UK to clarify tax on free game promotions

The UK is working on a new bill that will regulate the taxation of free games in betting promotions. The reason behind the bill is Jumpman Gaming's case against HMRC.

Jumpman Gaming, part of Super Group, challenged an HMRC decision on the Mega Reel promotion. In the promotion, a player who made a qualifying deposit won a free spin, and additional returns could be earned from that spin. HMRC argued these returns fell under remote gaming duty (RGD) and sought payment for promotional bets placed between July 2018 and December 2022. The Upper Tribunal, however, ruled that the free game exemption also covered the additional returns. The company thus avoided paying approximately GBP 13.2 million (USD 17.5 million) in tax.

The new finance bill announced in the government's 2026 Budget will change these rules. Free games will from now on be referred to as restricted games, and it will be explicitly stated that games won from another restricted game are exempt from tax. In addition, when participation in tournaments counts as a game of chance will be clarified, and the definition and taxation of prizes will also be reorganized.

In a separate development, the UK raised machine games duty by 5 percent, bringing the rate to 25%. Although this is below the 40% rate the industry had requested, industry representatives responded negatively to the decision. They said it could lead to job cuts and reduce the competitiveness of the legal market.