UK Gambling Tax Hike Fuels Offshore Market Growth, H2 Finds

A new H2 Gambling Capital analysis, reported by iGaming Business on July 20, 2026, finds that the UK's April 2026 Remote Gaming Duty increase from 21 to 40 percent of gross gambling revenue is accelerating a shift of bettors toward unlicensed, offshore gambling sites. Offshore gross gaming yield has grown from 200 million pounds in 2019 to 685 million pounds in 2025, and H2 projects it will reach 1.4 billion pounds by 2031, while onshore channelisation, the share of activity staying with licensed operators, is forecast to slide from 92 percent today to 85 percent.

Key facts

• Remote Gaming Duty rose from 21 percent to 40 percent of gross gambling revenue in April 2026 (H2 Gambling Capital, November 2025 analysis)
• Offshore gross gaming yield climbed from 200 million pounds (2019) to 685 million pounds (2025) and is projected to hit 1.4 billion pounds by 2031, a 12.7 percent compound annual growth rate (H2 Gambling Capital, cited by iGaming Business, July 20, 2026)
• Onshore channelisation fell from 97 percent (2019) to 92 percent (2025) and is forecast to reach 85 percent by 2031 (H2 Gambling Capital, cited by iGaming Business, July 20, 2026)

What did the H2 Gambling Capital report actually find?

H2 Gambling Capital's updated modelling shows the UK's licensed gambling market losing ground to offshore operators at an accelerating pace since the Remote Gaming Duty increase was confirmed. Offshore turnover rose from roughly 5 billion pounds in 2019 to 16.6 billion pounds by 2025, according to the figures iGaming Business published on July 20, 2026. H2 attributes the acceleration directly to the tax change, framing the Remote Gaming Duty rise as a "significant headwind" for onshore operators that pushes both pricing and product further from what unlicensed sites can offer.

Why is the Remote Gaming Duty increase pushing players offshore?

The duty increase forces licensed operators to either absorb a much larger tax bill or pass costs on to players through worse odds, smaller bonuses and tighter promotions, and H2's analysis in its original November 2025 note on the Budget change said the bulk of that adjustment would come from "lower bonusing... and a reduction in marketing spend." Offshore operators, unconstrained by UK tax or advertising rules, can keep offering the pricing and bonuses that onshore firms are cutting back, which is the core mechanic behind the channelisation decline.

How much has the UK's illegal gambling market grown since 2019?

The illegal and offshore gambling market has more than tripled since 2019, according to the Betting and Gaming Council, which cited H2 data showing the market climbing from around 5 billion pounds in 2019 to 16.6 billion pounds in turnover, doubling in just the past two years. Nearly half of all gambling advertising now reaching UK customers online comes from unlicensed operators, the BGC has said, citing separate research from advertising intelligence firm WARC.

What is channelisation, and why is the decline significant?

Channelisation is the share of total gambling activity, by value, that flows through operators licensed and regulated by the UK Gambling Commission rather than offshore sites outside its reach. H2 Gambling Capital's headline figure has onshore channelisation at 92 percent in 2025, down from 97 percent in 2019, with a forecast fall to 85 percent by 2031. A separate H2 breakdown of the tax change specifically for online casino products put onshore iGaming channelisation lower still, dropping to 80 percent, against 84 percent for the online market overall, underlining that slots and other casino games are migrating offshore faster than sports betting.

What does this mean for the UK Treasury's expected tax revenue?

H2 Gambling Capital's original analysis of the Budget measure estimated the Remote Gaming Duty rise would generate about 800 million pounds in additional direct tax on a static basis, but its full modelling, once player migration and behavioural change are factored in, puts the realistic net benefit closer to 1.6 billion pounds before adjustment and roughly 800 million pounds once the shortfall from lost onshore activity is subtracted. In other words, H2's own numbers suggest the Treasury may only capture a fraction of the headline revenue increase once offshore migration is accounted for, a dynamic H2 has separately said could leave the windfall at around half of the government's original expectation.

What does the Betting and Gaming Council say about the tax rise?

Betting and Gaming Council chief executive Grainne Hurst has repeatedly warned that the tax increases are counterproductive. "The only winners from these tax hikes will be criminal operators based overseas," Hurst said, as reported by iGaming Business on July 20, 2026. In earlier comments on the wider black market data, Hurst said the choice facing policymakers "is clear," adding that "if the regulated sector becomes harder to use or less competitive, customers will not stop betting, they will simply go elsewhere."

How does the UK's approach compare with other markets raising gambling taxes?

