On November 28, 2025, UK gambling companies were hit with unexpected news when Chancellor Rachel Reeves announced a sharp increase in betting taxes. The online casino tax rate will rise from 21% to 40% starting next April, a significant leap that left many industry players stunned. Additionally, a subsequent hike planned for 2027 will see the digital sports betting tax rise from 15% to 25%.
The announcement has prompted operators to urgently reassess their business models. While bingo and horse racing remain unaffected, the financial markets reacted swiftly. Notably, shares in listed betting firms took a dive, with Evoke—which includes brands such as William Hill and 888—experiencing a dramatic decline to its lowest in a decade. The company is now facing an annual tax bill increase between £125 million and £135 million, necessitating a shift in financial targets.
Evoke’s management has made it clear that cutting costs is unavoidable. This has sparked concerns about potential widespread layoffs. Similar sentiments are echoed by Entain, the owner of Ladbrokes and Coral, which forecasts a £100 million loss in 2026, potentially increasing to £150 million once the sports-betting tax hike is implemented.
In an attempt to pacify investors, companies like Flutter, Entain, and Evoke have vowed to protect EBITDA margins, projecting protection rates of 25% to 50% through cost-cutting measures. These include operational efficiencies and tighter bonus policies. Despite these efforts, the measures might fall short. The UK government anticipates raising £1.1 billion annually from the enhanced gambling duties by the year 2029–30, yet there is an acknowledgment that these measures could inflict lasting harm on the industry.
A significant area of concern is the looming threat of the black market. Analysts from Regulus Partners caution that the strategies being proposed by operators may not be sufficient. They suggest that if operators truly had excess capacity to trim, their operations would already be more efficient. For example, cutting marketing budgets may lead to a loss in market share to competitors who continue to invest in promotions. In a competitive environment, marketing cuts can quickly negate any perceived savings.
Another challenge is the reduction of bonuses. Offers such as free bets and casino promotions are crucial for retaining high-value customers. Cutting these incentives could drive customers toward offshore sites. Analysts predict a potential 20% market share loss to unlicensed operators, affecting regulated companies and undermining the Treasury’s expected tax gains.
Regulus Partners highlight this concern, stating that cutting bonuses could give the black market a significant edge in marketing and retaining players. They argue that this is not mere speculation but a straightforward calculation.
Without a more balanced approach, the industry may enter a downward spiral. Regulus suggests that if the government could be convinced to tax gross gaming yield instead of bonuses, which might soon disappear, the taxable base could stabilize even with a 40% rate. Effective enforcement against the black market is also crucial. Without it, the UK might witness a reduction in legal operators, growth in offshore competitors, and a decrease in tax revenues.
Contrastingly, some industry experts argue that the tax hikes, while severe, could spur innovation and competitive differentiation among the operators. By forcing companies to streamline and focus on core competencies, the industry might see a reinvigoration in how customer engagement and retention are approached. This pivot could potentially limit the long-term damage and even lead to a healthier market ecosystem.
The debate continues, with operators lobbying for a reconsideration of the tax structure, emphasizing the need for a sustainable approach that protects both industry viability and government revenue. As the April implementation date looms, the gambling sector braces for a period of transformation, with its future direction hanging in the balance.
Garry Sputnim is a seasoned journalist and storyteller with over a decade of experience in the trenches of global news. With a keen eye for uncovering stories that resonate, Alex has reported from over 30 countries, bringing light to untold narratives and the human faces behind the headlines. Specializing in investigative journalism, Garry has a knack for technology and social justice issues, weaving compelling narratives that bridge tech and humanity. Outside the newsroom, Garry is an avid rock climber and podcast host, exploring stories of resilience and innovation.
