UK Gambling Tax Reform: What It Means for Operators

Remote Gaming Duty Increases to 40%

According to the Office for Budgetary Responsibility’s autumn budget analysis, the UK government will raise remote gaming duty to 40% from April 2026. The move places a substantially higher tax burden on online casino operators. Government estimates suggest that operators may pass up to 90% of the additional duty on to players, reducing demand and lowering the expected yield by roughly £500 million by 2029–30.

The reforms also introduce a 25% general betting duty for remote betting starting in April 2027. The new rate applies only to online betting profits and excludes spread betting, pool bets, horserace betting and self-service betting terminals. The change follows earlier consultations aimed at simplifying and consolidating the UK’s gambling tax framework.

The updated taxation structure is expected to increase gambling tax receipts to £4 billion in 2025–26, a year-on-year rise of 9.8%. A further jump to £5 billion is forecast for 2026–27, marking a 24.8% increase. Although the budget removes the current 10% bingo duty and freezes casino gaming duty bands for 2026–27, static thresholds mean more casino revenue will fall into higher tax bands.

Industry Response: “A structural shift”

Benjamin Bradtke, Co-Founder of ThrillTech, examines how these changes will reshape operator strategy, margins and product development.

Bradtke stresses that the jump to 40% is not a routine adjustment but a turning point for the sector. As he explains:

“The UK government’s decision to raise online casino taxation to 40% is a structural shift that will force operators to rethink how they grow, how they retain players and, ultimately, how they protect margins in one of the most competitive regulated markets in the world.”

He notes that the industry’s first reaction is understandably cautious.

“For many, the immediate reaction is an understandable alarm. A 19% increase in effective tax is not something that can be absorbed quietly. It places pressure on marketing budgets, product roadmaps and acquisition strategies almost overnight.”

However, Bradtke sees an opportunity for strategic evolution rather than defensive contraction.

“Yet periods of regulatory and tax reform have always acted as inflection points for this industry. They separate the operators who react defensively from those who adapt strategically.”

Benjamin Bradtke, Co-Founder of ThrillTech

Player Value and Efficiency in the Spotlight

With higher taxes compressing margins, operators typically reassess their approach to growth. Bradtke highlights the shift toward maximising player lifetime value through better product design and deeper engagement. As he explains:

At times like this, operators tend to look hard at two fundamentals: player value and product efficiency. When acquisition becomes more expensive and margin more constrained, extracting greater lifetime value from existing players becomes critical. That rarely comes from simply spending more on advertising. It comes from product innovation, engagement mechanics and smarter ways to drive repeat play across a wider segment of the player base.”

Strategic Tools Move to the Forefront

A major consequence of the tax rise is that certain product features will shift from optional enhancements to essential revenue tools. Bradtke points to one category in particular, saying:

“This is where products such as side-bet jackpots come into sharper focus. These mechanics have matured from being optional ‘nice to have’ features into strategic tools that can materially affect player behaviour, session time and cross-sell.”

He adds that such tools help operators increase engagement without altering the core gameplay experience.

“When deployed properly, they give players fresh reasons to engage without fundamentally altering the core game experience, and they allow operators to generate incremental revenue at scale.”

Diversification as a Necessity, Not an Ambition

Bradtke believes the higher tax burden accelerates a broader shift already underway.

“Higher taxation also accelerates the need for diversification. Over-reliance on a narrow portfolio of games or a single acquisition channel becomes increasingly risky in a compressed-margin environment.”

He observes that operators are already exploring new content types, reward structures and monetisation models.

“We are already seeing more operators exploring new forms of game interaction, new reward mechanics and new ways to monetise player activity beyond traditional wager models. That is a natural and healthy evolution for a maturing market.”

Innovation Pressure Will Shape the Market

Discussing the wider market implications, Bradtke emphasises that the UK’s regulatory environment has always fostered resilient businesses. As he notes:

“There is also a broader point here about resilience. The UK is one of the most tightly regulated online gambling markets globally, and yet it remains one of the most commercially significant. Operators that succeed here tend to export those operating standards, technologies and product models into other jurisdictions.”

Despite the pressures, he believes the tax rise will sharpen competition rather than diminish it.

“The current tax increase will undoubtedly reshape parts of the market, but it will also sharpen innovation and efficiency among those that choose to compete.”

Product-Led Optimisation Becomes Central

In conversations with partners, Bradtke sees a distinct shift in priorities.

“From our perspective, moments like this change the nature of conversations we are having with partners. Instead of focusing solely on growth for growth’s sake, discussions shift towards margin optimisation, product differentiation and sustainable engagement. Those are all areas where product-led innovation plays a decisive role.”

He concludes with a long-term view:

“Ultimately, taxation will rise and fall, regulations will continue to evolve and market conditions will never stand still. What remains constant is the need for operators to deliver compelling, responsible entertainment while running commercially robust businesses. Those who treat the current change as a catalyst rather than a constraint will be the ones best positioned to succeed over the long term.”