Britain’s gambling sector is entering a period of uncertainty as a major tax increase takes effect, prompting warnings about the expansion of illegal betting markets and financial strain on licensed operators.

From April 1, the Remote Gaming Duty applied to online casino revenue has risen sharply from 21% to 40%, a change introduced in Chancellor Rachel Reeves’ Autumn Budget. Industry representatives and analysts say the move could reshape the market, with some warning that it may drive customers away from regulated platforms.

The Betting and Gaming Council (BGC) has raised concerns that the black market is already gaining ground. “While April Fool’s Day is synonymous with pranks and jokes, the scale of Britain’s growing gambling black market is no laughing matter,” the organization said.

Tax Increase Raises Pressure on Licensed Operators

The near doubling of the Remote Gaming Duty has forced companies to reassess their financial strategies. Operators now face higher costs, and many are expected to introduce changes to offset the impact. These may include reducing marketing budgets, cutting staff, closing retail locations, and adjusting promotions or payouts.

Industry sources suggest that companies are preparing for significant disruption. One source described the situation as unfamiliar territory, noting that the long-term consequences remain difficult to predict. “When you’re pushing [tax] from 21 to 40% you can have absolutely no idea what’s going to happen,” the source said. “You can have no idea what the behavioural response will be.”

The UK’s Office for Budget Responsibility has also highlighted uncertainty around how consumers and businesses will react. It estimated that most of the increased tax burden would be passed on to customers through higher prices or reduced payouts, which could reduce demand and ultimately lower expected tax revenue.

Some companies have already begun restructuring. Evoke, which carries significant debt, has announced plans to close around 200 William Hill betting shops starting in May. Meanwhile, other firms are exploring opportunities to acquire struggling competitors or assets as the market adjusts.

Concerns Over a “Spiral Effect”

Regulatory expert Dan Waugh warned that cost-cutting measures could trigger a negative cycle for operators. If reduced spending leads to weaker revenue, companies may need to make further cuts, creating ongoing pressure.

“There is that risk of a spiral effect: where the more operators cut costs to address falling revenue, the more that the revenue falls,” Waugh said.

The concern extends beyond individual businesses to the broader competitiveness of the regulated market. Industry observers note that licensed operators must comply with strict rules and pay significant taxes, while illegal platforms face none of these obligations.

This imbalance, they argue, could make regulated offerings less appealing to consumers, particularly if prices rise or incentives decline.

Black Market Growth and Regulatory Concerns

The BGC has repeatedly warned that illegal gambling operators are benefiting from the changing environment. These platforms often provide more attractive odds and promotions because they are not subject to taxation or regulatory safeguards.

“This is not a future threat, it is already happening,” said BGC chief executive Grainne Hurst. “Billions of pounds are being staked with harmful illegal operators and the black market is growing fast.”

She added that recent policy changes may worsen the situation. “Following the Chancellor’s Budget, the black market is continuing to grow. Rising taxes on the regulated sector are making it harder for licensed operators to compete, while illegal sites continue to offer better odds and bigger incentives because they pay no tax and follow no rules.”

Alongside tax increases, proposed Financial Risk Assessments have drawn criticism from the industry. These measures would require some customers to provide financial information to demonstrate affordability.

“At the same time, there is a real danger that measures like Financial Risk Assessments make matters worse. Ministers promised frictionless checks, but trials have already raised serious questions about whether they will work as intended,” Hurst said. “If punters are forced to hand over bank statements and other sensitive financial documents, many will simply walk away from the regulated market altogether.”

Economic Contribution at Stake

The regulated gambling sector remains a significant contributor to the UK economy. It supports approximately 109,000 jobs, generates £6.8 billion in economic output, and contributes £4 billion in tax revenue. It also funds various sports and operates under strict player protection standards.

However, industry representatives argue that the current policy direction could undermine these contributions if consumers migrate to unregulated alternatives.

The government has acknowledged the risks associated with illegal gambling and has allocated additional funding to the Gambling Commission to strengthen enforcement efforts. Still, some within the sector question whether these resources will be sufficient to counter offshore operators, which are often linked to larger networks with substantial capabilities.