But is it going to push swathes of gambling activity offshore, and will it yield £1.1 billion in new tax revenue as the Office for Budget Responsibility claims? And why could it lead to retail closures when taxes on betting shops were left untouched??

Ed Birkin is not so sure, as Right to the Source breaks down the key figures to cut away the hyperbole and set out what GB gambling faces facing in the wake of the tax rise.

The draft, “The Case For a National Online Gambling Tax“, stressed that while land-based bookmakers and casinos are currently taxed between 6%-9% of winnings or gross gaming revenue by the licensing provinces, they still generate employment and other communal benefits for the citizens. The same cannot be said about online and interactive gambling despite the significant spike in its user engagement.

A recent publication from the market’s regulatory bodies showed GGR from online gambling went up 60% on data from the previous year.

According to a report from Statistics South Africa, firms providing bookmaker and online gambling services saw a massive income boost up to R152.6 billion ($8.9 billion) as of 2023, representing a 72% increase between 2018 and 2023, a figure which clearly surpassed all other activities in the sports and recreation sector.

Why this proposed tax rate is cause for concern

With online gambling being in direct competition with land-based casinos as part of the interactive gambling industry in most countries, tax rates should be aligned to ensure fairness, the draft stipulated.

And as up to 11 other jurisdictions are already charging a 20% tax on GGR, with a further 16 regulators collecting an even higher tax rate, the National Treasury explained why the proposed rate should be upheld and implemented. The national gambling tax would be in addition to the provincial tax rates and would lead to a tax rate of between 26% and 29% for all online gambling activities.

The new rate is expected to translate to an additional R10 billion in revenue generation to the South African government. However, the proposed reform was not particularly aimed at further revenue generation but to curb the issue of problem and pathological gambling and its consequences.

Enforcing oversight

In respect to that, the National Treasury has also mapped out a procedure to ensure oversight and the collection of the proposed tax rate when approved.

Every online operator will be required to register and provide the South African Revenue Service with similar information to that currently available to the provincial gambling boards they are licensed to, which is used for gambling tax revenue collection. That way, compliance will be enforced.

Local industry players who are involved in interactive gambling will also be subjected to the proposed tax, depending on the extent of the GGR of every gaming activity in which they are involved.

In its conclusion, the Treasury’s proposal noted that regulatory bodies have not kept pace with the evolving market over the years as forms of gambling (like online and interactive gambling) other than lotteries and sports pools have been let off, hence the need for the new rate on their operations.

The betting and gaming consultancy questioned some of the figures put forward by the Office of Budgetary Responsibility (OBG). Previously, the OBG said the changes could bring in up to an additional £1.6 billion in tax receipts.

This figure, however, was reduced to £1.1 billion when accounting for “behavioural change” expected among consumers due to tax increases. These reflect a possible fall in player demand due to a reduction in bonuses as operators seek to mitigate the impact of higher tax, with some users also turning to the black market.

However, H2GC said the increase in tax receipts would be more modest. Its own estimates place the rise at around £800 million by FY28, after accounting for behavioural change among players.

That said, prior to behavioural change, H2GC noted that its estimates were in line with the OBR at £1.6 billion in additional tax income.

Behavioural changes from GB gambling tax hike

The most variation appears within the iGaming sector, which faces the higher rate of 40%. Based on its own calculation, H2GC said the “static” increase – prior to behavioural change alterations – would be £1.35 billion by FY28. However, it placed the adjusted figure at £649 million, almost half the initial, static figure.

As for sports betting, which will see its tax rate rise to 25%, the static estimation was £204 million. After behavioural change, the adjusted figure was considerably lower at £149 million.

Chancellor Rachel Reeves confirmed the tax increases in the autumn budget announcement on Wednesday. These include a rise in remote gaming duty from 21% to 40%, which will come into effect in April 2026.

A new general betting duty for remote betting will also be introduced in April 2027 at 25%, up from 15%. This will apply to online betting profit but exclude self-service betting terminals, spread betting, pool bets and horse racing bets.

Higher tax could push revenue down 14%

H2GC also compared the impact of higher tax rates on gross gaming yield (GGY) and gross gaming revenue (GGR) in the UK. It said both would be impacted by operators withdrawing from the UK, due to the rise in tax, and an increase in players switching to unlicensed sites in search of better bonuses and promotions.

By FY28, GGY – based on the market after the tax increases – would be around £6.69 billion. However, if rates were to be kept the same, GGY would reach approximately £7.79 billion. In total, H2GC said GGY would drop £1.1 billion, or 14%, if the tax rise goes ahead.

Again, iGaming would be the hardest hit, with a 16% drop in GGY expected after the new tax rules come into effect. Sports betting GGR would be 8% lower based on the same estimates.

In terms of GGR, current regulations mean this could hit £9.14 billion by FY28. After the tax rises, GGR would be approximately £7.12 billion, meaning a decline of £1.97 billion, or 22%, as a direct result of higher tax rates.

H2GC said iGaming GGR could be as much as 25% lower in FY28 if the tax rise goes ahead. Sports betting GGR would be 11% lower, with the rate increase here coming into effect later than for iGaming.

Black market in Great Britain to double in size by FY28

Much of the behavioural changes accounted for by the consultancy relate to players moving to black market sites.

Based on current taxation rates, total channelisation for the online market will be 94% by FY28, in terms of GGY. This would reach 97% for sports betting and 93% for iGaming. However, after the new rates, channelisation for the entire market could be as low as 87%, H2GC said. Sports betting channelisation could drop to 94% and iGaming 83%.

As for GGR, based on current taxation, channelisation is on track to be 93% in FY28, with a split of 97% for sports betting and 92% iGaming. Should the tax increase go ahead this would be around 84% for the whole online market, with sports betting at 93% and iGaming 80%.

In essence, H2GC said the black market could more than double in size based on the new tax rates. Offshore GGY would be 111% higher by FY28 if the changes takes place, with offshore GGR also rising 110%.

“We have little doubt that, if the direction of these forecasts materialise, then a reduction in the onshore market will be viewed by politicians as a major victory,” H2GC said. “Not only have they been able to curb the size of the onshore online gambling industry, but they have increased tax revenue at the same time.

“However, what will be completely ignored will be the at least doubling in size of the illegal market and all the negative implications this has, not least on player welfare.”

Industry hits back at planned changes

Announcement of the tax increases, unsurprisingly, led to criticism from the industry. Many major operators hit out at the decision, saying this would not only impact their own business but also have a detrimental impact on the wider market.

Primary concerns included increased traffic to the black market, a reduction in bonus offers and cut-backs on spending, with some businesses warning jobs could be lost as they seek to mitigate the impact of higher taxes.

Tax rises were confirmed by the Office of Budgetary Responsibility and set out in Parliament by Chancellor Rachel Reeves during the autumn budget announcement on Wednesday.

Among the gambling-specific changes was a hike in remote gaming duty from 21% to 40%. A new general betting duty for remote betting will also be introduced in April 2027 at 25%, up from 15%. However, this only covers online betting profit and excludes self-service betting terminals, spread betting, pool bets and horse racing bets. 

The new tax rates will come into effect from the start of the next financial year in April 2026.

Unsurprisingly, the response from the industry has been negative and highly critical. Main concerns include how the new rates will impact investment in the industry, with potential job cuts on the horizon. There were also worries over the future financial performance of operators and a potential rise in black market gambling.

Tax rises will ‘significantly’ harm UK industry

The overall consensus was that higher tax will have a negative impact on the UK market. Betting and Gaming Council CEO Grainne Hurst said the new, “excessive” online tax rates will undermine jobs, investment and growth.

“Massive tax increases for online betting and gaming announced in the budget make them among the highest in the world,” Hurst said. “They’re a devastating hammer blow to tens of thousands of people working in the industry across the UK, and millions of customers who enjoy a bet.”

Per Widerström, CEO of Evoke, also raised concerns about the impact the tax rise will have on the UK market. He said the increases are “highly damaging” for the UK economy and players.

“As an industry, we have consistently warned of the significant impact on jobs, investment in the UK and player protection that these changes would have,” Widerström said. “Yet sadly the government chose not to listen. Proposals are ill-thought-through, counterproductive and highly damaging. It is clear these changes will significantly harm businesses, employees and customers.

“As a result of the actions now required, these tax changes will reduce the overall level of tax the regulated industry pays in the UK and, more importantly, it will have a significant negative impact on player protection as these changes will incentivise activity moving to the illegal and dangerous black market.”

Stella David, CEO of Entain, said she was “deeply disappointed” with the decision, saying it poses risks to the industry.

“Disproportionately increasing gambling taxes will not only have a detrimental impact on our industry but also heighten the risk for customers,” David said. “As seen in other countries, punitive tax increases often lead to lower tax revenues overall, while also driving players to illegal, unregulated operators with no player protections.”

‘Robust’ enforcement must accompany tax rate

Super Group, which owns the Betway brand, was a little more positive in its assessment. CEO Neal Menashe said that the higher rates could be “reasonable” if accompanied by “robust and strict enforcement” in terms of black market activity.

“Super Group supports the reasonable taxation of online gaming in the UK,” Menashe said. “We rely on the government to ensure the very substantial increase should be paired with robust and strict enforcement against non-paying offshore operators. This is essential to protect the regulated sector’s investment in jobs, technology and responsible gaming in the UK.”

Elsewhere, Rank Group took the budget with mixed emotions. While the online rise will hit its digital business, this impact will be partly offset by the abolition of bingo duty, which was also announced in the budget.

“The announced increase in remote gaming duty represents a very significant blow to the regulated betting and gaming industry in the UK,” CEO John O’Reilly said. “While we are pleased that the government has abolished bingo duty, which will help to sustain jobs and investment in the land-based sector, the far more significant impact on the group is the hit to digital profitability.”

Budget ‘slightly’ better than expected

Away from operators, several professional firms and analysts have also given their opinion on the budget. Deutsche Bank said the news was “slightly” better than first thought, given the reprieves for land-based gambling. It said the budget “improves” the near-term outlook for the UK gambling sector.

“From a company perspective, Rank looks to have emerged significantly better than expected,” Deutsche Bank said. “Entain and Evoke are also slightly better, albeit for the latter there remains concern over the resulting balance sheet/leverage.”

Meanwhile, Adam Rivers, managing director and global head of betting and gaming practice at Alvarez and Marsal (A&M), said while the budget was “painful” for the online sector, not all business models have fared badly.

“Scrapping bingo duty and holding machine gaming duty steady gives land-based bingo operators some breathing space, helping venues that still matter to many communities stay on the high street and supporting the wider hospitality sector.”

How will operators cope with tax rise?

Looking ahead, some operators published forecasts as to how higher tax will impact their financial performance. They also detailed some of the measures they are putting in place to offset additional tax costs.

Super Group CFO Alinda van Wyk estimated an impact of approximately 6% to 2026 group adjusted EBITDA. However, the group has several mitigation levers in motion that are intended to offset the tax impact.

“Our strategy remains unchanged: sustainable growth and disciplined capital allocation,” van Wyk said. “We don’t expect the news to alter our long-term trajectory nor our capital return priorities.”

Entain’s David also offered insight into how the business will cope with the higher tax rate. She said it will mitigate approximately 25% of this impact through actions including reducing marketing and promotions. Consistent with the dates of proposed implementation, this equates to an EBITDA impact of approximately £100 million in 2026 and £150 million from 2027.

In addition, David hinted that Entain would likely pick up more UK-based players. This would come as other, smaller operators are forced to exit the market due to the higher tax rates.

‘Thousands’ of jobs set to be cut

Evoke’s Widerström also offered insight into potential mitigation steps. Approximately 50% of higher tax costs will be mitigated in the medium term. This includes through supplier savings, reduced marketing, retail store closures, operating cost savings and potential changes to the customer proposition.

Widerström added that Evoke will begin immediately to execute these mitigation plans, with redundancies set to be part of this approach. He said: “This will involve a significant reduction in investment into the UK and, very regrettably, the likely need for thousands of jobs to be cut up and down the country.

With Rank, the group said it expects an additional duty cost of £46 million on its UK digital business. However, this will be partly offset by the abolition of bingo duty. Rank also noted the impact of the 4.1% rise in the hourly National Minimum Wage to £12.71. It said this will represent an additional cost impact of approximately £5.5 million.

Some positivity over future financial prospects

Flutter UK and Ireland CEO Kevin Harrington was also among the voices of concern over the mooted changes. However, in terms of Flutter’s future performance, he remained optimistic.

