Following the increase in Remote Gaming Duty, operators appear steady. But is this just the calm before the real effects emerge?
Six weeks after Britain doubled its Remote Gaming Duty from 21% to 40%, the immediate damage many feared had yet to materialise in public earnings.
Tier-one operators have sounded bruised but not broken. Entain struck a cautious tone. Evoke reiterated the seriousness of the change but suggested trading remained stable. Even as FDJ reported a sharp decline in UK revenue in April, the wider market reaction has been one of uneasy restraint rather than panic.
That, however, may be precisely the point.
The UK gambling industry is now entering what many executives, advisers and regulatory lawyers describe as the first phase of a much longer adjustment cycle: one in which the effects of taxation emerge slowly, through changes in customer economics, promotional intensity and product value, before eventually surfacing in player behaviour and market structure.
“The limited immediate impact is not necessarily surprising,” says Chris Elliott, partner at Wiggin. “The RGD increase from 21% to 40% only took effect on 1 April 2026. The more important question is what happens over several quarters as operators reassess marketing, product investment, bonusing and the economics of UK customer acquisition.”
That view is widely shared across the industry. Melanie Ellis, gambling regulatory lawyer at Northridge Law, notes that operators are still early in the accounting cycle. “It will be a while before the impact of the increased rate for remote gaming duty is truly felt by operators due to the three-month accounting periods,” she says. “As this is not a change in customer-facing rules it would not be expected to have any immediate impact on customer behaviour.”
The bigger concern lies not in April’s numbers but in what happens between now and autumn.
Delayed effect
Vaughan Lewis, managing director at Teise Advisory, argues that the market is still only beginning to adjust to the underlying economics of UK gambling. “Operators have only just started pulling the major levers that change customer experience,” he says, “and where they have, the effect on player behaviour takes months to compound.”
One of the clearest early changes has been lower return-to-player rates on slots. “At 95% RTP the expected cost per spin is five pence in the pound; at 90% it doubles to ten,” Lewis explains. “That isn’t a marginal change, it doubles the cost of the entertainment.”
Customers do not immediately perceive such deterioration. “They notice over a sequence of sessions that their balance lasts less time, their bonus didn’t go as far, the wins felt less frequent,” Lewis says. “Then, gradually, they either reduce play, switch operator, or find their way to the offshore alternative.”
This delayed effect helps explain why operators have so far appeared relatively calm. The immediate impact of the tax rise has been felt more in profit margins than in player spending. Operators can initially absorb some of the pressure through cost savings, lower marketing spend and small product changes before customers begin reacting more noticeably.
Bethan Lloyd, partner at Wiggin, says the muted early impact “is broadly consistent with what many in the market expected”. Gambling behaviour rarely shifts immediately after tax increases, particularly when operators have had time to prepare. “The more important question is what happens over the medium term,” she says.
Visible consequences of UK gambling tax hike
The growing uncertainty is already reshaping strategic thinking across the sector.
Operators have a limited menu of responses: reduce promotional generosity, tighten VIP management, cut acquisition spending, improve automation, lower RTPs or pursue scale through consolidation. Chris Elliott argues that this dynamic “tends to favour larger incumbents with stronger brands and broader balance sheets”.
Lewis points out that under the old 21% regime, duty represented roughly 26% of net gaming revenue after bonuses. At 40%, if bonus structures remain unchanged, duty rises to around 50% of net revenue. “That is not a number you mitigate with marketing efficiency,” he says. “The bonus ratio has to come down, and RTPs have to come down and marketing spend has to come down.”
The consequences are already becoming visible around the edges. John Garfield, an industry commentator and compliance specialist, notes that two operators – Lottomatrix and Small Screen Casinos – have already exited the UK market. “The first wave of operator response is structural adjustment, not collapse, but the direction is clear,” he wrote recently in a blog.
Garfield’s analysis suggests the market is entering a period of structural compression rather than sudden crisis. Evoke, owner of William Hill, 888 and Mr Green, projected £125-£135 million in additional annual duty costs, with around £80 million hitting FY26 alone. Playtech warned of a “high-teens millions of euros” EBITDA impact before mitigating actions.
For now, larger operators remain comparatively insulated. Their international diversification allows them to absorb UK weakness while shifting investment elsewhere. The firms under greater strain seem to be mid-sized casino-heavy operators with smaller profit margins and more reliance on the UK market
Consolidation pressure on the horizon
Yet the picture is not entirely straightforward. Lewis argues that the sector’s second tier may prove more resilient than many expect. Operators such as LeoVegas, BetVictor, Midnite, Rank and Super Group remain large enough to sustain investment while larger incumbents prioritise margin protection.
Others are less optimistic. An executive at a well-known UK operator, speaking anonymously, warns that parts of the industry have become dangerously complacent about consolidation. “It is sad to see companies celebrating their supposed ability to survive in the UK as long as their competitors fail,” the executive says. “Are they supposed to be a good force and a credible voice for the industry?”
