When HM Treasury launched its consultation on reforming online gambling taxes, the favoured outcome in iGaming circles was a new, unified Remote Betting and Gaming Duty that would combine all remote gambling products under a single tax. The promise was administrative simplicity and a regulatory framework better aligned with how players now move between casino, sports betting, and other offerings.
The Unified Tax That Never Arrived
By the time the reforms were unveiled in the November 2025 budget, the unified duty did not survive the journey from consultation to legislation. Instead, the government opted for a differentiated tax model.
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From April 1 2026, the duty on remote gaming will increase from 21% to 40%.
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From April 1 2027, the remote online betting duty will go from 15% to 25%, though with specific exclusions. Bets on UK horse racing, for example, remain taxed under the existing 15% levy-linked structure.
On paper, the changes still deliver on the government’s revenue goal with a reform that is projected to raise more than £1.1 billion per year by 2029–30.
But in real terms, this is a clear departure from the earlier promise of simplification and convergence. What started as a single-duty consultation has concluded with a tiered system that taxes gambling products differently and intensifies the fiscal separation between casino-style gaming and betting.
In effect, the consultation period closed, the unified model was scrapped, and the UK’s gambling-tax debate has now moved from conversation into action.
From Simplification to Segmentation
What ultimately emerged from the 2025 reform process was not the administrative streamlining that had originally been promised, but a clear change in direction in how remote gambling is now being taxed. The initial logic of simplification has been replaced by a model that places products back into defined fiscal categories.
Under the final structure announced in the November 2025 Budget, online casino-style gaming is treated as a distinct risk class from remote betting, and taxed accordingly. This is not merely a technical adjustment. It reflects a deliberate policy judgement about where the government believes financial pressure should now reside within the sector.
In official terms, the decision is framed in terms of harm. Casino products, especially online slots and instant-win games, are cited by the government as carrying higher risk profiles and lower operating costs compared with remote betting, which is the rationale offered for the steep rise in the remote gaming duty. Betting, by comparison, remains more closely associated with sport, racing, and long-established retail channels.
There is also a political and regulatory dimension that we should not overlook. The government’s own White Paper on gambling - 2023 High Stakes: Gambling Reform for the Digital Age - set out a broad agenda for updating regulation to reflect the digital age. Among its aims were consumer protection, harm reduction, and modernising the regulation and taxation of gambling products in light of new risks introduced by online platforms. The new duty extends that logic into fiscal policy, using tax rates as an additional lever rather than treating duty purely as a conventional source of public revenue.
In practical terms, this marks a clear departure from convergence. The reform does not unify products under a single digital definition of gambling, as the consultation once explored under the now-abandoned unified duty proposal. Instead, it formally re-categorises them, applying heavier burdens to casino-style gaming. And in doing so, it reshapes the commercial core of the UK market, setting the stage for why online casino, in particular, now finds itself the most severely hit vertical of the new tax regime.
When Casino Maths Stop Working the Same Way
The scale of the policy shift becomes harder to ignore when it is translated from percentage points into operational reality. A move from 21% to 40% does not merely narrow margins but changes the arithmetic that sets the basis for how the product is built, priced, and sustained.
For UK operators, the higher duty leaves less room between what players stake, what is paid back in winnings, and what it costs to acquire and manage those players. In plain terms, game economics come under immediate pressure. Higher effective taxation reduces the room for competitive RTPs, restricts bonus funding, and alters the commercial balance between in-house content and third-party suppliers. The traditional trade-offs that have shaped the UK casino offer for years will begin to change.
Supplier negotiations are likely to feel that pressure most directly. When duty absorbs a larger share of gross gaming yield, operators must scrutinise content costs more closely, particularly for premium titles and revenue-share agreements. And the knock-on effect is not confined to casino operators alone. It travels upstream into the development and distribution chain.
The ability to absorb that pressure will not be evenly distributed. Tier-1 gaming groups with diversified international revenue and retail venues are better placed to adjust without making rapid cutbacks. Mid-tier operators and challenger brands, on the other hand, are far more exposed to changes. Furthermore, for those whose profitability is built primarily on the UK online casino, their room for manoeuvre is much more limited.
This is why the 40% figure has become the key element of the reform. Seen in this light, it’s not just about margins but the wider implications of how higher costs change what operators can realistically offer players.
Betting Wasn’t Spared, but Spared the Worst
The impact does not stop at casino. From April 2027, the duty on remote betting will rise from 15% to 25%, pulling sportsbook operators into the recalibration as well. For operators whose UK revenues are weighted heavily towards sportsbook, that change alone will reshape margins, pricing strategy, and promotional spend.