Harrington said direct first order mitigation, including reduced operational, promotional and marketing spend, will be approximately 20% of gross impact during the first six months after implementation, rising to 40% thereafter.  As such, net impact on adjusted EBITDA for FY2026 would be approximately $235 million and $339 million in 2027.

“Despite this impact, I am confident that through both our scale and leading position in the UK, as well as the proactive cost initiatives that we are taking, we are well placed to navigate through the changes,” he said.

Playtech also issued a statement acknowledging the increases. It said that impact in group adjusted EBITDA for 2026 would be in the “high-teens millions of euros” before mitigation. However, it added that its operations outside the UK would help offset these declines.

“Given the group’s geographic diversity across regulated markets and strong performance and prospects outside of the UK, Playtech remains comfortable that it can meet market expectations for the full year 2026,” Playtech said.

Enlarged black market argument remains

The underlying theme was the impact the rise in tax will have on black market gambling. In the lead up to the budget, industry voices raised concerns about growth among unlicensed operators after tax rises.

The BGC’s Hurst said these concerns will now be realised. She said: “The budget is a massive win for the incredibly harmful, unsafe, unregulated gambling black market, which pays no tax and offers none of the protections that exist in the regulated sector.”

Flutter’s Harrington agreed, saying the increases hand a “big win” to unlicensed operators, who will become more competitive overnight. He said: “These black market operators don’t pay tax and don’t invest in safer gambling. At 40%, the UK’s remote gaming duty is now above countries such as the Netherlands, where a recent tax increase saw a rise in illegal gambling and a fall in government receipts.”

Regulus echoes black market concerns

Regulus was of a similar mindset. Analysts said the expected reduction in bonuses – as operators seek to mitigate the costs on the tax rises – will drive more players to unlicensed sites, which may offer more bonuses and promotions. With this, it said as much as £2.5 billion in gross gaming revenue could flow into the black market.

“The idea that people are going to gamble less because the licensed sector does not offer bonuses, has a slowly worsening offer due to a lack of profits to invest, or because the Gambling Commission has another £26 million ‘to tackle the illicit market’ is naïve at best,” Regulus said. “Instead, around £2.5 billion of GGR will flow directly into the black market, as is already happening on a smaller scale due to other regulatory interventions.

“The black market therefore gets to fill the vacuum of cuts in marketing, product and operating expenditure in the licensed sector – meaning its product will be better, stand out and will be sought out.”

A new general betting duty for remote betting will be introduced in April 2027 at 25%, up from the current rate of 15%. However, the new rate will only be paid on online betting profit and exclude spread betting, pool bets and horse racing bets.  

Bets made at self-service betting terminals will also be spared from the new rate.

The chancellor had been hinting at a gambling tax increase in recent months, after an initial consultation was launched in April to consolidate the current three tax rates: remote gaming duty, remote betting duty, and gaming machine duty.

The new rates are expected to raise £4 billion in tax receipts in 2025-26, marking a 9.8% increase on last year. In 2026-27, gambling tax receipts will increase by a further 24.8% to £5 billion.

Elsewhere in the budget, it was announced the current 10% rate for bingo duty will be abolished and casino gaming duty bands will be frozen in 2026-2027.  

The government said it expected operators to pass on up to 90% of the duty increases to consumers by increasing prices or reducing payouts. This, it said, will lead to a reduction in consumer demand which reduces the yield from the measure by £500 million by 2029-30.   

How have we gotten here?

In April HM Revenue & Customs (HMRC) and the Treasury proposed a single remote gambling tax to replace the current three-rate system. The sector hit back at the suggestion, flagging the impact a rise in remote betting duty would have, particularly on the retail and horse racing sectors.

Various think tanks got involved in the conversation, proposing the government raise the remote gaming duty to as high as 50%.

Since then, the Treasury Select Committee carried out an investigation into what format a gambling tax restructure, or hike, should take. It questioned various sector stakeholders and think tank experts in October about the impact a tax hike could have on problem gambling rates.

It also quizzed members of the BGC on why many operators maintain offshore bases and whether the sector was overstating its concerns for their retail businesses.

In its follow-up report, the committee advised the government to tax verticals separately based on their risk profile.

In its pre-budget preparations, which included a Select Committee meeting with industry stakeholders and think tank representatives, the Treasury has raised concerns around parts of the UK sector being based offshore in hubs like Gibraltar and Malta.

During its meeting in October, the committee probed Betting & Gaming Council CEO Grainne Hurst and Tax Committee Chair Stephen Hodgson on why many UK-facing gambling firms maintained an offshore presence.

The committee’s suggestion was that companies were based offshore to avoid corporation tax in the UK. But Hignett explains the reasoning is much more nuanced.  

“There’s a history as to why different parts of the industry are offshore and some are onshore, which needs to be understood to sort of realise how we got here,” says Hignett.

“They’re there for reasons that are well explained,” he adds. Hignett notes that operators have flitted between having offshore and onshore bases for years, to ensure they can compete on equal footing.

Dynamic regulatory environment

Additionally, in the UK remote gambling was illegal until the 2005 Gambling Act came into force in 2007. During this period mobile and online betting was increasing in popularity and operators remained or returned offshore to leverage this opportunity across Europe.

“If you’re an operator in 2007, the question is ‘Why would you come onshore voluntarily, when all of your competitors remain offshore?’ You’re volunteering to pay a whole load of taxes that’s just going to put you at a massive competitive disadvantage,” Hignett tells iGB.

“I can tell you about some of the musings of the Court of Appeal, in particular income tax cases where they look at gambling companies that have gone offshore and said, ‘We kind of understand why you went offshore, because everyone else had gone offshore, and therefore you would be the only people paying duty in the UK when the rules were like that’. So they were pretty sympathetic of that.”

But the Treasury has made some progress in better understanding the sector, he suggests. “You can see that in the differences between the Treasury Select Report and the rather blunt [gambling tax] consultation earlier in the year. But I think they’ve got a way to go to really understand those differences,” Hignett says.

A long way since the consultation

The consultation was launched in April by the Treasury, requesting stakeholder feedback on the current three-rate, profit-based tax system for operators. The initial report hinted at consolidating the three rates into one single rate across all verticals.

But stakeholders largely objected to this idea, as it would raise betting duty from 15% to 21%, in line with Remote Gaming Duty. This could hugely impact, and possibly decimate, the retail betting and horse racing industries.

Various other policies were then suggested by think tanks, including increasing remote gaming duty to 50%, and machine games duty from 20%. But we won’t know which the government has settled on until Wednesday’s budget session.

“If anyone has the ability to sort of shoulder an increase in tax, it’s probably not various people within the general betting duty camp — you know, the high street shops, particularly bookmakers, who are taking bets on horse racing, where they’ve got to pay the levy as well,” Hignett reflects on the initial consultation.

“The industry reacted badly to this consultation, thinking it wasn’t a very good idea, because I think it was based on a false premise, which was essentially, because various types of gambling can be consumed online they must be sufficiently similar, and therefore we can merge them all together.”

Taxes on high-risk verticals in the UK

In its report following the Select Committee meeting, the Treasury has advised the government to consider increasing the tax for high-risk verticals, like online casino.

“I think they are on a journey and I think they’ve probably got a way to go, because what we’re looking at is a very complex ecosystem,” Hignett says of the committee’s meeting and subsequent findings.

“The Treasury select interview process was really interesting because it was meant to be all about gambling tax policy,” he adds. “And most of the questions that were being thrown, particularly of the BGC, were more regulatory-related questions and around gambling creating social ills. I think everyone accepts that. That’s why it’s regulated, to try and make sure we can control that.”

When could a new gambling tax policy come into force?

On the timeline for a potential gambling tax hike, Hignett says the chancellor has a choice on when to introduce a new policy that is announced during the budget.

“She will either bring them into effect from midnight of Budget Day or from the beginning of the next financial year. If it’s a transactional tax, like capital gains tax or a tax on transactions like stamp duties, rate rises often take effect from midnight.

“For the types of gambling duty that we have been talking about, rate rises often take effect from the start of the next financial year (this is what happened when RGD was increased from 15% to 21%, with effect from 1 April 2019). As regards rule changes (rather than just rate changes), these will typically come into effect on a date prescribed in the Finance Act that enacts those rule changes.”

He says a date for operators to formally change their systems could be included in the budget speech.

The Federal Revenue Service in Brazil published its monthly tax update on Monday. The BRL1.09 billion figure was 9.4% lower than the BRL1.21 billion generated in September.

However, it did take the total market tax contribution to BRL7.95 billion for the year. This is the latest indicator the market has reaped sizeable financial benefits since regulation launched in Brazil on 1 January.

Brazil government set to vote on tax increase on Wednesday

The tax situation for the regulated Brazil betting sector could change imminently, with a vote scheduled on Wednesday for the current rate to be doubled.

Currently, the tax rate on GGR stands at 12%. However, operators have to pay a number of other taxes, meaning their overall rate is in excess of 40%.

The Senate’s Economic Affairs Committee is expected to vote on PL 5,473/2025 on Wednesday, with the bill doubling the tax rate to 24%.

If it is approved the bill will go straight to the Chamber of Deputies, unless an appeal is made for the Senate plenary to vote on it.

The bill is facing opposition, however, with a previous vote postponed reportedly due to the Chamber of Deputies President Hugo Motta stating the proposal would fail to have the required support to pass.

Brazil government intent on hiking gambling taxes

With an election looming next year, President Lula’s administration appears determined to increase gambling taxation as it seeks to hit its fiscal targets.

The government recently faced a major setback when its provisional measure proposing a 50% hike in gambling taxes failed.

According to Brazilian iGaming analyst Elvis Lourenço, this defeat has triggered renewed and increasingly urgent efforts by the administration to push tax rates even higher.

“That’s the main reason that they struck back so fast, because it was embarrassing for them,” Lourenço, managing partner of EX7 Partners, previously told iGB.

“This becomes an election agenda, because this is good for the audience and the public to get votes because we are a conservative country in some ways. So, to put this on their agenda, ‘we increase the taxes of the billionaires, of the gambling world’, it is good for the speech of the actual government.”

Lourenço warns that doubling the current tax rate would be an “insane” decision, one that could jeopardise the regulated market.

Brazil has captured much of the gambling sector’s interest this year after regulation launched on 1 January, with a number of international giants entering the market.

One such company was Flutter, which created its new Flutter Brazil business after acquiring a 56% stake in NSX, the parent company of Brazil-facing brand Betnacional.

That deal was concluded in May and, in Q3, Flutter achieved $87 million in revenue from its Brazil venture. This was 412% higher than the $17 million it generated in the same quarter last year prior to the completion of the NSX deal, which largely came from its existing Betfair business.

But while Betnacional achieved record iGaming revenues in Q3, excluding M&A Flutter’s revenue during the quarter was actually down 18%, which Flutter attributed to the fact that Betfair Brazil was still continuing its recovery from the friction derived from the re-registration required at the start of regulation in January.

Despite the Betfair struggles, Flutter CEO Peter Jackson remains confident the company will succeed in Brazil.

“Brazil is an exciting growth opportunity for Flutter and we retain a strong conviction that scale operators with the best products will win the largest share of the market,” Jackson said in the Q3 report.

Entain hampered by poor sports margin

Entain, meanwhile, enjoyed a successful transition to the regulated market with its Sportingbet brand, reporting a 21% year-on-year NGR rise in Brazil during H1.

But Q3 was a different story, with NGR in Brazil down 11% despite 14% volume growth.

Entain deputy CEO and CFO Rob Wood put this down to “genuine bad luck from sports results”, stating the company is still trading on the right side of expectations when it comes to volume.

He expects sports margin to normalise over time, with the volume growth demonstrating why Flutter continues to be enthused about its future in Brazil.

It’s not just sports betting where Entain struggled during Q3, however, with Wood saying slow game authentication has hampered the company’s iGaming efforts in Brazil.

“iGaming is not particularly strong at the moment and all the growth is coming from sports,” Wood said on the earnings call. “We think this is a market-wide phenomenon, not just Entain.

“The good news is we think there’s a lot more growth to come out of gaming as we look forward. But so far in 2025, it’s been slow.”

BetMGM investing heavily in Brazil

Last August, MGM Resorts International struck a partnership with Grupo Globo, LatAm’s largest media group, to introduce the BetMGM brand to the Brazilian market as a joint venture.

The company has stated on a number of occasions that it is aiming to reach 10% market share in Brazil, and it reiterated this target in its Q3 presentation.

MGM achieved “strong growth” in Brazil during Q3 without giving direct figures. The company is focused on efficiently building brand awareness and customer acquisition, powered by its on-the-ground team led by MGM Brazil CEO Almir Ribeiro.