The UK is not alone in raising gambling duties to boost state revenue, but the channelisation risk is a distinctly UK concern because of how exposed its market already is to offshore competition from operators licensed in jurisdictions such as Malta or Curacao. Italy's Treasury, by contrast, is expecting an 800 million euro revenue boost from its own 2026 gambling tax changes without the same scale of an established offshore channel competing for its licensed operators, a contrast covered in our report on Italy's own gambling tax overhaul. The comparison illustrates why UK trade bodies argue tax design needs to account for channelisation risk, not just headline revenue projections.

What happens to the additional remote sports betting duty due in 2027?

A second tax rise is already scheduled for April 2027, when remote sports betting duty is set to increase from 15 percent to 25 percent of gross gambling revenue, while remote horse race betting duty stays at 15 percent, according to H2 Gambling Capital's November 2025 analysis of the Budget. If the channelisation trend seen in online casino continues, operators and trade bodies are likely to raise similar warnings about sports betting migrating offshore once that second increase lands.

What are UK regulators doing about illegal gambling operators?

Enforcement against unlicensed operators has become a live policy issue elsewhere in Europe too. Denmark's regulator, for example, disclosed it blocked 334 illegal gambling websites in 2025 while expanding cooperation with app stores, a step we detailed in our coverage of Denmark's illegal site blocks. In the UK, the Gambling Commission has been separately pushing ahead with its financial risk assessment checks on licensed operators, a parallel compliance push that BGC members argue adds further friction to the regulated channel just as offshore competition intensifies.

Are UK gambling participation and problem gambling rates changing too?

Yes, though not necessarily in the direction the offshore data might suggest. Our recent look at the 2026 UK gambling participation survey found overall participation broadly stable and the problem gambling rate falling to 2.4 percent among the regulated population that the survey captures. That survey, however, is not designed to measure activity on unlicensed offshore platforms, which is precisely the population the H2 data suggests is growing, and which typically falls outside the safer gambling tools, self-exclusion schemes and affordability checks that licensed UK operators must provide.

What should UK bettors know about offshore gambling sites?

Offshore operators without a UK Gambling Commission licence are not legally permitted to take real money bets from UK customers, and using them means forfeiting the consumer protections that licensed operators are required to provide, including dispute resolution through the Commission, mandatory safer gambling tools and participation in the National Gambling Self-Exclusion Scheme. The same dynamic has been visible elsewhere: our coverage of Gamecheck's discovery of 5,000 fake online casinos in Brazil showed how quickly unlicensed operators can scale once players start looking outside the regulated market.

What comes next for UK gambling tax policy?

With the Remote Gaming Duty increase already in effect and the remote sports betting duty rise due in April 2027, the immediate battleground is over how the Treasury and the Gambling Commission respond to channelisation data as it firms up through 2026 and 2027. Trade bodies including the BGC are pushing for enforcement funding and advertising restrictions on unlicensed operators to be tightened in parallel with any further tax changes, arguing that tax policy and channelisation cannot be treated as separate issues.

Comparison: UK onshore market metrics, 2019 to 2031 (projected)

Metric	2019	2025	2031 (projected)
Offshore gross gaming yield	200 million pounds	685 million pounds	1.4 billion pounds
Offshore turnover	5 billion pounds	16.6 billion pounds	Not disclosed in this dataset
Onshore channelisation	97 percent	92 percent	85 percent
Licensed market turnover share	Not disclosed in this dataset	90 percent	78 percent

Source: H2 Gambling Capital data as reported by iGaming Business, July 20, 2026.

Frequently asked questions

What is the UK's Remote Gaming Duty in 2026?

The Remote Gaming Duty rose from 21 percent to 40 percent of gross gambling revenue when the increase took effect in April 2026, per H2 Gambling Capital's analysis of the Budget change.

How big is the UK's offshore gambling market in 2026?

H2 Gambling Capital estimates offshore gross gaming yield reached 685 million pounds in 2025, up from 200 million pounds in 2019, with offshore turnover climbing to 16.6 billion pounds, as reported by iGaming Business on July 20, 2026.

What is channelisation and why does it matter?

Channelisation is the share of gambling activity taking place through licensed, onshore operators rather than unregulated offshore sites. UK onshore channelisation stood at 92 percent in 2025, down from 97 percent in 2019, and is forecast to fall to 85 percent by 2031.

What does the Betting and Gaming Council say about the tax hike?

BGC chief executive Grainne Hurst has said the tax hikes hand an advantage to illegal operators, warning that the only winners from the increases will be criminal operators based overseas.

When does the UK's remote sports betting duty rise?

A separate increase to remote sports betting duty, from 15 percent to 25 percent of gross gambling revenue, is scheduled for April 2027, according to H2 Gambling Capital's November 2025 Budget analysis.

Is it legal to use offshore gambling sites from the UK?

No. Operators without a UK Gambling Commission licence cannot legally offer real money gambling to UK customers, and using them forfeits the consumer protections, dispute resolution and safer gambling tools that licensed operators must provide.

Updated July 2026.