The executive argues that Britain risks drifting toward a European model dominated by a handful of heavily regulated incumbents operating “more like utilities or insurance companies” than consumer entertainment businesses.
For challenger brands, the economics are becoming increasingly hostile. “The result is predictable: fewer competitors, less innovation, more bureaucracy and a market that becomes harder to enter, harder to challenge and worse for consumers,” the executive says.
Bethan Lloyd believes consolidation pressure is real but not immediate. “Larger operators generally have greater capacity to absorb increased duties, affordability-related compliance expenditure, safer gambling infrastructure costs and reduced marketing efficiency,” she says. Smaller operators, by contrast, often operate with “far thinner margins and less operational flexibility”.
Still, Lloyd notes that interest in the UK market has not disappeared altogether. “We are also continuing to receive enquiries from overseas operators looking to obtain their first licence in the UK notwithstanding the costs, as a UK licence is still viewed by many as the gold standard of regulation.”
Black market fears
The industry’s greatest anxiety, however, is not consolidation but channelisation. The tax rise comes alongside the Gambling Commission’s controversial financial risk assessment programme, which remains deeply divisive despite the regulator’s pilot phase.
Dan Waugh of Regulus Partners believes the cumulative effect of regulation and taxation is becoming impossible to ignore. “There is no doubt that there will be a tipping point, where punitive taxation and excessive regulation destabilises the regulated market,” he says. “We are seeing it in market after market across Europe.”
Lewis goes further, “I’d argue the tipping point isn’t ahead of us, we’re already past it,” he says.
The Netherlands looms large in industry thinking. There, increased taxation and tighter regulation coincided with a sharp decline in channelisation rates as consumers migrated offshore. Lewis warns that Britain risks following the same trajectory. “Customers on offshore sites are getting RTPs of 96%–98%, features that they love like bonus buys, auto spins and turbo spins, and significant free spins and bonuses,” he says. “The licensed alternative has worse RTPs, smaller bonuses, mandatory affordability checks, deposit limits and increasingly suspicious-feeling intervention prompts.”
Ellis also sees the risk as cumulative rather than sudden. “I don’t see this so much as a tipping point, but a number of factors that will contribute to a gradual shift of customers and spend to unlicensed operators,” she says.
The anonymous operator executive is more direct: “Players are pushed toward unlicensed sites in the same way people are pushed toward Nigel Farage: because they feel straightjacketed, patronised and restricted in their personal freedom.”
Financial risk assessment pains add another layer
The Gambling Commission says the financial risk assessment pilot shows checks can be carried out with little disruption. But critics argue it only answered narrow technical questions, while avoiding harder issues around consent, data accuracy and behavioural impact.
“The pilot has answered one narrow question well, and not engaged at all with the questions that actually matter for policy,” Lewis says. The commission’s claim that 97% of assessments can be completed frictionlessly “demonstrates that credit reference agencies can, in technical terms, return data on most customers without manual intervention. But that is a question about CRA capability, not a question about whether the policy works.”
Ellis shares concerns about implementation. “The pilot has not involved any action taken in response to information from financial risk assessments,” she says. “Concerns remain about the accuracy of the data the assessments are providing.” Elliott adopts a more measured tone, cautioning against describing financial checks as “mass financial surveillance”. Still, he acknowledges that “operators remain concerned about how useful CRA outputs will be in practice”.
Waugh is less restrained. “It is abundantly clear that the pilot has done nothing to ease the concern of operators, customers or British horseracing about the damaging effects of Financial Risk Assessments,” he says. Underlying all this is a deeper divide over the future of regulated gambling markets.
The anonymous operator executive accuses policymakers and some campaigners of seeking to maximise “annoying friction and killjoy for all customers”. Gambling, the executive argues, is fundamentally “transgression. Escape. Guilty pleasure.” Over-regulate it and customers eventually seek alternatives elsewhere.
True test will come later
Lloyd argues that Britain’s regulatory reforms have unquestionably produced a safer product environment. The challenge is preserving channelisation while maintaining those protections. “The UK’s regulatory model depends on maintaining a competitive licensed market that remains sufficiently attractive to consumers,” she says.
That tension increasingly defines the industry’s outlook. The Treasury expects the reforms to generate more than £1 billion annually in additional tax revenue. Operators, meanwhile, fear a gradual erosion of both margins and channelisation. For now, neither side can conclusively prove its case. April’s results remain too early, too partial and too distorted by operator-specific factors to establish a clear trend. But almost nobody inside the industry believes the current calm will last indefinitely.
“Operators will absorb a portion in the short term,” Lewis says. “But the more important point is what this all adds up to from the customer’s perspective: a worse-value licensed product, at the same time as an unlicensed alternative becoming more visible, better marketed and structurally cheaper to operate.”
Britain’s gambling tax hike has not yet produced a visible crisis. What it has produced is something subtler: a market beginning to reprice itself around a permanently harsher economic reality. The true test will come later, once customers start noticing.