However, MGM Resorts International CFO Jonathan Halkyard said the company’s heavy investment in Brazil will likely lead to MGM Digital reaching an EBITDA loss of close to $100 million for the year.

Halkyard explained the company’s investment is in line with its roughly 50% stake in the JV, which is already showing positive signs.

“The venture has seen encouraging growth quarter-over-quarter throughout the year in active players, deposits and GGR,” Halkyard said on the company’s earnings call.

Record LatAm casino revenue for Betsson in Q3

Betsson continues to make significant efforts in LatAm, launching in Brazil and Paraguay during 2025 to add to its existing markets which include Argentina, Colombia and Peru.

It is proving a successful venture, with Betsson achieving year-on-year revenue growth of 10.2% to €76.5 million in LatAm over Q3.

This was powered by record casino revenue in the region, rising from €46.1 million in Q3 2024 to €56.6 million in the same period this year.

Casino growth helped to offset a year-on-year drop in sportsbook revenue from €23.1 million to €19.8 million. Betsson put this down to tough comparisons with last year’s Q3 which included the European Championship and Copa America football tournaments.

LatAm accounted for 26% of Betsson’s revenue in Q3, down from 28% in Q2.

Betsson CEO Pontus Lindwall pointed to Argentina, Peru and Colombia as key areas of focus, with the former continuing to show strong underlying growth in terms of deposits and turnover.

Codere Online positioned to become a leading player

Codere Online is currently operating in the LatAm markets of Mexico, Colombia and Panama, as well as certain provinces in Argentina.

Its current total addressable market (TAM) is €4.8 billion, although it noted in its Q3 presentation the combined TAM of online expansion markets, which includes Brazil, Peru and Uruguay, could be €8.4 billion by 2029.

In the presentation, the company said: “Codere Online is especially well positioned to become a leading player across the region.”

Mexico continues to be Codere Online’s biggest market, achieving market revenue of €26.8 million in Q3. This is ahead of the €22 million generated in its home market of Spain.

However, with Mexico’s government weighing up increasing the gambling tax rate from 30% to 50%, Codere Online said it may have to reconsider its investment into the market.

Outgoing CFO Oscar Iglesias, who will shortly be replaced by Marcus Arildsson, expects the tax to come in from 1 January.

“The discussions around capital allocation, I think, is a broader one, and it’s in the context of the discussions we’re having at the board level,” Iglesias told analysts.

“The tax obviously factors into … our appetite and willingness to invest into the market because it has an impact on the unit economics, the flow-through of every dollar of NGR to EBITDA in the business.  

“It’s still a little bit early to say what that means in terms of our plans for next year to invest in Mexico.” 

Codere Online is also working under the assumption that the 19% VAT in Colombia, which is set to end from the start of 2026, will be renewed.

Codere Online Executive Vice Chairman Moshe Edree explained the operator’s short- to mid-term strategy “does not include Colombia”, echoing CEO Aviv Sher’s post-Q2 comments that the company was pulling back in the market.

RSI confident Colombia VAT won’t be renewed

But while Codere Online is expecting the VAT to be renewed, Rush Street Interactive CEO Richard Schwartz said on the company’s post-Q3 earnings call that the business is predicting the tax will be scrapped.

Rush Street Interactive followed many other operators in absorbing the tax through player bonusing. This meant in Q3, while GGR from Colombia grew over 50%, net revenue was down 27%. Revenue across LatAm fell 11%.

Despite this, Rush Street Interactive believes it holds second place in Colombia, while it also claims to be among the top seven operators in Mexico.

Monthly active users in LatAm during Q3 were up 30% year-on-year to around 415,000.

Rush Street Interactive listed Brazil, Ecuador, Argentina and Chile as potential expansion opportunities.

When asked on the earnings call whether the situation in Colombia may dampen the company’s interest in further LatAm expansion, Schwartz responded by saying the company was still excited by the region.

“We believe those markets are at the infancy of growth,” Schwartz said. “And as we see in our growth ourselves, there’s lots of opportunity there, and it’s a very large population across Latin America that are in the process of or will be legalising online gaming in the future. So we certainly remain very excited for it.”

Kambi lowers FY2025 guidance due to slow Brazil progress

In its Q3 report, Kambi announced it was lowering its full-year 2025 guidance from an adjusted EBITDA of €20 million-€25 million to approximately €17 million.

The company said this was in part down to the Brazilian market developing more slowly than expected, with CFO David Kenyon stating the company isn’t seeing the growth in Brazil it had “hoped for”.

Kambi CEO Werner Becher said on the earnings call that while the Brazil market is continuously growing, he believes the overall pre-regulation market size was overstated.

“There’s a little bit of disappointment, I would say, in the entire industry about the Brazilian market,” Becher claimed.

“The legalised regulated market grew slower than expected because the black market is still very big there.”

The campaign is crammed with evocative imagery: coin-pushers on sea promenades, bookies wedged between the chip shop and the newsagent, fruit machines with glowing buttons that evoke the warm memory of holidays. The Sun’s 8.7 million daily readers are told this is not actually about taxation, but an attack on “our way of life”. 

It is safe to say that what began as a technical fiscal recalibration has become a noisy public brawl about British culture, high-street decline and, not least, the right to personal choice and a harmless flutter. 

As Matt Chapman, The Sun’s racing columnist, writes: “By slamming the betting industry government will indirectly be telling you how you can – or in this case can’t – spend your money.” 

Farage enters culture war 

For a long time, arguments over gambling regulations and taxation have been contained among think-tanks, industry consultants and the occasional treasury committee hearing. But now the Labour government’s plan to overhaul gambling duties and increase taxes on remote gambling duties – with proposals reaching as high as 50% of gross gaming revenue (GGR) – is drawing strong reactions. 

Part harm-reduction exercise, part revenue-raising manoeuvre has collided with national nostalgia and The Sun, never shy about riding a political wave – as seen in its successful pro-Brexit campaigning in the run-up to the 2016 referendum – is very much pushing the debate. 

Protecting high-street livelihoods

The newspaper has said its campaign is a defence of punters and high-street livelihoods. This is an argument in line with that of gambling industry bodies such as the Betting and Gaming Council (BGC) who have warned of job losses of up to 40,000 and a £3 billion blow to the economy if the proposed tax hikes come into force. The sector has also been extremely vocal about high-street bookmakers facing an existential threat if a higher Remote Gaming Duty is enforced.

The Sun’s ‘Save our Bets’ activism has immediately attracted support from the right of the political spectrum, most notably from Nigel Farage, whose Reform UK party is currently the most popular party in the UK. More than a third of voters have said they would vote Reform UK if there were elections today, according to polling data.  

Farage’s constituency of Clacton-on-Sea in Essex is a seaside town that very much thrives on summer tourism – ripe with bingo halls, slot machines and gambling opportunities that play an integral part of the town’s entertainment offerings. Farage has called Labour’s tax plans an assault on British culture. He believes a betting tax hike will do nothing to help problem gamblers. 

Leader of the Conservative Party Kemi Badenoch has also spoken out against Chancellor Rachel Reeves’ plans designed to help fill a financial black hole. Badenoch accuses Labour’s “fun police” of taking a “nanny state approach” to betting, which she said could kill off the industry. 

Sun’s campaign evokes mixed feelings 

But the campaign has not been received entirely well by some within the gambling industry. “I’m uneasy about how the debate has been positioned,” says Dan Waugh of Regulus Partners, one of the sector’s most respected analysts. “This childish idea that gambling is a battle between good and evil has taken hold.”  

But Farage’s involvement, he concedes, is legitimate – he leads the most popular party in the polls after all. And as Waugh points out: “The Liberal Democrats and the Greens, for example, have developed positions that are explicitly anti-gambling. It would be worrying if none of the political parties were prepared to stand up for people who enjoy betting, bingo and horse racing.” 

Waugh does not approve of the spectacle into which policy has been conscripted. “The issues are complex,” he says. “We’re not helped by the noise.” With The Sun’s campaign and the public debate growing louder, the situation could perhaps offer a chance to improve transparency and push for more evidence-based policy. It may also give the gambling industry an opening to publicly challenge the government’s tax proposals. 

Operator support for Sun’s ‘Save our Bets’

Neal Luke, a gambling compliance consultant, says the issue is twofold. While the Gambling Commission is investing heavily in data and research, most people will never read it. What matters is how that information shapes regulation – and how clearly the public can understand what’s been considered. 

“The public will only see headlines. It’s about making sure they know what’s been considered, in plain English, from a neutral place – not a political one.” Asked what a neutral source would look like, Luke argues that today’s opinions are shaped by short-form online content, making balanced communication more important than ever. 

Among operators there is a positive acceptance of The Sun’s war on the government’s plans and of Nigel Farage’s outbursts. For Betfred’s Head of Communications Mark Pearson, the message should be about one thing only. 

“For me this is not about media framing but getting the message across that the country’s betting shops are already in a very, very fragile position. Any hit on the high street is going to close betting shops with job losses and less money going to racing and the treasury. Once betting shops close, they are not coming back,” Pearson says.  

A spokesperson for Flutter UK&I also backs the media campaign. Putting taxes up for any business is not a free hit; it has consequences, he stresses. “It’s great to see The Sun’s ‘Save Our Bets’ campaign as it gives a voice to the customer – and customers have been overlooked in the debate driven by anti-gambling groups so far this year.” 

Think tanks push back industry claims 

The “anti-gambling groups” that Flutter UK&I refers to are primarily the think tanks The Institute for Public Policy Research (IPPR) and Social Market Foundation. Both are pushing hard for a higher gambling tax. And both are heavily supported by several influential political voices, such as former Labour prime minister and chancellor Gordon Brown, who believes that the tax hike could help end child poverty in the UK, making the tax hike not merely a regulatory tool but a moral undertaking.  

“We tax cigarettes at 80%, we tax alcohol at 70%, but the online gambling tax is 21%. So there’s a big case for change. I think the gambling companies could well afford to pay a tax – and I want that money to go to child poverty,” he told Sky News. 

Dan Waugh of Regulus Partners worries that the entire debate, including the industry’s approach, has lost its anchor in evidence. And, in the end, a campaign led by a tabloid newspaper may not make things clearer. “Public debate is chaotic,” he says. “Statistics are misused across the board.” 

The most talked-about levy 

Grainne Hurst, the BGC’s CEO, attended the Reform UK conference earlier this year and was photographed alongside Farage, who in spite of popularity remains a divisive political figure. 

“It was a pleasure to lead the Betting and Gaming Council team at the Reform UK Conference this week. We had constructive discussions with senior figures in the party about the importance of a strong, sustainable and well-regulated betting and gaming sector,” Hurst wrote in a post on her LinkedIn page.  

Explaining the reason for her presence she added: “I will always stand up for our industry – one that supports 109,000 jobs, generates £6.8 billion for the economy, contributes £4 billion in tax and serves the millions of people who enjoy a bet responsibly.” 

‘Necessary lobbying’ for the sector

Waugh sees Grainne Hurst’s presence at Reform UK´s conference as a necessary part of the trade body’s lobbying efforts. “Operators should engage with a wide range of stakeholders, in my view. If anything, the industry has been far too passive in recent years in the face of an orchestrated campaign to close it down.” 

Others, who prefer not to speak on record, are less cheerful, noting that any perception of ideological capture could backfire while Labour is weighing its final tax design. What happens next will depend on whether Chancellor Rachel Reeves allows public clamour to overshadow the data on her desk.  

The government knows the gambling sector billions in tax revenue; it also knows online gambling has grown rapidly and that harms persist. It must weigh those realities against the possibility of shuttered shops, reduced racing revenue and a migration to offshore operators. 

For now, the noise grows as The Sun has succeeded in making gambling tax the most talked-about levy in Britain. Whether this results in better policy in the eyes of the industry – or simply more polarisation – remains to be seen. 

Following the failure of a provisional measure to increase the tax rate from 12% to 18%, new proposals were made in October to hike the current rate on gross gambling revenue to 24%.

An initial vote for the proposal was postponed earlier this month, prior to Tuesday’s meeting of the Economic Affairs Committee (CAE) also being pushed back.

Reportedly, Chamber of Deputies President Hugo Motta believed the bill did not have the required support to pass. He informed Senate chief Davi Alcolumbre of his intention to prevent the bill from going to a vote. This ultimately led to CAE president Renan Calheiros cancelling the meeting.

It is expected that negotiations over what the bill includes will continue with a vote potentially scheduled for next week.

The bill also contains a higher social contribution on net profit for fintechs and other financial institutions.

However, it could be a long process, with 172 amendments to PL 5,473/2025 having already been presented in the CAE.

