The Gambling Duty Hikes and the Black Market Threat
Robin Prince · Posted on: December 1st 2025 · read
The government’s new policy on gambling duties is set to generate over £1 billion annually for the Exchequer, but it comes with significant commercial and regulatory risks that cannot be ignored.
Instead of adopting a single, "Remote Betting and Gaming Duty" as previously consulted on, the government has chosen a targeted approach, dramatically increasing the duty on high-margin, high-harm activities while creating a critical tax differential.
This targeted approach has a substantial risk of driving consumers towards unregulated, illegal platforms.
The New Duty Structure
The policy introduces three main changes, each with a distinct impact on the betting sector's operating models:
Remote Gaming Duty (RGD) Hike
New Remote Betting Duty (GBD) Rate
Bingo Duty Abolition
- Remote Gaming Duty (RGD) Hike: The most significant change is the increase of RGD from 21% to 40% (effective 1 April 2026). This targets online slots and casino games, which the government labels as having lower operating costs and higher potential for harm.
- New Remote Betting Duty (GBD) Rate: A new remote rate of 25% is introduced for online sports betting (effective 1 April 2027), rising from the current 15% General Betting Duty rate. Crucially, remote bets on UK horse racing remain at the de-facto 25% rate (due to the existing 10% Horserace betting levy contribution), and land-based retail betting remains at 15%.
- Bingo Duty Abolition: Bingo Duty is abolished entirely from 1 April 2026, simplifying the tax for this sector and supporting lower-risk activities.
For remote betting and gaming providers, the RGD increase to 40% is a powerful challenge to their profit margins on what is typically their most profitable product vertical. The 25% GBD rate for sports betting, while lower than RGD, still represents a material increase in the cost of operation.
The Black Market Conundrum
One of the most significant unintended consequences of steep tax increases in regulated gambling is the risk of driving activity toward unregulated, illicit operators. Government impact materials explicitly recognise this possibility. They note that some individuals “could choose … to gamble through the illegal gambling market” if regulated online gambling becomes more expensive or offers less attractive returns.
This poses several risks:
- Loss of consumer protections (e.g., responsible-gambling safeguards, age verification, fairness and payout assurance).
- Reduced transparency and traceability resulting in increased risks for players.
- Less tax revenue for the state overall if users shift outside the regulated market.
- Reputational and compliance risks for operators and payment providers if linked, directly or indirectly, to unlicensed platforms.
An exodus from regulated provider would create a lose-lose scenario, it undercuts the revenue goals of the government, and it pushes vulnerable consumers into an environment with no safeguards, defeating the government's stated objective to disincentivise harm.
Summary
The industry now faces a complex task, absorbing a massive tax increase while maintaining the product quality necessary to keep customers within the highly regulated, safe ecosystem. Failure to strike this balance will be a direct commercial gift to the black market.
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