Leaked 40% Gambling Levy Sends Shockwaves Through the Industry
Unexpected Leak Reveals Steep Gambling Tax Increase
A premature disclosure from the UK’s Office for Budget Responsibility startled the gambling sector by revealing plans for a significant rise in the remote gaming tax rate. The leaked documents indicate the government intends to impose a far stricter tax regime than previously anticipated, raising the remote gaming duty to 40%, surpassing the expected range of 30-35%.
Impact on Operator Share Prices
The proposed budget includes a major revision of the remote gaming duty, increasing it from 21% to 40% starting in April 2026. Industry leaders warn that this sharp hike could result in financial losses for many online casino operators, especially those operating with thin profit margins or high marketing costs. Although the bingo duty currently set at 10% will be eliminated, this relief is minimal compared to the near doubling of tax burdens for most operators.
Following the leak, stock prices of major gambling companies such as Entain, Flutter, and Evoke plummeted, with some experiencing declines approaching 20%. This market reaction occurred even before the official budget announcement, reflecting investors’ shock at the scale of tax increases and government expectations that consumer behavior will shift, likely reducing overall revenues.
Government Revenue Expectations and Consumer Behavior
The Treasury aims to generate approximately £1.1 billion annually from the revamped gambling duties by 2029-30. However, officials anticipate that the higher tax rate may push consumers towards offshore betting sites or lead to a general decrease in gambling activity, possibly resulting in about one-third less revenue than initially projected. This highlights the challenges the government faces in balancing tax collection with industry sustainability.
Broader Consequences of the Tax Changes
The reform also includes plans for a new general betting duty of 25% to be introduced in 2027. This rate will exclude spread betting, pool betting, and horse racing, reflecting the racing industry’s success in securing this exemption after prolonged advocacy efforts. Meanwhile, the current tax rates applied to traditional casinos are set to be frozen for one year before resuming their usual inflation-adjusted increases.
Industry experts warn that the combined tax pressures could lead to significant layoffs and force smaller companies out of the market. Notably, Flutter’s Sky Bet has already relocated its headquarters to Malta, potentially saving millions in taxes. Analysts expect more companies might follow suit or pursue mergers to survive the challenging environment.
Looking Ahead: Industry Adapts to New Realities
The Office for Budget Responsibility believes operators will eventually adapt their gaming products to lessen the impact of the increased tax rate. Nevertheless, the sector faces a difficult transition ahead. While the 40% tax is not the absolute maximum considered in recent discussions, it nears the highest end of the spectrum. Investors and industry leaders must now prepare for the reality that the UK gambling market is likely to contract under these new financial pressures.