If the bill is approved, it will head straight to the Chamber of Deputies unless there is an appeal for it to be voted upon in the Senate plenary.

Brazil government determined to hike gambling tax

With a general election coming up next year, the government, led by President Lula, seems set on increasing gambling taxes to meet its fiscal targets.

The government suffered a humiliating defeat when its provisional measure to raise the gambling tax by 50% failed.

Brazilian iGaming analyst Elvis Lourenço has told iGB this has led to desperate continued attempts to raise the tax rate.

“That’s the main reason that they struck back so fast, because it was embarrassing for them,” Lourenço, managing partner of EX7 Partners, told iGB in October.

“This becomes an election agenda, because this is good for the audience and the public to get votes because we are a conservative country in some ways. So, to put this on their agenda, ‘we increase the taxes of the billionaires, of the gambling world’, it is good for the speech of the actual government.”

Lourenço believes doubling the current tax rate would be an “insane” move that could risk a collapse of the regulated market, which only launched on 1 January this year.

Codere Online reported its Q3 earnings on Monday. It said net gaming revenue for the period had dropped slightly to €51.6 million from the €51.7 million reported last year. 

Adjusted EBITDA for Q3 was up €2.9 million or 93.3% compared to €1.5 million last year, with Codere Online reiterating its full-year NGR guidance of between €220 million-€230 million and adjusted EBITDA of €10 million-€15 million. 

The company’s NGR in Mexico was €26.8 million, a 0.4% year-on-year rise. Codere Online CEO Aviv Sher noted revenue had been flat in Mexico despite a 5% devaluation of the peso and a consistently low sports betting margin. 

However, Mexico is in the process of increasing its tax rate on gambling from 30% to 50%, as part of the government’s 2026 budget. 

The hike hasn’t yet been approved, but CFO Oscar Iglesias, who will shortly be replaced by Marcus Arildsson, expects it to come into effect from 1 January. 

“The discussions around capital allocation, I think, is a broader one, and it’s in the context of the discussions we’re having at the board level,” he told analysts during the earnings call, in response to questions on its position in the market.  

“The tax obviously factors into that in terms of our appetite and willingness to invest into the market because it has an impact on the unit economics, the flow-through of every dollar of NGR to EBITDA in the business.  

“It’s still a little bit early to say what that means in terms of our plans for next year to invest in Mexico.” 

Mexico government targeting the wrong side of legality 

Mexico continues to be Codere Online’s biggest market, with its €26.8 million in Q3 revenue ahead of the €22 million achieved in its home market of Spain. 

Its monthly active players in Mexico soared by 39% to approximately 88,300, compared to 50,200 in Spain. 

Elsewhere, Codere Online is working with the Mexican government to highlight the prevalence of the black market in the country.  

Iglesias said the government should be looking to bring illegal operators onshore as a source of additional revenue. 

“Directionally, obviously, a tax increase is not good,” Iglesias explained. “We always are looking for governments to look to increase compliance with anyone operating offshore or operating in the grey or black markets. That’s the first place we prefer for governments to look for additional revenues.  

“We are partnered with the Mexican government. We are partnered with governments in every market in which we operate, and we are going to find a way through this and continue to be confident that the Mexican market is going to be a winner for us over the short, medium and long term.” 

Tax rise might ease competitive landscape in Mexico 

Iglesias did note the incoming tax increase could dampen the competitive landscape in Mexico, perhaps benefitting well-established players such as Codere Online. 

“While it is difficult to know how other operators will react, we are expecting that this tax increase may have a chilling effect on both new market entrants in regards to their appetite for further investment in the Mexican market and on those not yet operating in Mexico, but with near or medium-term plans or ambitions to enter the market,” Iglesias said.  

“It is difficult to quantify the impact of that chilling effect, [but] we would at least directionally expect a more benign competitive landscape in Mexico going forward, which we believe will be to our and other incumbents’ benefit.” 

Codere Online five-year strategy does not include Colombia 

In the company’s Q1 results, Codere Online said it was pulling back in Colombia because of the 19% temporary VAT. Sher reiterated this strategic change on the business’ post-Q2 earnings call. 

The VAT is set to come to an end from the start of 2026, but the company is working under the assumption it will either be renewed or made permanent. 

Speaking on the Monday call, Codere Online executive vice-chairman Moshe Edree said the operator’s short to mid-term strategy “does not include Colombia”.  

“We just monetise it as it is. So we’re not going to invest any further unless the tax will change,” he said.  

Iglesias added more colour: “We continue operating under the assumption that this will continue, that this will get legislated in a more permanent way.  

“That said, that may not necessarily be the case. If it’s not the case, then we will rethink what it is we want to do. Obviously, that’s a game changer and fixes the primary problem in Colombia, which is the unit economics are not good in the context of a tax on customer deposits. It is a situation we’re monitoring. 

“As things stand today, it’s a tough market for us to find a way forward that makes sense for us.” 

What was once a familiar fixture of local life and working-class leisure could soon become a casualty of what the gambling industry has called a shortsighted fiscal ambition. 

Even before the threat of new levies, the retail segment was faltering as the nation’s gambling habits migrated largely online. Quarterly updates from Entain – with over 2,000 stores across its Ladbrokes and Coral brands – have repeatedly described retail as a “stable” but low-growth segment, although the group insists it “treasures” its shops as the backbone of its brand.

Major operators have issued stark warnings against a hike, insisting the impact could wipe out retail betting in the country, with thousands of jobs and hundreds of shops at stake. Aside from Flutter’s recent closures, Evoke, which operates 1,300 William Hill outlets, has also threatened to close as many as 200 shops – 15% of its estate – if taxes rise. As have Entain and Betfred.

“If [the tax rate] went up to anywhere like 40% or even 35% there is no profit in the business,” Betfred founder Fred Done said in an interview with the BBC on 19 October. “We would have to close it down … probably 7,500 job losses.”

Speaking to iGB, a spokesperson for Flutter UK & Ireland reiterates the impact a rise could have on its retail business, noting it has already had to close shops even before any tax increase. “We unfortunately had to close 57 Paddy Power shops last month – and that’s before any increase in gambling duty. Any tax increase on business isn’t a free hit, it comes with consequences,” they warn.

Tax hike will ‘devastate’ UK high street bookmaker jobs

A rise in gambling duty will have a significant effect on jobs and sports sponsorships, as well as offering a huge boost to an illegal black market that has almost tripled in size in the UK in the past three years. 

A report commissioned by the UK’s Betting and Gaming Council (BGC) in October claimed such a “tax raid” could wipe out £3.1 billion from the UK’s economic output and threaten more than 40,000 jobs.

The analysis by EY found that once lost employment, reduced corporation tax and lower National Insurance contributions are considered, the Treasury’s net gain from the proposed UK gambling tax hikes could fall below £500 million.

“Further tax hikes would devastate jobs, reduce Treasury revenues and drive billions into the hands of the black market,” the BGC tells iGB.

The impact of a possible UK gambling tax rise on the already suffering retail sector has been clearly outlined by stakeholders, but some parliamentarians appear skeptical of the sector’s warnings.

Treasury committee doubts impact of remote tax hike on retail

During a Treasury committee session held in Parliament on 28 October, committee members probed BGC CEO Grainne Hurst and the trade body’s tax policy advisor, Stephen Hodgson, on the issue, seemingly expressing doubts over the sector’s threats that retail would take a hit even if remote taxes were to increase.

Hurst confirmed that UK gambling companies operated a “circular economy” and a single profit-and-loss model, meaning any impact to one side of the business would inherently be felt across the group.

“They will be reinvesting money they make in one part of their business into another. And so if we see any additional further tax increases on any part of the sector, it is likely to have an effect on the retail side of the business,” Hurst told the panel.

“These are businesses that operate in an integrated manner. So if you were to increase remote taxes and leave land-based taxes untouched, you would still see a consequence on the overall ecosystem,” Hodgson added.

“If you look at some of the larger businesses the BGC represents, they are quite integrated. That’s how they manage to achieve economies of scale and become the large, successful businesses they are. And they will look at costs across the board.”

Could the retail sector be shielded from the impact?

Elsewhere, the panel discussed the potential of specifically shielding the retail sector from any tax increase by establishing a separate rate for online and retail betting activities.

Currently the sector pays a flat 15% General Betting Duty across profits made from bets made both online and in-person. But during the meeting Paddy Power co-founder Stewart Kenny proposed a separate lower rate for retail activities to help protect high street bookies from extinction.

“I believe there should be provisions in any taxation [model] that betting shops will be lower, because I think they can be a real social [hub] for people who don’t drink, to have fun. Betting shops do have a future, but obviously like [everything] on the high street they are going to suffer,” he said.

A social institution under threat 

Operators have equally raised concerns over the human impact of shop closures. In an interview with The Times, Entain CEO Stella David said closures would be a blow to community identity. “We don’t want to close shops,” she said. “These are part of Britain’s cultural fabric – not just places to bet, but places where people come together.” 

The sense of loss is echoed across the industry, says Bethan Lloyd, senior associate at Wiggin LLP who previously worked in William Hill’s legal team. She points to the special place the high street bookmakers hold in the lives of punters.  

“Many of these bookies serve as something of a social base for their regular customers; it is sad that this will be taken away,” she notes.

“Many of our shops play a central role in communities and we are committed to our retail estate, but clearly any duty rise in the upcoming budget could impact our plans,” the Flutter spokesperson adds.

Dan Waugh, a partner at Regulus Partners, believes the disappearance of the betting shop will have real social consequences. “Millions of people choose to bet and watch racing in shops despite the fact they can do both at home. A meaningful number of consumers will find their lives negatively impacted by the withdrawal of an activity that brings them pleasure,” he says. 

Impact on mental health 

Mark Pearson, Betfred’s head of corporate affairs and communications, stresses there is a lot more at stake than just a line on a balance sheet. “Retail is the very heartbeat of our business,” he says. “Fred [Done] started with just one shop in 1967. Betting shops are a massive part of communities and high streets.”

He also warns the knock-on effects would be profound. An impacted retail sector would mean reduced investment in horse racing and sport, and not least “a free pass for the black market that offers no protection for vulnerable players.” 

The BGC estimates that 1.5 million Britons stake up to £4.3bn annually with unlicensed operators in a growing black market.

Dan Waugh at Regulus Partners also adds a sobering warning that funding for treatment of gambling disorders, as well as harm prevention initiatives and research, is at risk of falling too. Under the new statutory levy, around 90% of funding comes from betting shops, online betting and online gaming.  

“If consumer spending in these channels falls as a result of tax increases, then we may see essential mental health treatment services collapse.”

The human cost 

The threat to the UK land-based gambling sector is not just about betting shops. The proposed UK gambling tax structures from think tanks such as the IPPR and Social Market Foundation (SMF) would hit all land-based gambling venues – from casinos and bingo clubs to seaside arcades.

Dan Waugh believes the SMF and IPPR reports which propose more than doubling current UK gambling tax rates are of “extremely poor quality”.

“Neither think tank appears to have considered the impact of shutting down large swathes of the land-based industry,” he laments. “Clearly, omnichannel incentives will be far less relevant if there are far fewer shops,” he says of crucial player retention strategies that operators have built over years.

But Lloyd acknowledges that successfully converting customers between online and retail has been a challenge for all the major operators. She says many retail clients don’t regularly bet online and stricter marketing rules have added a layer of complexity to omnichannel approaches.

Behind UK high street bookmakers lie thousands of British employees, many of whom have spent decades in the same communities and companies. Lloyd notes the personal cost is that these staffers will unlikely be redeployed as the industry is tightening its belt across the board.  

UK high street bookmaker employees won’t be redeployed

This will also negatively impact the consumer experience, Lloyd says: “This route will be minimised or removed, and with it, the grassroots knowledge of the punter and the product.”  

Waugh agrees that political advocates of the tax hike underestimate this disruption. “It is easy for people in Westminster think tanks to say that betting shop employees can easily find work elsewhere,” he says. “This ignores the fact that unemployment is rising, that in some parts of the country jobs simply aren’t there.”  

The industry’s geography aggravates the issue. “Online gambling – as with ecommerce in general – tends to concentrate employment in a small number of locations,” Waugh notes. “There might be some opportunities for shop workers in places like Stoke-on-Trent and Leeds, but these are exceptions.” 

The end of an era? 

Retail betting shop closures could have a ripple effect across British racing and related industries. A quarter of racing turnover occurs in betting shops, meaning their disappearance would erode media rights revenues and levy receipts.

“Racing will be the most impacted,” says Lloyd. “Given the demographic of the shops’ customers and their betting patterns.” 