Yet, in the context of a 40% levy on online casino activities, betting has clearly been treated more lightly. The margin between the two rates is wide enough to indicate more than a simple revenue measure. It reflects a clear policy distinction in how different forms of remote gambling are viewed, taxed, and, ultimately, prioritised.
The specific exclusions only underline the policy divide. Horse racing, long tied to betting duty and levy funding, remains protected at its existing tax rate. Retail betting, too, retains its current treatment. These decisions anchor betting to sport, physical venues, and established funding structures that the government has shown little appetite to disrupt.
In practical terms, this creates a two-speed tax environment within UK gambling. Casino-style gaming absorbs the heaviest fiscal burden. Betting is drawn into the higher-cost frame of the reform, but falls far short of the duty now attached to iGaming.
Taken together, the structure now draws a clear line between “sport” and “gaming” in the way gambling is taxed. And it is along that line that operators are beginning to reassess product balance, investment priorities, and their long-term exposure to the UK market.
How the Market is Responding
Since the announcement, there has been no immediate rush to the exit door, but the first signs of strategic repositioning are now on record. One of the most visible moves has come from Sky Bet, which has relocated its headquarters to Malta. The transition, reportedly driven by ‘efficiency and cost reduction’, is widely interpreted as a response to the looming tax increases. Industry observers estimate Sky Bet could save as much as £55 million a year.
At the same time, publicly-listed gambling firms saw their stock prices tumble immediately after the new duties were made public. By midday on November 26, shares in top firms such as Entain, Evoke Group (owner of William Hill), and others fell by between 1% and 19%. Some firms followed with profit warnings or downward revisions of short-term earnings forecasts.
The trade body for the sector, Betting and Gaming Council (BGC), was quick to respond. The organisation described the tax rises as a “hammer blow” to regulated operators and warned that steep tax burdens could push players and revenue toward unregulated markets. Alongside potential consumer migration, the BGC has flagged risks to employment, industry investment, and the long-term viability of some operators.
Analyst sentiment also turned cautious. Some have emphasised that the combined effect of higher duty, weaker player incentives (bonuses, promotions), and increased cost pressure could force smaller or mid-tier operators to reduce market presence or even consider exiting the UK market altogether.
Significantly, while the industry has not yet seen a broad exodus, there's evidence that strategic repositioning is under way. In short, the budget has triggered a first wave of structural adjustment in UK iGaming, not a collapse, but a clear repositioning. Operators, investors, and regulators alike are watching closely.
A Two-Year Reset Window
The structure of the reform has created a staggered adjustment period that now stretches across two financial years. The 40% duty on online casinos arrives in April 2026. The higher 25% rate on remote betting follows a year later, in April 2027. Between those dates lies a natural adjustment period that gives operators time to reassess. Capital allocation decisions that might otherwise have been delayed are now being brought forward. Investment is being re-evaluated by vertical. Moreover, the new cost profile is already feeding into decisions on product development, marketing scale, and where to invest next.
Has the UK Changed the Shape of Its Market?
Taken at face value, the reform can be read as a revision of duty rates. In market terms, however, it functions as something more fundamental. By sharply separating the fiscal treatment of casino and betting, the UK has effectively re-priced participation across its core online gambling verticals.
For operators, the impact of this change does not stop at balance sheets. As cost pressure increases, the dynamics of supplier relationships change with it. Platform providers, trading and risk partners, data suppliers, and content studios now affect commercial margins more directly than in the past. Operating agreements that once worked on scale and volume are being tested under a tighter cost base.
This, in turn, places greater weight on the type of supplier alignment operators pursue. Not simply who can deliver coverage or content, but who can operate efficiently under heavier fiscal constraints, who can adapt pricing and commercial models as duty rises, and who can support product strategy when margin for error is reduced.
At board level, this is where the underlying strategic implications begin to crystallise. The UK remains one of the largest regulated gambling markets globally, offering regulatory credibility and long-term relevance. But the reform appears to be tilting it from a default growth market to one where broad, aggressive, or default growth no longer makes sense for everyone. Exposure will almost certainly be reassessed. Capital will be allocated more cautiously. And supplier choice now carries heightened strategic consequence.
If you’re reassessing your UK exposure under the new tax framework, aligning your platform, trading, and data partnerships with that reality is now a strategic priority.
Book a tailored platform and performance review to explore how your supplier stack can remain commercially efficient as higher gambling duties reshape UK market economics.
