UK Tax Hike Drives Players to Offshore Casinos, Says H2

The gambling industry in the UK is under significant pressure. An increase in the Remote Gaming Duty (RGD) in April 2026 appears to have far-reaching consequences. Experts from H2 Gambling Capital warn that this tax hike is driving players into the hands of unlicensed offshore operators. This not only jeopardizes the regulated market but also player protection. Other voices complain about an additional planned increase in license fees by almost 30 percent for British operators.

H2 Gambling Capital's analysis paints a clear picture. It shows how the "channelisation rates" – the proportion of gambling conducted through licensed operators – are decreasing. This is a direct result of stricter regulation and higher costs for licensees.

Numbers and facts

H2 Gambling Capital forecasts that the Gross Gaming Yield (GGY) on offshore sites will rise from approximately €807 million in 2025 to around €1.65 billion by 2031. This represents a significant doubling. The turnover of these unlicensed providers is expected to climb from €19.6 billion to around €42.4 billion over the same period, corresponding to a compound annual growth rate of 12.7% from 2025.

H2 estimates that the share of online gambling taking place with UK-licensed operators (channelisation) fell from 97% in 2019 to an estimated 92% in 2025. A further drop to 85% is projected by 2031. Measured by turnover, the licensed market’s share is expected to decline from 90% in 2025 to 78% by 2031.

The UK online casino industry saw GGY grow by 14% to €6.71 billion in 2025. In contrast, online betting GGY was down 6% to €2.89 billion. At the same time, the number of active players decreased by 7%, and the number of bets placed dropped by 6%.

Background

The Remote Gaming Duty increase in April 2026 creates what H2 Gambling Capital describes as a "significant headwind" for licensed operators. This measure contributes to player migration to offshore sites.

TransUnion, a credit reference firm, found in separate research that one in eight young adults, or 12%, have knowingly fallen victim to fraud through an unlicensed betting site. People aged 25 to 34 were particularly affected.

Grainne Hurst, chief executive of the Betting and Gaming Council, commented on the situation: > "The only winners from these tax hikes will be criminal operators based overseas. Britain will lose jobs, investment and tax revenue, while consumers are pushed towards operators offering none of the protections found in the regulated market."

The planned nearly 30% increase in license fees for the UK Gambling Commission, set for February 2026, will further pressure the British gambling industry. These fees are intended to secure the regulator's funding and strengthen enforcement against illegal operators. However, many operators see this as an additional burden that further weakens competitiveness.

Sean Coleman, CEO of the South African Bookmakers' Association, emphasized in another context that the black market is not solely a British problem: "The black market isn't UK-specific; it is something all regulated territories battle to varying extents." This observation underscores the global nature of the problem, exacerbated by excessive regulation and taxation.

Why it matters for German players

The experiences in Great Britain should serve as a cautionary tale for Germany. The German Interstate Treaty on Gambling 2021 (GlüStV 2021) has led to strict regulation in this country. This includes the 1 Euro per spin betting limit and the 1,000 Euro per month deposit limit, as well as the central player self-exclusion system LUGAS. The aim of these measures is player protection.

However, overly strict rules carry the risk of driving players to unregulated offerings. German players are attracted to casinos without a German license which have no betting or deposit limits. With these providers, player protection is often inadequate, and there is a risk of fraud or unfair practices. Those who play on offshore sites are legally vulnerable and have little recourse in case of a dispute. The GGL, the Joint Gambling Authority of the Federal States, lists all licensed providers in Germany on its whitelist. We strongly recommend playing exclusively at these GGL-licensed casinos. Here, a minimum level of security and consumer protection is guaranteed.

What it means for GGL-licensed casinos

For GGL-licensed casinos, such developments mean walking a tightrope. They must adhere to strict rules while remaining attractive to players. To compete with the black market, they must highlight the advantages of the regulated market more strongly: security, player protection, and guaranteed payouts. Excessive regulation and taxation could also jeopardize profitability here and hinder innovation. This, in turn, would lead to a greater exodus of players and undermine the intended player protection. Policymakers and regulatory authorities are challenged to find a balance that protects players without pushing them into illegality.