As the chancellor’s autumn budget approaches, the industry’s lobbying has reached fever pitch. Entain’s David has urged policymakers to look beyond short-term revenue. “When you start damaging the regulated market, you don’t get less gambling, you just get less safe gambling,” she has told the media.

The image of the British bookmaker has endured for decades. But it now stands at a crossroads. Taxation that aims to boost public finances could instead hollow out the very communities it is meant to serve and, if the environment becomes unsustainable for the operators, policymakers may soon witness the disappearance of one of Britain’s last surviving high street institutions.  

At a time when talk of a Las Vegas slowdown swirls as visitation dips, Stevens isn’t interested in writing Sin City’s obituary. The numbers tell a different story. Even with fewer visitors, Las Vegas gaming revenue continues to rise. The Las Vegas casino market is evolving, not dying, he says.

With properties such as The D and Circa Resort & Casino – the first new hotel-casino development on Fremont Street since 1980 – Stevens is credited as one of the pioneers revitalising Downtown Las Vegas. And others are following his lead. “We’ve got nine construction cranes over downtown,” he notes, proof that development there is booming, not busting.

Listen to the World Series of Politics on Apple Podcasts

Do taxing times for sports betting worry Derek Stevens?

Stevens has also redefined the sportsbook model with Circa Sports, championing a low-hold, value-odds sportsbook that prioritises fair pricing over gimmicks. Circa’s success has been powered by expansion into multiple states. It offers something different, and it even secured one of Missouri’s two untethered sportsbook licences, beating out larger rivals in the process.

But Stevens warns that rising sports betting tax rates, especially like what Illinois has implemented, threaten the industry’s sustainability. In his words, these levies amount to “illegal bookmaker preservation taxes”. These measures hurt legal operators and risk driving bettors to offshore sportsbooks.

For Stevens, smart policy is key. Kentucky’s sports betting framework is “best in class”. Over-taxed markets like Illinois show how governments can “win the short term but lose the long game”.

All this and more in the latest World Series of Politics podcast!

The policy, rolled out by the government in July, allows for a 5% tax rate on every withdrawal made on any betting wallet, scrapping the previous 20% levy on net winnings. An additional 5% excise duty on deposits also came into effect, which does away with the previous duty of 15%.  

Legal advisors David Sarinke of McKay Advocates and Allan Mzungu of MMS Advocates both believe the new policy could bring about a financial boom for the government.  

Yet, it has also shifted a higher cost burden onto casual bettors and has introduced new behavioral and ethical challenges that gambling regulators must monitor closely.  

“Business Daily [recently] reported government betting tax revenues are projected to nearly double after the rate cuts.” Sarinke tells iGB. “That strongly implies increased betting activity has already started to pick up following the Finance Act 2025 changes.”  

“This change simplifies enforcement because tax is now collected digitally at the wallet gateway rather than at the level of individual bets,” Mzungu explains further.  

“It broadens the tax base, since even people who deposit and later withdraw without [actively] betting are taxed, capturing far more users than before. It will surely ensure continuous cash flow to the Kenyan revenue authorities, as deposits and withdrawals occur daily.” 

‘Wallet-flow’ taxation system  

According to the Parliamentary Budget Office, this “wallet-flow” system could see a doubling of gambling tax revenue. With collection now automatic and seemingly “tamper-proof”, it could mean a projected rise from about KSh5.4 billion to KSh11.4 billion in the 2025-26 financial year. 

“Under the old regime, it was the winners who paid the most – 15% to 20% of their winnings,” explains Mzungu. “Now, all bettors will pay 5% on deposits and withdrawals, regardless of whether they win or lose.” 

Mzungu says Kenya’s new gambling tax policy will stabilise revenue and close loopholes for the government. However, casual bettors will end up paying more as they are taxed even without winning.  

As Sarinke puts it: “This shift has created a cash-flow based tax model rather than a bet-outcome model.” 

The impact on betting behaviour 

SportPesa, Kenya’s largest operator, reported in an August 2025 update that the average wallet balance per active user rose by KSh285 within the first month of the new regulation. This indicated that bettors were now retaining funds for longer periods. 

“In terms of the behavioural impact on bettors, I’d say it is still too early to determine as the regulator has not yet released any official data,” Sarinke notes.  

“But you [expect] the lower effective tax burden [on winnings] would naturally incentivise higher betting frequency and wallet liquidity.” 

Mzungu goes on to clarify the metrics behind Kenya’s new gambling tax system: “Before the reform, a bettor who won KSh10,000 would lose between KSh1,500 and KSh2,000 to the withholding tax on winnings. Now, under the new law, withdrawing that same KSh10,000 attracts only KSh500 in tax, which is a 70% reduction in effective tax liability.” 

The Finance Act 2025 has turned Kenya’s betting ecosystem into a real-time, wallet-based tax network. It simplifies enforcement for government, has boosted revenues and incentivizes continuous betting for experienced punters. 

Mzungu is quietly optimistic in the long term: “If properly enforced and supported by responsible gambling frameworks, the reform could stand as a model for digital tax policy in Africa, balancing fiscal innovation with behavioral insight.”

In July, the gambling regulator in Kenya announced a shakeup of its licensing process, including a significant licensing fee hike.

During the committee session MPs heard from two panels of experts; the first included Jung who is acting interim associate director for economic policy and AI for the Institute for Public Policy Research (IPPR). 

The IPPR in August advised the government to increase remote gaming duty from 21% to 50%, and machine games duty from 20% to 50% of operator profit, to raise an additional £3 billion ($4 billion) in tax revenue per year. 

“Gaming machines and remote betting are fairly sort of sticky. You can raise the tax more and raise more money, but it also means not everyone will be deterred by higher rates or poorer odds,” he told the committee.  

“And therefore, on its own, I would argue it’s not a sufficient policy to address problem gambling.”  

Jung’s points were made in response to comments from ex-industry stalwart and co-founder of Paddy Power Stewart Kenny. He told the committee that “higher-risk” gambling offerings should be taxed more “to disincentivise bookmakers from sucking [players] from sportsbook into the online casino”.  

Netherlands not a fair example in black market tax hike argument 

Responding to a question on the impact of gambling tax hikes on the black markets, Jung said the Netherlands was not a viable example for gambling tax increases contributing to black market growth.  

The market increased its gambling tax in January as part of a staggered hike and, in August, reports suggested the rise would leave a €200 million black hole in the budget as less tax revenue was being made overall in the market.  

In its most recent report on market activity, the market regulator (KSA) said that this year, for the first time, black market spending had outpaced regulated gambling spending.  

“That is an example that [the industry] will use, but it’s the only example they will use,” Jung said. “In the Netherlands, not only did they introduce tax, they did a whole load of other regulatory changes as well, which we are not proposing.” 

Jung also pointed to very complex legal processes which would hinder black market enforcement in the market.  

“Fortunately, we don’t have that in this country. We are much better and we’re seen as world leaders when it comes to tackling this sort of black-market site,” he added.  

He also used Estonia as an example to show there “is no such correlation between the level of tax and the level of the black market”.  

“Estonia, lower tax, lower share of legal market. One of the problems we have in this area is that it’s very hard to measure, because you’re trying to measure something that’s a criminal activity, so notoriously, it’s always hard to measure,” Jung added.  

Retail connected to online businesses  

In a second panel session, Betting and Gaming Council (BGC) CEO Grainne Hurst and BGC tax committee chair Stephen Hodgson answered the panel’s questions on how a remote gambling tax hike would impact retail operations.  

In recent weeks several operators in the UK have warned they would close high-street betting shops in response to a potential tax hike in the UK.  

Hurst said companies operate as a single profit-and-loss model and therefore any impact to the online sector through increase remote gaming duty would inevitably impact their retail businesses.  

Operators would likely have to pull back investment from other parts of their business, she said.  

Elvis Lourenço, a Brazilian iGaming expert and managing partner at EX7 Partners warns doubling the current gambling tax rate could have catastrophic consequences for the sector.

However, he suggests there may be room to negotiate the newly proposed 24% rate. He believes with intervention from the sector the rate could edge closer to 18%.

The tax 18% rate was previously proposed in Brazil’s initial sports betting bill which was passed into legislation in December 2023. However it was later brought down to 12% of operator GGR.

“The first bill that they proposed back in the day was 18%,” Lourenço tells iGB. “We all know that.

“So if you look for the best worst scenario, it is 15% at least, 18% maximum because that was on the first agenda.

“But 24% is insane. It’s insane and it will collapse the market.”

Where does Brazil’s gambling tax rate stand today?

Discussions over taxation on gambling in Brazil continue to plague the market, with the government determined to increase the rate amid concerns over the social and financial impacts of betting on the population since regulation launched on 1 January.

A provisional measure to increase the rate from 12% to 18% failed to pass through Parliament earlier this month, as did plans to introduce retrospective taxes for pre-regulation gambling activities.

Just a day after the provisional measure was withdrawn, a new bill (PL 5,076/2025) was presented by Lindbergh Farias, leader of the Workers’ Party in Brazil’s Chamber of Deputies, which seeks to double the tax rate to 24% of GGR.

PL 5,076/2025 received urgent status last week and, while it is still unclear when exactly the Chamber of Deputies president Hugo Motta will put the bill to a vote, the industry is once again left nervously awaiting developments.

Gambling being used for political motivations

The Brazil government seems dead set on increasing the tax burden on gambling, with a policy of introducing new taxes on the three Bs – billionaires, banks and betting.

With an election coming up next year, Lourenço suggests President Lula’s government is trying to appease the significant conservative section of the population by increasing taxes on betting operators.

This, according to Lourenço, has been expedited by the humiliation for the government of its failed provisional measure to increase the rate from 12% to 18%, with the gambling sector being used as a “currency of trade” by politicians.

“That’s the main reason that they struck back so fast, because it was embarrassing for them,” Lourenço explains.

“This becomes an election agenda, because this is good for the audience and the public to get votes because we are a conservative country in some ways. So, to put this on their agenda, ‘we increase the taxes of the billionaires, of the gambling world’, it is good for the speech of the actual government.”

Gambling industry the target

Brazil’s regulated sector has endured a mixed start, with hesitant optimism weighed down by lingering concerns over tax rises and new ad restrictions.

Many are frustrated by the threat of tightening regulations so early into the regulated market. Lourenço argues the fact that the licensed sector is still so new is in fact the reason it’s being targeted for tax increases.

“They [the Brazil government] need to collect [taxes] with some industry, and unfortunately we are the industry at target,” Lourenço says. “If they choose retail, commodities, banking, the lobby is too strong.

“So unfortunately, we are the target because we are new, with new regulation, and the conservative country says, ‘they can pay more’.”

Unfair comparisons to other markets

Lourenço also highlights the comparisons some are making to other jurisdictions, with such comparisons ignoring the other taxes that operators in Brazil are mandated to pay.

At present, in addition to a 12% tax on GGR, operators are subject to a 9.25% PIS/Cofins levy and municipal taxes that can reach up to 5%.

They are also taxed on approximately 34% of their profits, comprising 25% corporate income tax and a 9% social contribution tax.

Brazil is also transitioning to a new tax system, with PIS/Cofins being replaced with a dual tax system that Lourenço predicts could raise the total burden on operators to an excess of 50%, if further GGR-based taxes are also added.

Government targeting the wrong side of legality

Another point of frustration for Lourenço and much of the licensed sector is the government’s emphasis on targeting legal operators, rather than their black market alternatives.

Somestakeholders have estimated over half of the Brazilian gambling market’s revenue is generated by the black market, claiming the government’s focus on restricting licensed operators is hugely benefitting operators that act outside of regulation.

With the government seemingly desperate to generate more tax revenue from gambling, Lourenço suggests it should instead focus on bringing more betting onshore rather than simply raising the burden on licensed operators.

If the government can effectively reduce the black market, Lourenço says operators would be more inclined to reluctantly accept lesser tax increases.

“They are targeting to increase the taxes but they are not targeting to combat illegal gambling,” Lourenço adds. “So you have more than 50% in the black market and they’re doing nothing to get this money that is circling through.

“Guys, let’s try to get some money from here [illegal gambling]. If we can lower 50% to 30%, well it’s done.

“And the distribution of the money is too low for the security, for the enforcement. So we know that most of the money must go to health and to health programmes in Brazil and education as well. But you need to fight against the illegal market and you need to get the enforcement strong. But, it’s not happening.”

At stake is whether Estonia – already one of the world’s most digitised economies – can convert its technological advantage and forward-thinking tax policies into a credible and sustainable hub for online gaming. 

