What Impact Will The Increased Gambling Tax Have On UK Online Casinos?

The UK government’s recent overhaul of gambling duties, most notably a near-doubling of the Remote Gaming Duty (RGD) from 21% to 40% from 1 April 2026, marks one of the biggest changes to the taxation of online casinos in decades. It’s a move framed around concerns about gambling-related harm and a desire to raise revenue, but it will ripple across operators, customers, employees, and the wider gambling ecosystem in several clear (and some less obvious) ways.

Below, I unpack the likely consequences: immediate financial effects, operator strategy responses, player experience and behaviour, wider market dynamics (including the risk of unregulated alternatives), and the social and political trade-offs

Immediate financial hit: profitability and prices

An increase from 21% to 40% RGD is huge in tax terms. For online casino operators that pay RGD on remote gaming profits, this will substantially compress margins unless firms can pass the cost to players or find efficiencies. Government modelling and commentary indicate the package is expected to raise over £1 billion per year, which gives a scale to the hit operators must absorb or pass on.

The arithmetic is straightforward: if a game’s operator's profit after the player wins currently faces a 21% levy, doubling that rate slices a large chunk out of the remaining profit pool. That forces operators to choose between (a) raising prices/house edge (i.e., reducing RTPs/promotions), (b) cutting costs (staff, marketing, customer offers), (c) shrinking UK operations, or (d) accepting lower returns for shareholders, or some combination thereof.

Evidence of impact is already surfacing. Large-scale operators have warned of material financial impacts, and one owner of major brands has estimated a six-figure-to-nine-figure annual burden that could force strategic reviews and divestments.

How operators are likely to respond

Rationalise product economics - Operators will reprice or withdraw the least profitable products. That often means higher volatility games, some slot titles with thin margins, or aggressive bonus deals will be scaled back. Industry modelling (commissioned by trade bodies) has highlighted these levers.

Reduce marketing & bonuses - Promotions and welcome bonuses for things like online slots are an easy early target. Expect smaller sign-up offers and tougher wagering requirements on bonuses aimed at protecting margin.

Cost-cutting and consolidation - Staffing, tech investments, and even market footprints may shrink. Some firms may scale back UK-specific investment or consider selling UK-focused assets to operators with more global diversification. Recent corporate filings and reporting indicate some groups are already exploring strategic options.

Product and jurisdiction shifts - Operators with global licences may shift focus to markets with lower effective tax burdens. Conversely, some firms with large UK exposure will look for ways to optimise operations (e.g., changing product mixes to bets taxed differently). The government has left some betting categories (e.g., some horse-racing-related bets) outside the same rate, which may influence product strategies.

Players: price, experience and behaviour

If operators pass through the tax, players will see it in one or more ways: worse RTP (long-term payback), fewer promotions, or higher minimum stakes in some products. That reduces the attractiveness of regulated UK sites.

A key behavioural risk for policymakers and operators alike is migration to unregulated/overseas sites. If the perceived value gap becomes large, price-sensitive players, particularly heavier users, may seek offshore or grey-market alternatives where RTPs, promotions, or access remain more generous. This not only undermines UK tax receipts but weakens consumer protections and responsible-gambling safeguards. Several industry and public-policy analyses highlight this leakage risk when taxes or restrictions widen the gap with offshore markets.

However, not all players are price-sensitive to the same degree. Casual players may barely notice smaller promotions disappear, while high-value players (VIPs) will notice quickly and have more options to move.

Market structure: winners and losers

The tax change is a re-sorting event:

Large, diversified operators with global footprints or deeper balance sheets are best placed to absorb or manage the shock, and may gain market share if smaller rivals fail or retrench. Analysts expect credit ratings and leverage metrics to come under pressure for some groups.

Pure-play UK operators or highly leveraged groups face the most acute stress and may pursue consolidation, asset disposals, or restructuring. Investor reactions (share movements, strategic reviews) suggest this is already happening.

Smaller/independent operators risk failure or exit, which could shrink the diversity of offerings and reduce competition, a longer-term negative for consumers.

Jobs, shops and the land-based sector

The Treasury framed the change partly as preserving lower taxes for face-to-face gambling (e.g., betting shops) while targeting remote gaming where harm is perceived to be greater. That means land-based operators are relatively protected, potentially shielding high street jobs in betting shops, but online-specific roles (customer service, digital marketing, product teams) could be vulnerable as operators cut costs or centralise functions. Trade body studies and industry forecasts model potential job losses and regional impacts, but numbers depend heavily on how much cost is passed to customers versus absorbed.

Public-health and social-policy angle

The government justifies the higher RGD partly on the basis that online casino products are associated with higher gambling harm. The tax increase is thus both fiscal and normative: it raises money and acts as a market signal disincentivising certain products. Critics argue that taxation alone is a blunt instrument: without targeted restrictions, higher taxes may harm lower-income users disproportionately or push consumers to unregulated options where harm could be greater. Independent policy analyses urge combining fiscal measures with strengthened consumer protections and treatment resources to address harm meaningfully.

Risks: black markets and unintended consequences

A core risk is regulatory displacement. If regulated operators significantly degrade product value while offshore operators remain attractive, illicit markets expand. That undermines both tax receipts and consumer safety. The government and Gambling Commission will need to double down on enforcement, blocking unlicensed operators and improving detection, but enforcement is costly and never perfect. Reports modelling tax hikes explicitly flag this leakage risk as a major sensitivity.

What this means for investors and stakeholders

Investors should model lower UK margins and scenario-test outcomes where either (a) operators pass most costs to consumers, (b) they absorb costs but shrink margins, or (c) customer churn to offshore sites increases. Credit agencies and analysts are repricing risk for some groups accordingly.

Regulators and policymakers must monitor market displacement, harm metrics, and tax receipts, and be ready to tweak policies if outcomes diverge from objectives.

Consumers will likely see smaller offers and possible pricing changes; those concerned about value for money may explore alternatives, with the associated risks.

Bottom line - balancing fiscal, public-health and market stability goals

The RGD increase is a deliberate policy choice: raise revenue and target products tied to higher harm. But the economic and behavioural feedback loops mean outcomes will be shaped by operator responses, enforcement against unregulated competitors, and player behaviour. The near-term effects are likely to be:

Lower operator margins or higher consumer prices.

Consolidation pressure and strategic reviews among UK-centric and highly leveraged firms.

Risks of customer migration to offshore markets, unless enforcement and product offerings keep the regulated market competitive and safe.

If the policy’s aim is to reduce harm and raise revenue without hollowing out the regulated market, the government and regulator should pair the tax changes with strong enforcement against unlicensed operators, targeted prevention and treatment funding, and monitoring to ensure the tax doesn’t simply export harms abroad. Independent assessment and agile policy tweaks will be essential as the tax changes come into force from April 2026 and beyond.