UK Sets New Direction on Gambling Tax

UK Sets New Direction on Gambling Tax

The UK government has confirmed a significant change to its gambling tax framework, formalising plans to raise duties on online betting and remote gaming while leaving most land-based activities unaffected. The decision follows recommendations from the Treasury Committee and gives legislative backing to measures first outlined in Chancellor Rachel Reeves' Autumn Budget. Together, the changes reflect a policy shift that draws a clearer distinction between digital gambling and traditional formats.

At the centre of the reform is a revised approach to the taxation of different gambling activities. Ministers have argued that the existing system no longer reflects the market's evolution, particularly the rapid expansion of online betting and casino-style games over the past decade. By increasing taxes on remote products and protecting sectors such as horse racing and bingo, the government is signalling that fiscal policy should respond to both market scale and social impact.

According to official estimates, the new regime is expected to generate more than £1 billion in additional annual revenue once fully implemented. The government has framed this outcome as part of a broader effort to modernise the tax system, while also addressing concerns raised by MPs about the concentration of risk within certain online gambling products.

One of the most notable changes is the increase to remote gaming duty, which applies mainly to online casino operations. From April 1, 2026, the rate will rise from 21 percent to 40 percent. This represents a substantial adjustment and places online casino-style games on a markedly different footing from their land-based counterparts. A year later, on April 1, 2027, remote sports betting will also face higher charges, with duty increasing from 15 percent to 25 percent.

The government has taken care to stagger the implementation dates, allowing operators time to adapt their business models. At the same time, ministers have made it clear that the direction of travel is fixed. Online gambling, they argue, now accounts for a large share of the market and should be taxed accordingly.

In contrast, several traditional forms of gambling will see no increase at all. Bets placed on UK horse racing will remain outside the scope of the changes, reflecting the sport's economic and cultural role. In-person casinos and betting shops will continue to operate under existing duty rates. Bingo halls, meanwhile, are set to benefit from the abolition of bingo duty from April 2026, a move the government has linked to the social nature of the activity and its lower association with harm.

These distinctions closely mirror the conclusions of the Treasury Committee, which published its report on gambling taxation in November 2025. The committee argued that the tax system should better reflect differences between gambling products, particularly as online formats have grown in scale and accessibility. Its analysis showed that remote gaming's share of Gross Gambling Yield increased from 12 percent in 2013/14 to 44 percent in 2023/24, a shift driven largely by smartphone use and continuous-play products.

During its inquiry, the committee challenged claims from the gambling industry that online betting does not contribute to social harm. Evidence given by industry representatives was met with scepticism, with MPs questioning whether it aligned with data on addiction and financial stress linked to certain digital products. The committee ultimately rejected the view that online gambling could be treated in the same way as all other forms of betting.

Dame Meg Hillier, chair of the Treasury Committee, has been one of the most vocal advocates of reform. She has repeatedly argued that while gambling can be a legitimate leisure activity, not all products carry the same level of risk. In earlier remarks, Hillier criticised the idea that online platforms bear no responsibility for harm, particularly where design features encourage frequent or prolonged play.

Following the government's confirmation of the tax increases, Hillier welcomed the decision to follow the committee's recommendations. She described the changes as a more realistic reflection of how the market operates today and how costs should be distributed. In her view, higher duties on remote betting and online casino games better align taxation with impact.

The government has acknowledged that higher tax rates do not always guarantee higher overall receipts. International examples, including recent developments in the Netherlands, were cited during parliamentary discussions as cases where increased gambling taxes led to reduced revenues or market disruption. Despite this, ministers have said they remain confident that the UK reforms strike a workable balance between revenue generation and market stability.

Officials have also stressed that the measures are not intended to discourage responsible gambling altogether. In its response, the government emphasised that many people participate in gambling activities without adverse effects, particularly in community-based settings such as racecourses, seaside arcades, and bingo halls. Preserving favourable tax treatment for these sectors was presented as a deliberate policy choice rather than an exception.