“Estonia is indeed moving toward positioning itself as a more attractive and competitive jurisdiction for gambling operators,” says Margus Reiland, partner and head of regulation, gambling and tax at Tallinn-based Law Firm Widen. 

Reiland explains that Estonia’s new gambling bill currently being debated in Parliament represents the most significant update to Estonia’s gambling framework in more than 15 years.  

New measures being considered

Among its key measures are: 

• Updated definitions of remote and additional gambling. 

• Broader scope for licensed operators to offer support services such as IT and accounting within the same group. 

• Mandatory audits of annual financial reports. 

• Clearer anti-money laundering data requirements for licence applications. 

• The Tax and Customs Board becoming the single point of contact for licences. 

• Tighter rules on gambling venues located near youth facilities. 

• Tenfold increases in fines and penalties. 

• Perhaps most importantly, a reduction in the remote gambling tax rate. 

According to the bill’s explanatory memorandum, its aim is to “modernise rules that have remained largely unchanged for over 15 years, strengthen supervision and improve the reliability and transparency of the gambling sector”. 

“In other words,” Reiland adds, “the reforms aim to encourage licensed operators to base their operations in Estonia instead of elsewhere in the world.”  

The timeline for reforms remains uncertain but Reiland says the bill is currently under parliamentary discussion and has not yet been adopted. “That being said, if the government coalition remains stable and continues to support the proposal, it is likely that the amendments will eventually pass,” he adds.  

Estonia new gambling bill’s tax reform 

One of the headline changes is the proposed lowering of Estonia’s gambling tax. For Reiland, this sends a clear strategic signal. The proposed bill by MPs from the Eesti 200 and the Reform Party would gradually reduce the remote gambling tax rate by 0.5 percentage points per year, aiming to reach 4% by around 2029.  

“From a regulatory standpoint, the intent appears to be to strengthen Estonia’s position in the gambling sector,” Reiland says. “And that intent is without a doubt positive.” 

Operators have largely welcomed the move, viewing it as recognition that “their long-standing concerns and challenges are being acknowledged by policymakers,” says Reiland. Although he also points out that the wider political debate “has been more divided”.  

The main question seems to be whether lowering the gambling tax truly benefits the wider economy or primarily favours the operators. 

The most prominent opponents are members of the centre-left opposition party Keskerakond The underlining sentiment is that the proposed gambling regulation is a lobby project, with no real positive effect. Industry insiders, however, are cheering the direction of travel.  

In an October blog post, Tim Heath, founder of crypto-driven gaming giant Yolo Group, praised Estonia’s new gambling bill, noting: “Only a year ago, the plan was to raise taxes. Proposing a different course took serious courage, and it shows the Estonian government understands how our industry really works.” 

Yolo has been headquartered in Estonia for years. Lower tax friction, Heath argued, would attract more operators, which in turn could bring “more investment, more jobs and, ultimately, more tax revenue. By going down this path, Estonia is choosing to grow its share of the pie rather than fight over the crumbs.” 

Digital credibility as a competitive edge 

Reiland believes Estonia’s strengths go beyond gambling taxation. “Obtaining and maintaining a licence in Estonia is already relatively fast, cost-efficient and administratively straightforward,” he explains. 

On top of that, “Estonia has strong IT infrastructure, robust cyber security standards and a well-developed anti-money-laundering framework. This raises the regulatory credibility to a high level.” 

In his view: “Estonia has always been a solid and effective choice for getting a licence – it just hasn’t received the same level of international attention as some other jurisdictions.” That could soon change. Estonia’s X-Road data-exchange system – a secure interoperability platform connecting public and private databases – underpins much of the nation’s digital governance and has become a unique asset for regulators. 

“It’s not just used in gambling supervision,” Reiland notes. “It’s also in data exchange across government agencies, health service providers and many private sector stakeholders. I wouldn’t go as far as to say it is a branding exercise but a widely used system that does actually support regulatory efficiency.” 

Yolo Group’s Heath agrees that this technological backbone gives Estonia an advantage few others can match. The market’s use of crypto as a payment method for gambling is a huge benefit to the group. “Estonia’s embrace of crypto in this new regulation helps cement its reputation as the world’s most digital country,” he wrote. “It encourages operator transparency and turns it into a national advantage.” 

Crypto and compliance in the EU  

Unlike many European jurisdictions tightening their stance on digital assets, Estonia is keeping cryptocurrency as an approved payment method – albeit under strict AML and KYC rules. 

“The Estonian approach allows crypto as a payment method for Estonian licensed operators,” Reiland explains. But he cautions that since MiCA – the European Union’s comprehensive legal framework for crypto-assets, designed to bring consistency, consumer protection and financial stability to the crypto sector – it is still a novel regulation and national practices differ.  

“It should be analysed under other target market jurisdictions whether all necessary requirements have been met,” says Reiland. In practice, he says, “the key question isn’t whether to use crypto but whether the operators know how to apply the highest standards of AML, KYC, enhanced due diligence etc under self-regulation principles”. 

In his blog post Heath echoed this pragmatism, arguing that Estonia’s openness “aligns with MiCA and EU best practice”. The integration of blockchain analytics tools such as Chainalysis, he suggests, allows for “real-time tracing and risk-scoring of crypto transactions,” thus enhancing transparency rather than undermining it. 

Crypto casinos, which are largely unlicensed or illegal across most European markets, are gaining rapid popularity among younger players. Last month Yolo announced it would be leaning entirely into regulated markets, and in another blog post Heath said he believed crypto was becoming “mainstream”.

Predictability and digital expertise 

Some in the industry remain cautious of Estonia’s new gambling bill and point to last year’s short-lived proposal to raise gambling taxes as a sign of political volatility. But Reiland dismisses this concern. 

“Estonia has had a very stable regulatory framework for a long time,” he insists. “The only real changes have come in the past couple of years, largely because different interests were competing over how to modernise the system. Right now if the bill is passed, the expectation is that the framework will remain generally stable for many years and the likelihood of a reversed course is very low in my eyes.” 

That sense of predictability – combined with Estonia’s digital expertise – could be decisive in drawing operators who are increasingly weary of the administrative burdens in older licensing hubs. The draft bill also introduces modest reforms to responsible-gambling measures, including expansion of the Estonia´s self-exclusion register, HAMPI. 

“There were different ideas floating on the self-exclusion list amendments but right now the latest parliamentary bill seems to be quite conservative,” Reiland notes. “It is my view still that probably the HAMPI regulation will be overhauled pretty soon since the existing system has been in place for quite some time.” 

Heath, meanwhile, highlighted this as one of the most important improvements, arguing that the reforms “lay the foundation for a safer, fairer environment – one where players can simply enjoy the thrill of the game, confident that they’re spinning in a trusted, regulated space”. 

Estonia’s new gambling bill a blueprint for Europe? 

If Estonia succeeds, could its model influence EU-wide discussions on digital gambling regulation? Reiland is cautiously optimistic. “Hopefully, if Estonia’s system proves effective, it could serve as a model for EU discussions rather than an outlier,” he says.  

“The underlying logic is not to prohibit or overregulate, but to use IT systems and secure information exchange to support legitimate business while maintaining continuous oversight.” 

Marriage of innovation and integrity could pay off 

For now, Estonia’s new gambling bill’s parliamentary journey continues. “It might be expected that after this bill has been adopted, the Ministry of Finance might also present a bill covering the remaining issues,” Reiland says – mentioning future clarification on crypto and the HAMPI system as likely priorities. “No seismic changes are to be expected.” 

As Heath of Yolo Group put it: “What Estonia is proposing right now could become a blueprint for how small, smart countries lead global industries – by marrying innovation with integrity.” And with legal experts like Reiland pointing to stability, efficiency and credibility as the cornerstones of the new framework, Estonia’s gamble on innovation might just pay off. 

These claims were made in a new report commissioned by the BGC and carried out by consultancy EY-Parthenon. Titled ‘Impacts of changes to betting and gaming regulation’, it considered several of the proposals submitted for an amended gambling tax.

The government is expected to set out new gambling tax plans during its upcoming budget on 26 November. Several approaches have been mooted but the government is yet to confirm which approach it will take.

The report considers four proposals, covering the current three core gambling tax rates in the UK. These comprise general betting duty (GBD), currently at 15% of net stake receipts, remote gambling duty (RGD) of 21% of profit and machines gaming duty (MGD) at 20% of profit.

It also took into consideration the impact of ‘elasticity’ when analysing each approach to new tax rules. Elasticity measures the responsiveness of one economic variable to a change in another.

This is based on estimates of ‘central’ price elasticity of demand, produced in 2014 by Frontier Economics for HMRC, and ‘higher’ elasticity, estimated by EY to account for a greater possible impact.

Aligning rates could cost almost 5,000 jobs

In the first instance, the report looked at how aligning rates would impact the industry. This approach would see betting duty rates rise to 21%, remote duty remain at 21% and machine duty stay at 20%.

Based on central elasticity, this measure would raise an additional £250 million in betting duty but also lead to a £400 million increase in black market stakes. As such, the government would forgo £10 million in duties. In addition, 800 direct jobs could be lost and 2,000 indirect jobs.

However, on a higher elasticity basis, this approach could favour the black market more heavily. Betting duty would rise £180 million, whereas black market stakes could increase by £1.2 billion. This could lead to a £420 million drop in gross value added (GVA), the measurement used to estimate the size of the industry and its supply chain, and 4,700 direct and indirect job losses.

SMF tax proposal could pump £8.1 million into black market

Secondly, the BGC’s report considered a proposal made by the Social Market Foundation (SMF). In July, the SMF suggested raising RGD from 21% to 50%, GBD to 25% – but cutting horse racing bets to 5% – and keeping MGD level at 20%.

In a best, central-based elasticity scenario, an additional £1 billion would be drawn from the industry in tax in this scenario. However, the report said black market stakes would rocket $5.8 billion and cut regulated industry GVA by £2.2 billion. In addition, some 22,000 jobs could be lost as a result of the changes.

As for higher impact, research suggested tax revenue would rise, but only by £470 million. This would be due to more players turning to the black market, with illegal stakes forecasted to rise £8.1 billion. GVA would drop by £2.5 billion and more than 30,00 jobs would be lost.

IPPR approach puts 40,000 jobs at risk

The third proposal addressed was from the Institute for Public Policy Research (IPPR), a progressive think tank. It suggested increasing all three rates: GBD from 15% to 25%, RGD from 21% to 50% and MGD from 20% to 50%.

Should this be the case, central elasticity basis suggests a £1.8 billion increase in tax, given that all three rates would rise. However, black market stakes are anticipated to rise £6 billion, wiping $2.5 billion off industry GVA. On top of this, the report said 29,100 jobs would be cut from the sector.

However, if there were a stronger, higher response from consumers, the impact of changes would worsen. Tax revenue would rise £1.1 billion but black market stakes would also jump £8.4 billion, leading to £290 million in foregone duty.

As such industry GVA would slump £3.1 billion, while some 40,000 jobs could be lost. This would include 14,100 direct jobs and 26,000 indirect positions.

Fixed increases would still hit jobs

Finally, the report looked at whether a fixed increase should be applied to each rate. In this case, referred to as a ‘ready reckoner’, GBD, RGD and MGD would all increase by 5%.

Based on central elasticity, excise revenue would be higher across all three rates, but other tax revenue would decline. GVA would be lower across each segment, while hundreds of jobs would be lost in the process. RGD would likely be hardest hit, losing an estimated £359 million in GVA and approximately 3,700 jobs.

In terms of high elasticity, again excise tax revenue would increase in each area, but other tax revenue would decline, with an estimated £210 million to be lost in total. GVA as a whole would drop £860 million, while up to 10,000 jobs would go.

Again, RGD would see the worst impact, losing £420 million in GVA and almost 5,000 jobs.

Tax rises a ’threat’ to UK economy

Commenting on the report, BGC CEO Grainne Hurst said it was clear further tax rises would be a “direct threat” to UK jobs and economic growth. She urged the government to tread carefully before committing to higher tax.

Any increases would be in addition to the new statutory levy, which came into effect on 6 April this year.

“Figures speak for themselves,” Hurst said. “Tens of thousands of jobs lost, billions diverted to the black market and a possible £3 billion hit to the economy.

“Tax raids like those proposed would mean fewer betting shops, casinos and bingo halls, fewer jobs and a huge boost to the growing, unsafe gambling black market, while not raising anywhere near the tax claimed.”

With this, Hurst called for “balanced’ regulations and a “stable” tax regime to help support a growing, regulated sector.

