More Financial Pressures On the Way for UK Online Casinos

The costs attached to operating an online casino in the UK have been steadily increasing. April will see remote gaming duty increased and now it appears that the cost of United Kingdom Gambling Commission licence fees is also going to rise. Could this lead to some companies leaving the UK market?

2025 saw a mandatory levy introduced for online casinos. This aims to raise £100 million a year with funds raised being used to help fund treatment of and research into gambling harm. Then came even more bad news in the Autumn Budget. There had long been fears of tax increases but few expected the rate of remote gaming duty to be increased from 21% to 40% from April 2026.

A further tax increase on sports betting will take place next year. Before that though, the cost of UKGC licence fees is due to rise. By how much is currently under discussion during a consultation period. The favoured option by the government is one of 30% which would place even more financial pressure on an industry that still achieves impressive profits.

Three years ago, the then Conservative government published its long-delayed White Paper on gambling reform. That included a promise to look at the UKGC’s funding levels to ensure that they have enough money to carry out its regulatory duties and reform agenda.

Time has passed without any action being taken. In the meantime, the UKGC has a shortfall in funding that, like the black holes the new Labour government keep talking about, must be filled. Without an increase in funding, there is the possibility that the commission will have to make job cuts and be unable to fully investigate possible regulatory breaches and the growing number of illegal operators.

Andrew Rhodes is currently the chief executive of the UKGC but will leave that position at the end of April. Speaking last month, he said the consultation period will help decide how much licence fees will be increased and how the additional funds will be used.

There are concerns however over the timing of the planned increase.  It is not just the problem of larger amounts of tax, the new mandatory levy and licence fees that will make operating in the UK increasingly difficult for gambling companies.

Last year saw stricter regulation of the UK’s online casinos being introduced. New maximum stakes were imposed on the slot games that deliver huge amounts of revenue for independent betting and casino sites. This action was taken due to concerns over the highly addictive nature of the slots, particularly for younger players.

Action has also been taken this year against the bonuses that UK online casinos can offer thor customers. These have long been criticised due to high wagering requirements and terms and conditions that are often considered to be far too complex. With stricter rules on how gambling can be advertised and the UKGC issuing large fines for regulatory breaches, operating in the UK is becoming increasingly difficult.

It is not just the online casinos themselves who are being affected by the stricter regulation. Affordability checks that seek to discover if a player can afford the amounts that are being deposited and lost have become stricter. Such checks are unpopular with players, especially those who do not consider their gambling to be a problem. 

This is leading gamblers to leave the licensed and regulated market and play at unregulated illegal sites. Such sites do not need to adhere to the regulations set out by the UKGC and nor do they pay any levy, tax or licence fees. If the planned licence fee does help fund the fight against the illegal sites, that would help the licensed sites. The fear is that the regulation and financial pressures being placed on legal operators will simply lead to more players heading over to the illegal sites.

The founder of Gambling Consultant, Steve Donaghue, controversially believes that the UKGC doesn’t want to prevent a “black market explosion.” Doing so would mean they would have to admit that “increasing regulatory friction” is creating a demand for the illegal sites. His prediction is that 20-30% of bets placed in the UK market could be made on the black market. That would not be good news for the Treasury who are eager to see more gambling tax revenue being received in the future.

As for the legal operators, they may decide to reduce their activity in the UK market or perhaps even leave it altogether. Many companies such as Entain, bet365 and Flutter Entertainment operate in several global markets. They may well decide to place more emphasis on markets that aren’t so strongly regulated and with lower tax rates.