The five-percentage-point rise in MGD, announced by UK Chancellor John Healey on Wednesday, is considerably smaller than calls for a much higher 40% rate throughout the summer.
While some figures expressed cautious relief that the increase was not as steep as had been predicted, others have issued sharp warnings that this tax hike could accelerate a shift of customers toward unregulated gambling operators.
Operators and advisers have also highlighted that the new duty adds to several recent tax and regulatory changes affecting both retail and online gambling businesses.
In last year’s budget, then-UK Chancellor Rachel Reeves announced a near doubling in remote gaming duty (RGD) from 21% to 40%, while a new general betting duty for remote betting will come in next year at the rate of 25%, up from 15%.
Dan Waugh, partner at advisory firm Regulus, cautions against viewing the tax rise positively despite it being better than initially feared.
“If your income tax went up by a quarter overnight, you wouldn’t see that as a positive,” he tells iGB.
Waugh warned the increase could trigger further venue closures and job losses. He also said that constantly evolving fiscal policy risks making the UK seem unreliable to prospective investors.
Legal experts voiced similar concerns. Bethan Lloyd, partner at Wiggin, notes: “The industry is already very squeezed. A 5% increase on an industry that has very squashed margins is not ideal.”
She emphasises to iGB the risk to horse racing revenues given the reliance of many punters on retail betting shops rather than online platforms. She expects continued consolidation and cost-cutting in the sector but suggested advances in technology and new market entrants might ease some pressures over time.
Emerging threat of the illegal market
The strongest alarm comes from Ismail Vali, president of Gaming Compliance International, who describes the MGD increase as part of a “perfect storm” that encourages consumers to migrate towards an expanding illicit gambling market.
Vali highlighted data showing that the unregulated share of online gross gaming revenue in the UK has surged dramatically from 0.43% in 2020 to an estimated 9% by the end of 2025, effectively doubling annually from a small base.
“We are knocking on the door of 10% illegal black market share,” he warns.
According to Vali, as legal operators cut marketing budgets in response to tightened profitability, consumers encounter other brands offering better odds or welcoming bonuses without verifying their licensing status.
“Consumers cannot differentiate between this stuff,” he says, warning the emergence of “plug-and-play” offshore sites with startup costs reportedly as low as £25,000 further facilitates rapid unregulated market expansion.
Cumulative effect of increased gambling taxes
The 40% MGD figure that floated around in the months leading up to the election largely stemmed from a report earlier this year by the Social Market Foundation think tank.
Some industry observers emphasised the importance of perspective, explaining that the widely reported 40% rise proposals originated from the Social Market Foundation rather than official Treasury plans.
However, the consensus remains that the overall burden on operators, taking into account recent rises in RGD on online betting combined with the new MGD increase, is cumulatively challenging.
“The industry needs to work out how it breaks this cycle of tax increases and regulatory tightening, because otherwise it’s heading to a pretty dark place,” Waugh says.
Future outlook for retail and online gambling
Lloyd expresses her view that larger, diversified groups such as Flutter and Entain are better placed to absorb cost increases, while smaller retailers remain at greater risk, as well as operators that are purely retail-focused.
Waugh predicts venue closures and job losses but stops short of forecasting a merger wave solely driven by tax rises.
Ismail Vali foresees a sharper structural change, saying: “I expect to see retail consolidate. I expect some operators to fail, and I expect more migration to online platforms.”
His primary concern remains the unchecked growth of the illegal market, which he argues can only be curbed through stronger enforcement and better coordination among regulators, platforms, payment providers and advertising channels.
Vali also highlights the broader public policy dilemma. While the UK maintains a globally respected licensing regime, excessive fiscal and regulatory pressures risk pushing legal operators to cede market share to illicit competitors.
He urges a renewed focus on channelisation strategies prioritising the monitoring, policing, enforcement and optimisation of the total gambling marketplace.
What could lie ahead?
Waugh also suggests there could be further tax pain down the line, noting the difference in Healey’s tone towards the gambling sector and banks.
While announcing that banks would pay an extra 3% on banking surcharges, Healey said he was “grateful” for the role they play.
There was no such praise for the gambling industry, however, with Waugh stating: “It was not surprising, but I think the other thing is the sense that actually the government looks down its nose on this industry, and the sense it’s prepared to be vindictive even.
“We’ll be back here in a year’s time because it’s again not even apologising for raising taxes. I think that’s striking.”