“These proposals would achieve the absolute opposite of that and undermine the very consumer protections that keep people safe by pushing customers towards the unregulated black market, where there are no safeguards, no tax receipts, no jobs and no support for the sports we all love,” Hurst said.

“Britain’s betting and gaming sector is a world leader – employing thousands, paying billions in tax, and investing in British sport. The choice is clear: back a successful, sustainable, regulated British industry – or risk losing jobs, investment and growth.”

High street bookmakers echo tax concerns

The report comes after several major operators warned they could close retail locations if the mooted tax rises go ahead.

A Sunday Times report suggested William Hill shop closures could take place if taxes rise. The sources, who were not named, said these closures could range between 120 and 200 – up to 15% of the entire William Hill UK estate.

Flutter Entertainment also set out plans to close 57 Paddy Power betting shops across the UK and Ireland. This, it said, was amid increasing cost pressures with almost 250 staff facing redundancy.

Stella David, CEO of Entain, has also said UK retail shops could close to help save on costs.

Yet, the revenue being generated through the “proliferation” of betting houses in the southern African nation was not flowing directly into the treasury, as punters’ winnings were untaxed. To formalise the industry and help boost revenue collection to meet “pressing budget needs”, he introduced the 10% withholding tax on gross sports betting winnings, one of only four taxes that he announced on that day.  

The tax, which came into force on 1 January, applies to winnings at all local betting shops and via online platforms operated by land-based bookmakers.

The Herald, a local daily, reported on 13 March that Zimbabwe’s gambling industry had generated about $120 million in revenue in 2023, with the online segment contributing $45 million.  

Ncube previously projected the economy could collect up to $15 million annually via the punters’ tax, based on his forecast of $150 million gross winnings in 2025. He said about 300,000 locals engaged in online betting in 2024, up 15% on the prior year, with 60% of bettors being between 18 and 35 years old.

“This growth has been fuelled by rising internet penetration and the accessibility of smartphones, with over 5.2 million devices in use nationwide,” the paper wrote.

Zimbabwe withholding tax will prove costly for operators

To comply with the new tax collection system, Marvellous Tapera, the founder and managing partner of WTS Tax Matrix, a leading Zimbabwean tax consultancy, said bookmakers were required to set up or upgrade their transaction and reporting systems to automatically calculate and withhold the 10% levy on all winning payouts across points of sale and online wallets.

“They also had to enhance accounting and reconciliation workflows to produce accurate monthly returns for ZIMRA (Zimbabwe Revenue Authority), train staff on tax procedures and customer communications, improve cash management and banking for timely remittances, and often consult tax or legal experts to ensure full compliance,” he tells iGB.

“Although feasible, these changes were operationally demanding and particularly costly for smaller operators, requiring significant time and financial resources,” Tapera adds.

Citing an anonymous operator, The Herald’s article reported Zimbabwe’s withholding tax would require a system upgrade costing up to $50,000 per platform. This is in addition to the $20,000 the average bookmaker spends on tax reporting yearly.

Tapera observes the betting tax’s flat structure raises fairness concerns. In its current form, he argues, the tax “is socially regressive” as it affects low-income and casual bettors compared to wealthier participants. It has the potential to squeeze operators’ profit margins and cause them to adjust odds to make up the losses.

“Applying a uniform 10% withholding tax without any exemption is regressive in a low-income economy like Zimbabwe’s, as it risks burdening poorer bettors and driving gambling activity to unregulated platforms,” Tapera adds.

He advises the government to adopt a more nuanced structure like the one proposed in South Africa, which is based on the amount and frequency of players’ winnings.

What can Zimbabwe learn from other African markets?

“South Africa’s model – a 15% withholding tax applied only to winnings above R25,000 – demonstrates how such a safeguard can protect casual players, and Zimbabwe would benefit from implementing a similar threshold or accompanying social protection measures,” Tapera suggests.

“Introducing a minimum exemption threshold or adopting a more progressive structure would make the system fairer while still capturing significant revenue from larger winnings.”

In a release on 5 September, Stats SA, South Africa’s national data agency, said the gambling sector generated $3.4 billion in GGR during the 2023-24 financial year. The latest figures from the National Gambling Board (NGB) in October reported an increase to $4.3 billion for the financial year 2024-25.

South Africa’s government announced the proposal to introduce a tax on winnings in 2011, with the aim being to start collecting it in the following year. The levy targets professional or regular bettors, while seeking to exclude casual punters.  

However, according to Deloitte, the government had not yet implemented the tax in February, due to staunch opposition from the local industry. 

Withholding tax must account for inflation

“The current economic climate, characterised by high unemployment and cost of living, calls for a balance between revenue generation and social protection,” the consultancy said in a 10 February note.

“A withholding tax on individual winnings may provide this balance if carefully structured. The minimum value for taxation should be reconsidered, taking into account inflation over the last 13 years since the first proposal. This will ensure that those gambling to supplement their low income are kept out of this tax net and do not turn to illegal gambling activities, which are completely out of SARS’ (South African Revenue Service) grasp,” the note said

In October, the Kenyan government similarly introduced a 5% withdrawal tax to replace its previous 20% tax on net winnings. It expects to collect about $74 million in the 2025-26 fiscal year, more than double the $35 million it collected previously.

Rapidly growing mobile penetration leaving land-based betting behind

Commenting on the new Kenyan model, Parliament’s “The Budget Watch 2025” document said a blanket tax rate could discourage casual participants and push actors from regulated platforms to offshore ones.

An official at one of Zimbabwe’s largest land-based operators expresses a similar concern to iGB. Speaking off the record, he says the withholding tax came into effect at a time when a large number of local punters is increasingly switching to unregulated and offshore operators.

“One now needs a mobile phone, a computer and an internet connection to start betting online,” he says.

“Some workers have been disciplined by their employers for participating in online gaming and betting using their employers’ computers and internet. And this [is on] platforms not subject to local regulations, including the new tax. 

“There are some people who used to visit brick-and-mortar branches who are now not doing so as frequently. [Zimbabwe’s witholding] tax will hasten the traffic to online platforms, leaving physical betting halls empty or for the few that don’t have smartphones and mobile data, and the old, technologically less-experienced ones.”

The Postal and Regulatory Authority of Zimbabwe said in its latest quarterly report in October that the nation’s mobile penetration rose from 101.39% in the first quarter of 2025 to 102.64% in the second.  The internet penetration also jumped from 76.19% in March, to 81.83% by June.

This figure includes its 50% share in the US-facing BetMGM business, although the operator did, for the second time, break its earnings down to also exclude its US figures.  

Ex-US NGR was up 4% or 5% cc, assisted by a 10% NGR uptick in the CEE region. 

UK NGR was up 8%, in line with expectations the operator said, with online (up 15%) largely driving the uptick. This was down to “growth in players’ values driving strong volumes and further market share gains”, Entain said.  

Notably NGR in Brazil was down 10% year-on-year during the period due to unfavourable sporting results which offset 14% volume growth.  

During the earnings call on Wednesday, Group CFO Rob Wood said that, despite this drop in revenue, the company is “excited” by Brazil’s potential.  

Wood dubbed the Brazil results as “genuine bad luck from sports results” as the market has a high football mix and was impacted by both Champions League and local league results.  

Wood insisted that, despite the dip, the market was “trading on the right side of expectations on a volume basis”.  

Impact of tax hike in UK  

When asked on the earnings call about mitigating the impact a possible remote gambling tax increase could have in the UK, Entain CEO Stella David warned a number of business areas would take a hit. 

“There are a number of levers we could pull which include being less generous on bonusing, odds [could] be not quite as good, a reduction in marketing. These are all things that one does to mitigate against unwelcome tax increases,” David told analysts.  

Adding to David’s point, Wood said the sports sector would take a hit as operators (including Entain) would likely pull back on sponsorship deals and the advertising around them.  

“It doesn’t matter which [market’s] tax [rate] moves, sponsorships, because there is a long pay back and they are about brand awareness, are an obvious place operators will go,” Wood added.  

“The only winner in that situation is the black market because they have less competitive disadvantage. The loser of course is [the] sports [sector].” 

“Obviously we don’t sit on our hands and not plan for those eventualities,” David added.  

The possible increase in remote gambling tax is a hot topic among the sector today and was also addressed in Rank’s Q1 2025 earnings update on Wednesday.  

In April the UK government said it was considering a new tax framework for remote gambling. It opened a consultation and is expected to provide an update on its plans in the 26 November autumn budget.  

Analysts asked Entain execs whether a hike could benefit the operator by speeding up industry consolidation and weeding out smaller competitors.  

Wood said it was certain that smaller operators would be squeezed, and up to 25% of the UK’s iGaming market was made up of tier 3 or smaller operators.  

Entain AUSTRAC proceedings update  

On the operator’s ongoing legal proceedings with Australia’s AUSTRAC, David said she was pleased with the operator’s current compliance framework in the market.  

“I think we’re probably market leading [with the system we have in place now],” David said. She noted there was no clear timeline for the proceedings and the legal process could end up being worked out in court.

It is currently working through a mediation process with the regulator, which “will take as long as it takes”, she said. Mediation started in the summer.

The operator appointed a new permanent CEO for its Australia business in August. Andrew Vouris acted as interim CEO for two months before being made permanent.

Farias proposed PL 5,076/2025 on 9 October, notably just a day after the Brazil Chamber of Deputies withdrew a provisional measure that had intended to raise the gambling tax from 12% to 18%.

Under Farias’ bill, half of the revenue from the 24% tax rate would go towards social security and actions within public health, while the remainder would be split between sectors such as sports and culture.

In his justifications for the bill, Farias noted the huge volume of betting in Brazil, which the bill reported now sits behind just the US and the UK in terms of highest betting consumption, according to a 2023 Comscore study.

“This growing increase in bets and the number of bets is accompanied by several social and economic problems,” Farias’ bill read. “What often begins as a joke can eventually lead to gambling addiction.

“Gambling addiction, in addition to having a strong impact on the mental health of gamblers and their families, can have a significant impact on personal and family finances, leading to significant indebtedness.”

Workers’ Party trying again to hike gambling tax in Brazil

Farias is a member of the Workers’ Party, currently in power and led by Brazil President Luiz Inácio Lula da Silva.

However, the failure of the Workers’ Party to pass any new rules on gambling tax last week has cast major doubt over its ability to fulfil its economic policies.

The previous tax increase bill, PM 1,303, initially intended to raise gambling taxes by 50%.

However, this was scrapped in the lead-up to last week’s vote on the provisional measure, with a retrospective tax programme on licensed operators’ pre-regulation activities also vetoed.

This new bill, PL 5,076/2025, marks a new attempt to try and increase gambling taxes and aid the government’s economic agenda.

“This proposed law increases Brazilian taxation on betting to a higher level than the average for other activities – which is justified by the fact that betting is an activity that is harmful to health and the family economy,” PL 5,076/2025 reads.

“However, it is important to emphasise that, even with the proposed increase, the Brazilian tax rate will still be below the rate of other countries, such as France and Germany.

“Therefore, to try to reduce this epidemic, in addition to all the regulations being developed by the federal government, we must increase taxes on betting so that bets become a little less attractive and so that the country obtains the resources necessary to invest in its healthcare system.”

Last week the Spanish government imposed a new policy requiring online gambling operators to present tobacco-style warnings across their products, alerting players to the dangers of gambling addiction and the likelihood of losing money.

Speaking to iGB, Hinojosa said the body had found out about the new policy in the media. It was not included in any discussions with the regulator before the announcement by Minister for Social Rights Pablo Bustinduy at a safer gambling event on 1 October.  

“The only thing we know is the Ministry for Consumer Affairs said last week ‘we are going to implement these new measures’ but said nothing about how the resolution [would be included in the law].

“They didn’t share any proposal with the sector, so we are exactly like you, reading about it in the media,” he adds.  

No clear timeline for tobacco-style warnings introduction

When asked when the tobacco–style warnings must be introduced by operators, Hinojosa says there has been no clear response from the regulator.  

“This is not really [made clear] by the regulator. We don’t know exactly what it’s about. We would like, once again, a solid impact analysis.” 

According to the government’s announcement, the rule was implemented into Spain’s gambling laws as part of the Royal Decree 958/2020, which covers marketing and gambling communications.   

It also noted the influence of recent addiction data as justification for the measure. The data was published by the Spanish Ministry for Health in 2024 and formed part of the country’s National Drug Plan.   

But Hinojosa questioned the relevance of the data, saying: “[Looking at addiction statistics] and the gambling problem across the consumer, it’s not really a bigger problem than before.”   

“The data for addiction among students is similar over the last four or five years. It is concerning for us, of course, but it’s not really a bigger or different problem than before.” 

