Tax increase in the UK raises risk of illegal betting

UK Chancellor John Healey announced on Wednesday a 5 percentage point increase in the machine games duty (MGD). The rise fell well short of the 40 percent proposal that had been discussed over the summer, and some industry representatives were relieved. Others, however, warn that this tax burden could push players away from regulated platforms.

The change comes on top of other recent tax and regulatory measures. Last year's budget raised the remote gaming duty (RGD) from 21 percent to 40 percent. The new general betting duty on remote bets will also rise from 15 percent to 25 percent next year. Dan Waugh of the Regulus consultancy says that constantly changing fiscal policy could make the UK appear unreliable to investors. Waugh also notes that the increase could lead to venue closures and job losses.

Bethan Lloyd of Wiggin says margins are already very thin and that a 5 percent increase is not ideal. Lloyd draws attention in particular to the risk to horse racing revenues. Since many bettors play through betting shops rather than online platforms, this channel could also be affected. In her view, consolidation and cost cuts will continue in the sector, but technology and new entrants may ease the pressure over time.

The strongest warning comes from Ismail Vali, chair of Gaming Compliance International. Vali describes the tax increase as a "perfect storm" that pushes consumers into the illegal market. According to the data, the illegal share of gross online gaming revenue in the UK rose from 0.43 percent in 2020 to an estimated 9 percent by the end of 2025. Vali says, "We are knocking on the door of a 10 percent share of the land-based market."