Study Reveals How High Gambling Taxes Undermine Regulated Markets
Impact of Elevated Gambling Taxes on Market Health
A recent analysis from the UK Betting and Gaming Council highlights the consequences of imposing high taxes on gambling activities. Conducted by PwC, the research reveals a clear connection between excessive taxation and the growth of illegal gambling sectors.
Countries With Hefty Taxes Face Larger Illegal Markets
The PwC study, titled “Impact of the Taxation and Regulatory Environment on European Online Betting and Gaming Markets,” examined various European countries, focusing on those with strict gaming policies.
France, Sweden, and the Netherlands were identified as nations with stringent regulations. These countries struggle extensively with black market gambling, accounting for 57% of the market in France, 35% in Sweden, and 37% in the Netherlands.
In contrast, Spain and Denmark have adopted more moderate taxation policies. These nations report notably smaller illegal gambling shares, around 11%, suggesting that balanced tax rates might help limit black market dominance.
The study also drew attention to the UK’s offshore gaming segment, which has increased its share from 3.3% in 2021 to 5% currently. This growth represents a substantial amount of untaxed gambling activity, amounting to hundreds of millions of pounds annually.
The Pitfalls of Increasing Gambling Taxes
PwC challenges the assumption that raising gambling taxes leads to higher government revenue. Data between 2019 and 2024 indicate countries with tax rates below 25% saw greater growth in tax income compared to those with higher rates.
This phenomenon is partly because operators in high-tax environments tend to cut back on marketing and promotional efforts, weakening their competitive edge and inadvertently driving gamblers toward unregulated markets.
The research concludes that heightening gambling taxes in the UK risks damaging the economy without delivering sustainable financial gains.
The report finds that higher tax burdens and stricter rules often shrink regulated markets, whereas jurisdictions with balanced taxation and relaxed policies experience stronger growth.
BGC statement
Potential Risks for the UK Gambling Market
Grainne Hurst, CEO of the Betting and Gaming Council, emphasized the importance of cautious regulation. While the UK currently maintains one of the safest gambling environments in Europe, she warns that imprudent tax hikes and regulations could replicate the challenges seen in France or Sweden.
“The UK enjoys one of the safest gambling markets in Europe, but without careful oversight, it could face large black markets that evade taxes, lack player protections, and contribute nothing to sports or the broader economy.”
Grainne Hurst, CEO, BGC
Hurst urges policymakers to pursue fair taxation and well-considered regulatory frameworks to foster a thriving, responsible gambling industry.
