H2 Gambling Capital's latest analysis shows that the planned gambling tax increase in the UK may only bring about an additional £800 million in tax revenue, which is less than half of the Treasury's expected £1.6 billion. The report points out that changes in player behavior and the expansion of the black market will significantly weaken the effect of the tax increase, and by the 2028 fiscal year, the size of the UK black market could more than double. More comprehensive market analysis reports are available on the PASA official website for reference.
Tax revenue expectations significantly reduced
The Treasury originally hoped to increase revenue by £1.6 billion by raising the gambling tax rate, but considering that players might reduce their betting, this figure has been revised down to £1.1 billion. However, H2GC's forecast is even more conservative, believing that the actual increase in revenue by the 2028 fiscal year might only be around £800 million. The static tax revenue expectation for online gambling is £1.35 billion, but considering changes in player behavior, the adjusted figure is directly halved to £649 million, which is not a small gap.
Overall market size shrinks
The impact of the tax increase on the industry will be significant—by the 2028 fiscal year, total gambling revenue is expected to decrease by £1.1 billion compared to maintaining the current tax rate, a decline of 14%. Online gambling will be most affected, with revenue potentially decreasing by 16%, and sports betting will also decrease by 8%. More concerning is the total gambling revenue, which after the tax increase might only be £7.12 billion, £2.22 billion less than what could have been achieved, a significant shortfall.
Rapid expansion of the black market share
Players turning to unlicensed sites is the main reason for the shortfall in tax revenue. Currently, the legal channels of the UK online market account for about 94%, but after the tax increase, this ratio might fall to 87%, with the legal share of online gambling possibly plummeting from 93% to 83%. The size of the black market is expected to more than double, with offshore gambling revenue and income both potentially increasing by about 110%. H2GC bluntly states that politicians might consider the shrinkage of the legal market a victory, but completely ignore the negative impact of the black market expansion on player protection.
