UK gambling businesses and advisers say a five-percentage-point increase in MGD could push more customers towards unregulated operators, while adding to tax and regulatory pressure on retail and online firms. The rise was announced by Chancellor John Healey on Wednesday and is below the 40% rate discussed in the months before the announcement.
Tax adds to pressure on operators
The 40% figure largely came from a report by the Social Market Foundation earlier this year, rather than an official Treasury proposal. But the new duty comes on top of other increases: last year, then-Chancellor Rachel Reeves announced that remote gaming duty (RGD) would rise from 21% to 40%. A new general betting duty rate for remote betting will take effect next year, increasing from 15% to 25%.
Dan Waugh, a partner at advisory firm Regulus, said the MGD increase should not be treated as positive simply because it was lower than feared. “If your income tax went up by a quarter overnight, you wouldn’t see that as a positive,” he said.
Waugh warned of further venue closures and job losses, and said changing fiscal policy could make the UK appear unreliable to investors. He said the industry must find a way to stop the cycle of tax increases and tighter regulation, or face “a pretty dark place”.
Bethan Lloyd, a partner at Wiggin, said: “The industry is already very squeezed. A 5% increase on an industry that has very squashed margins is not ideal.” She also pointed to potential risks for horse racing revenues, given many punters use retail betting shops rather than online platforms. Lloyd expects continued consolidation and cost-cutting, although technology and new entrants could ease some pressures over time.
Concerns over illegal gambling
Ismail Vali, president of Gaming Compliance International, described the tax increase as part of a “perfect storm” that could encourage migration to illicit gambling. He cited estimates that the unregulated share of UK online gross gaming revenue rose from 0.43% in 2020 to 9% by the end of 2025, doubling annually from a small base. “We are knocking on the door of 10% illegal black market share,” he said.
Vali said legal operators may reduce marketing as profitability tightens, leaving consumers exposed to brands offering better odds or bonuses without clear licensing checks. He also warned that “plug-and-play” offshore sites, reportedly costing as little as £25,000 to launch, could speed expansion of the unregulated market.
Uneven impact and outlook
Lloyd said larger diversified groups such as Flutter and Entain are better placed to absorb higher costs than smaller retailers and businesses focused solely on retail. Waugh expects closures and job losses but does not predict a merger wave driven solely by tax rises. Vali expects retail consolidation, operator failures and further migration online.
Vali said stronger enforcement and coordination among regulators, platforms, payment providers and advertising channels are needed to curb illegal gambling. He warned that pressure on licensed operators could hand market share to illicit competitors despite the UK’s globally respected licensing regime.
Waugh also suggested further tax increases could follow, noting Healey’s different tone towards gambling businesses and banks. Healey said he was “grateful” for banks’ role while announcing an extra 3% on banking surcharges. Waugh said the government appeared to “look down its nose” at gambling and added: “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.”
