- New general betting duty: 15% → 25% for online betting profit (April 2027)
- Exemptions: self-service terminals, spread betting, pool bets, horse racing
Higher Taxes Could Shrink Revenue
H2GC predicts that gross gaming yield (GGY) and gross gaming revenue (GGR) could fall as operators withdraw from the UK and players shift to offshore sites.
- FY28 GGY: £6.69B with tax rise vs. £7.79B at current rates (-14%)
- iGaming: -16%
- Sports betting: -8%
- FY28 GGR: £7.12B with tax rise vs. £9.14B at current rates (-22%)
- iGaming: -25%
- Sports betting: -11%
Black Market Could Double
Much of the behavioural change is linked to players moving to unlicensed sites. H2GC forecasts:
- Current channelisation (onshore market share) FY28: 94% overall, 97% sports, 93% iGaming
- With new rates: 87% overall, 94% sports, 83% iGaming
Offshore GGY could be 111% higher, and GGR 110% higher, effectively doubling the black market.
“Politicians may see reduced onshore activity as a win for revenue,” H2GC said. “But the growth of the illegal market and the negative implications for player welfare will be largely ignored.”
Industry Pushback
The announcement drew strong criticism from operators. Key concerns include:
- Increased traffic to black market sites
- Reduced bonus offerings
- Spending cutbacks
- Potential job losses as operators adjust to higher taxes
The industry warns that while the Treasury may collect more in tax, the wider UK gambling market could shrink significantly.
