H2GC: UK gambling tax hike will yield only half of Treasury’s expected windfall

H2GC: UK gambling tax hike will yield only half of Treasury’s expected windfall

Summary

H2 Gambling Capital (H2GC) finds the planned UK gambling tax rises will generate roughly £800m by FY28 — about half the Treasury/OBR’s headline forecast of £1.6bn (and significantly below the OBR’s behavioural-adjusted £1.1bn). H2GC’s analysis accounts for behavioural shifts: reduced player demand, smaller bonuses, operator exits and a marked move to offshore/black‑market sites.

The consultancy expects iGaming to be hardest hit (remote gaming duty rising from 21% to 40% in April 2026) and a separate remote betting duty to rise to 25% from April 2027. Gross gaming yield (GGY) and gross gaming revenue (GGR) could fall sharply — with GGY down c.£1.1bn (14%) and GGR down c.£1.97bn (22%) by FY28 if the changes proceed. Crucially, H2GC warns the GB black market could more than double by FY28 as channelisation to licensed operators falls.

Key Points

1. H2GC estimates additional tax receipts of ~£800m by FY28 — around half the Treasury/OBR’s static £1.6bn projection and well below earlier expectations.
2. OBR reduced its figure to £1.1bn after behavioural adjustments; H2GC’s behavioural-adjusted estimate is lower still (£800m).
3. Remote gaming duty (iGaming) rising from 21% to 40% in April 2026; remote betting duty to 25% from April 2027.
4. GGY could fall ~£1.1bn (14%) and GGR ~£1.97bn (22%) by FY28 due to operator exits and player migration offshore.
5. iGaming is projected to be the worst affected: up to a 16% drop in GGY and a possible 25% fall in GGR by FY28.
6. Channelisation to onshore operators could drop from c.94% to as low as 87% (GGY), with iGaming onshore share falling to ~83% — implying offshore GGY/GGR could rise by ~110%.
7. Industry reaction highlights risks: increased black‑market traffic, lower bonuses, cost cutting and potential job losses.

Context and Relevance

This analysis lands amid the UK autumn budget tax announcements and is important for operators, investors, regulators and policy makers. It challenges optimistic revenue forecasts by showing how player and operator behaviour can erode the expected take — and warns of large unintended consequences for player protection and the regulated market if customers move offshore.

Why should I read this?

Because if you work in UK gambling, finance or regulation — or invest in the sector — this is the short version of a big headache. H2GC says the tax plan might look like a win on paper, but in practice it could shrink the onshore market and boost the illegal one. Read it to know what to expect: lower yields, fewer bonuses, possible job cuts and a much bigger black market. We’ve done the reading — you get the punchlines.

Source

Source: https://igamingbusiness.com/finance/tax/h2gc-questions-uk-gambling-tax-hike-yield/