Plans put forward by HM Revenue & Customs (HMRC) and the Treasury to restructure the UK’s remote gambling tax system have immediately drawn skepticism and concern from industry stakeholders, who fear the reforms could ultimately lead to higher taxes for the sector.

On Monday, April 29, 2025, HMRC and the Treasury formally proposed consolidating the current three-rate system for remote gambling duties into a single tax, to be known as the Remote Betting & Gaming Duty (RBGD). Alongside this proposal, the government departments initiated a consultation process, inviting input from industry participants. The consultation is set to run for 12 weeks, concluding on July 21, 2025, with the government expected to outline its final plans during the autumn budget. While the government stated the tax shake-up is intended to simplify the tax system and reduce administrative burdens for operators, the primary concern among industry figures centres on where the single new rate will ultimately be set.

Under the existing system, remote gambling activities in the UK are taxed under three different rates: Remote Gaming Duty (RGD), applied at 21% of operator profit; General Betting Duty (GBD), set at 15% of profit; and Pool Betting Duty (PBD), also at 15%, but levied on net stake receipts.

Industry insiders fear that the consolidation will result in the GBD rate being increased by 6 percentage points to align with the current 21% RGD rate. This harmonisation, if set at the higher figure, would represent a significant tax increase for betting operators.

Responding to the consultation launch, Betting and Gaming Council (BGC) CEO Grainne Hurst voiced strong opposition to any potential overall tax increase. In a statement reported by iGaming Times, Hurst described such a move as “self-defeating” and one that “makes a mockery” of the government’s stated growth strategy. She argued that “Any potential further increase in taxes on our members, so soon after a white paper which cost the sector over a billion pounds in lost revenue, will not raise more money for the treasury.” Hurst also expressed concern that raising GBD to the same level as RGD could have “catastrophic” financial consequences for the British horseracing industry, which benefits significantly from betting revenues. A spokesperson for the British Horseracing Authority (BHA), also speaking as reported by iGaming Times, welcomed the opportunity to participate in the consultation process but shared concerns that the tax harmonisation could have “unintended consequences” for the sector’s finances.

Potential Favouring of Land-based and Black Market Risks

Beyond the headline rate, some stakeholders have expressed concerns that the proposal documentation may implicitly favour on-premises, land-based gambling sites. The consultation documents reportedly highlight that retail and on-premises casinos face higher operating costs than online operators, including expenses related to building maintenance, larger staff requirements, and utility costs. While factual, some worry this distinction could be used to justify a higher tax burden on the remote sector.

Gambling consultant Steve Donoughue, speaking as reported by iGaming Times, argued that the black market will ultimately be the determining factor for future tax rates. He believes that increasing friction and restrictions within the legal, licensed market are already driving a growing number of gamblers towards competitive offshore alternatives. This view aligns with a report from gambling charity Deal Me Out last month, which also indicated that UK gamblers were being pushed towards the black market due to increased friction on licensed products. Donoughue further expressed concern that the proposed tax reform could be seen by a “cash-strapped treasury” as an opportunity for a revenue grab. He was skeptical that all taxes would revert back to the original idea of being around 15%, recalling past discussions where the Treasury reportedly believed they could tax online gambling as high as 29% without inadvertently creating a significant black market. According to Donoughue (as reported by iGaming Times), the new rate “could be up as high as that.”

Questioning Treasury’s Growth Estimates

Adding another layer of debate to the consultation, concerns have been raised regarding the Treasury’s own statistics on gambling growth. In its consultation document, the Treasury estimated the UK’s gross gambling yield (GGY) at £15.6 billion annually as of 2014, with approximately £3.4 billion collected by the exchequer in excise duties each year. However, Dan Waugh, a partner at Regulus Partners, speaking as reported by iGaming Times, suggested that the government may have miscalculated the GGY growth of the remote gambling sector in recent years, particularly its estimate of “exponential” growth of 208% between 2014 and 2024.

Waugh explained that the core issue with this calculation lies in the change to how remote gambling was taxed in November 2014, shifting from a Point of Supply to a Point of Consumption basis. He noted that for seven months of the 2014-15 financial year, under the old Point of Supply system, a large number of operators were not required to report their GGY to the Gambling Commission, leading to an artificially low baseline for 2014. Therefore, Waugh argued (as reported by iGaming Times), the 208% growth statistic is based on a “false comparison.” He pointed to the Gambling Commission’s own statistics for the period between 2015 and 2024, which show a more realistic figure of 36% growth for online sports betting.

Perspective on the Timeline

Despite the immediate concerns and debate surrounding the proposal, some industry leaders are taking a more pragmatic view regarding the likely timeline for any changes. During Entain’s Q1 earnings call on Tuesday, April 29, CEO Stella David commented on the news. She told analysts that the reform process is still in its very early stages, requiring a lengthy journey involving consultation and legislative changes. David stated (as reported by iGaming Times from the earnings call) that the earliest the sector anticipates any changes coming into force is likely late 2027 or early 2028. “There’s a lot that can happen between now and then,” she noted, adding that “It’s really early days and nothing will happen in the short term.”

In conclusion, while the government’s proposed remote gambling tax reform aims to simplify the system, it has triggered significant concern among UK gambling stakeholders. The primary fear is that the harmonisation will result in a higher overall tax burden, potentially impacting the horseracing industry and pushing more players towards the black market. Experts have also questioned the data used by the Treasury to justify the reform, while industry leaders anticipate a lengthy process before any actual changes are implemented. The consultation period will be critical for the industry to present its case and influence the final outcome.