Return of strict ad measures expected in Spain  

Policymakers in Spain are considering further player protection measures, including restoring a previously withdrawn ban on the use of celebrities in gambling advertising. 

The minister said this was currently being processed through the Spanish Congress and he did not offer a timeframe for the measure to be reinstated.    

Hinojosa tells iGB that up to five policies from the original Royal Decree 958/2020, which heavily restricted gambling marketing back in 2020, are being reconsidered by the government.  

These regulations sought to reduce minors’ exposure to gambling advertising in Spain by banning aspects such as sponsorship deals with operators. 

The decree was approved by the Supreme Court in November 2020, but a number of measures were overturned in 2024.  

Other stakeholders have speculated that the full scope of restrictions could be reinforced in the short to medium term, including watersheds for TV and radio advertising and welcome bonuses for new customers.  

“Big changes in regulation must be strongly grounded in empirical evidence and temporal sequences, rather than political decisions driven by impulse, intuition, or the partial interpretation of a single data point,” he says of the government’s overall approach to gambling reform.  

““It is [difficult] to understand why there are so many regulations to protect the player, then who protects the gambling market?”   

But Hinojosa says there is no indication of a timeline for these policies to be debated, due to the current political instability in Spain.  

In June, the organisational secretary of the Spanish Prime Minister’s Socialist Workers’ Party (PSOE) resigned on corruption claims and the prime minister himself has faced opposition calls to resign over the scandal which extends to others within the party.  

No threat of gambling tax increase in Spain 

One challenge that Hinojosa does not expect the Spanish sector to face is that of increasing tax rates. Governments across the UK and Netherlands and further afield to Latvia and Romania are considering or are already implementing tax increases for the sector.  

But Hinojosa says Spain has not had a budget session in the last two years and is not expected to have one in 2025, meaning any potential tax rise is not on the cards in the short term.  

“We do not expect any change to the tax system,” he tells iGB. “It would be another blow to the investments and the innovation that the sector brings to the country, whether the government likes it or not.” 

The measure was included this week in an amended version of PM 1,303, which sought to address a number of economic policies in Brazil. 

The retroactive tax would have replaced initial plans for a permanent increase in gambling tax from 12% to 18% of GGR. 

This tax rise was introduced in June as a provisional measure. But operators will return to paying the original 12% now the measure has been scrapped.  

The bill was approved by a congressional joint committee on Tuesday, with members voting in favour, 13-12.  

But as it hit its final stage on Wednesday, PM 1,303 failed to gain the required support to pass through Congress. 

The Chamber of Deputies withdrew the bill due to it not having the necessary support to pass. Members voted 251-193 in favour of the bill’s withdrawal.  

Senator Rehan Calheiros, the chair of the joint committee that analysed PM 1,303 on Tuesday, said the bill’s failure to pass could have huge ramifications for Brazil. 

In its amended form, the bill which included other economic measures was expected to generate BRL17 billion ($3.2 billion) in additional revenue over 2026. 

“This is very bad. It ends up affecting public finances. I think it’s regrettable,” Calheiros said. 

What does this mean for betting operators in Brazil? 

The retroactive tax scheme, dubbed RERCT Litígio Zero Bets, was introduced within the bill as a voluntary programme, requesting operators pay a 15% tax on gambling operations carried out between 2014 and 2024, prior to regulation on 1 January this year. 

Operators joining the programme would also pay a 15% fine, leading to an effective total tax charge of 30%.  

Udo Seckelmann, head of gambling & crypto at Brazilian law firm Bichara e Motta Advogados, told iGB this week the programme could have offered legal certainty for licensed betting operators in Brazil, helping them to avoid tax disputes in the future. 

What happens now? 

The expiry of PM 1,303 means retrospective taxes will not happen in the short term, but it is likely they will be revisited in the not-so-distant future. 

The government had expected to raise approximately BRL5 billion specifically from the retrospective tax programme.  

Notably, this would have been equivalent to three years of increased gambling tax revenue.  

With such a significant revenue stream on the table for the government, stakeholders expect the government will review similar opportunities again.  

The matter has been one of the key focuses of the GTI-Bets, a working group created in January between the Secretariat of Prizes and Bets and the Federal Revenue Service (RFB) which aims to ensure the licensed sector is meeting its tax requirements. 

Robinson Barreirinhas, special secretary of the RFB, told the parliamentary inquiry commission on betting in March that the government should seek to recover taxes that went unpaid in the grey market. 

Brazilian iGaming expert Elvis Lourenço believes retroactive tax will be revisited.

“Politically, the [failure of PM 1,303] signals limited congressional appetite for a fast-track fiscal package tying betting taxation to broader revenue measures,” he tells iGB. 

“Expect the government to reframe or refile elements in a new bill/MP, but timing is uncertain.”

Before the vote took place, a previous preliminary measure to increase gambling tax to 18% of GGR was hastily removed from the bill.

The government expects to raise around BRL5 billion ($560 million) from the retroactive tax programme, the equivalent of three years of revenue if the tax rate were to increase to 18%.

Heading into this week, the regulated betting market in Brazil had been prepared for the worst as PM 1,303, which contained the proposals for the 50% tax rate increase, awaited approval.

But the bill’s rapporteur, Carlos Zarattini, presented last minute amendments to PM 1,303 ahead of the vote, including removing the tax rate increase, which some believe did not have enough support to pass through Congress.

However, Zarattini’s amendments also included the creation of the Special Regime for the Regularisation of Exchange and Tax Assets (RERCT Litígio Zero Bets), which would seek to retrospectively tax operators for their activities prior to regulation on 1 January.

Vote approved by 13 to 12

On Tuesday, the amended PM 1,303 was approved by just a single vote in 25, with the bill now headed to both houses of Congress for a second vote, which is expected on Wednesday.

The approval followed a day of political negotiations, including a meeting with Finance Minister Fernando Haddad.

If the text doesn’t receive approval by the Senate and Chamber of Deputies by the end of Wednesday, the bill will lose its validity.

This means operators would go back to paying the 12% GGR tax rate enforced before the provisional measure was introduced in June.

Alongside the changes to the tax proposal, Zarattini’s amendments also included a clampdown on illegal operators.

Under the amendments, internet service providers will have 48 business hours to suspend content flagged as illegal gambling.

Brazil retrospective gambling tax will be ‘voluntary’

Notably, the bill said the retrospective tax requirement (RERCT Litígio Zero Bets) would apply a 15% tax rate on gambling activities between 2014 and 2024. It would also include a 15% fine.

Brazilian iGaming expert Elvis Lourenço explains to iGB that this means that operators would have to pay 15% income tax on the value of any online gambling assets they owned between 2014 and 31 December 2024, the day before the licensed market was launched.

Lourenço says operators would also be subjected to a fine equal to the tax rate, for operating in the grey market. This would lead to an effective total tax charge of 30%.

However, participation in the scheme is voluntary and licensed operators will have 90 days from the publication of the text to join the programme. This must be done through a voluntary declaration of assets.

“We’ve done everything we can to ensure that the funds from bets, which weren’t paid under the previous administration, now reach the public coffers,” Zarattini said following the vote’s approval.

A working group in August estimated that the retrospective tax scheme could raise up to $2.3 billion for government coffers.

Why would Brazil betting operators join the programme?

The voluntary nature of the retrospective tax programme may raise questions over why licensed operators would choose to join.

Udo Seckelmann, head of gambling & crypto at Brazilian law firm Bichara e Motta Advogados, tells iGB it could offer legal certainty for Brazil betting operators moving forwards, helping them to avoid prolonged tax disputes with the government.

“Voluntary participation might limit future liabilities, demonstrate good faith toward regulators and stabilise relationships with authorities,” Seckelmann tells iGB.

“However, many operators may question why they should pay retroactive taxes at all, since they entered the market under different legal and fiscal rules.”

Lourenço agrees it could offer licensed operators a pathway to legitimising past undeclared assets or profits, although he believes operators who deem retrospective taxes to be unconstitutional could threaten legal challenges rather than joining the programme.

Lourenço warns the proposal is still subject to political negotiations, with the potential for approval or further amendments, as well as the lapsing of the bill altogether.

Do operators win or lose from the amendments?

While the removal of the tax rise is a positive for operators, those companies that operated prior to regulation may feel uneasy about reporting prior undeclared assets.

Seckelmann suggested the proposal could raise concerns among those that entered the market under clearly defined tax expectations, which made no mention of this policy.

“Applying retrospective taxation could undermine legal certainty and investor confidence, discouraging compliance and future investment,” Seckelmann adds.

“A fair and forward-looking approach would be far more beneficial for the development of Brazil’s regulated betting market.”

On the other hand, Lourenço feels the amendments bring “greater clarity and predictability” to the Brazilian market, which is a positive development in terms of regulatory stability.

“For operators that generated profits in the pre-regulation period, it provides a clear voluntary route to settle potential liabilities,” Lourenço says.

“For those that operated at a loss or break-even, there may be little or no taxable base to declare, making the programme less relevant.

“Separately, operators that consider any retroactive taxation unconstitutional retain the option to litigate.”

If PM 1,303 passes, Seckelmann says he hopes the industry will actively participate in public discussions to ensure the measures are fairly implemented.

“If the PM is approved with such proposal, operators should analyse the fiscal impact, engage with industry associations and prepare for regulatory or judicial developments,” Seckelmann declares.

Back in June, the Brazil government published a provisional measure raising the tax on operators to 18% of GGR, from the previous 12%.

PM No 1,303 is set to be voted upon by the provisional measure’s committee on Tuesday, when politicians will decide whether to make the tax rise permanent.

The vote was supposed to take place last week but was twice postponed. The deadline for the tax to be approved by the committee and the Senate and Chamber of Deputies is this Wednesday.

The tax increase has caused widespread concern among the industry and, ahead of Tuesday’s vote, the IBJR has again warned that the tax rise risks boosting black market activity.

This could lead to hugely damaging consequences for players, who will not receive the same levels of protection in the black market as they do from the licensed operators who follow Brazil’s regulations.

The IBJR assesses PM 1,303 “exposes not only the sector, but also bettors to increasing risks of migration to clandestine operators”.

The association is also calling for digital platforms such as social networks and search engines to take a harder stance on illegal betting sites, with the “same rigour already applied to other illicit content”.

Tax rise risks affecting investment into Brazil’s betting sector

Additionally, the IBJR believes the 50% rise in the tax rate at such an early stage of Brazil’s regulated betting sector will lead to hesitation regarding investment into the market.

Brazil’s licensed betting sector launched on 1 January and, alongside this tax rise, the government is also weighing up whether to implement further restrictions on advertising.

“Abruptly changing taxation, increasing the contribution rate on gross revenue from 12% to 18% just eight months after the regulation was enacted, creates legal uncertainty, undermining the confidence of companies that have invested in the country,” the IBJR said.

“This instability threatens not only the continuity of operations but also the credibility of the business environment in Brazil.”

IBJR searching for new executive president

In September, the IBJR announced that its executive president Fernando Vieira was leaving his role in pursuit of a new professional opportunity.

Vieira had been in the role since March, having first joined the IBJR in October 2024.

Over his tenure, Vieira conducted important work in fighting the black market, which is often identified as the primary concern by licensed betting operators in Brazil.

The IBJR praised Vieira for his “decisive contributions” and the trade body is now searching for his successor.

André Gelfi, one of the IBJR’s founders and managing partner of Betsson Group in Brazil, is serving as interim executive president following Vieira’s departure.

Some 101 MPs – nearly half of Labour’s backbenchers – signed a letter asserting there is a “compelling” case for a “targeted levy on harmful online gambling products”. The letter, written by MPs Alex Ballinger and Beccy Cooper of the All Party Parliamentary Group for Gambling Reform, suggested that the money raised should be used to scrap the two-child benefit cap.

Ballinger and Cooper called on Chancellor Rachel Reeves to introduce changes recommended by the Institute for Public Policy Research (IPPR). Former Prime Minister Gordon Brown made the same call last month.

What gambling tax changes does the IPPR propose?

The IPPR proposes increasing the tax rate on gross gambling yield, with Remote Gambling Duty lifted from 21% to 50%. Machine Games Duty on cash-prize slot machines would rise from 20% to 50% under its proposal, while General Betting Duty on sports betting, online or in betting shops, excluding horse racing, would rise from 15% to 30%.

The IPPR estimates these measures would together raise an extra £3.2 billion ($4.3 billion) in 2026-27 – enough to remove the cap that allows families to claim benefits only for their first two children. The think tank said this would lift 500,000 children out of poverty.

“No child should be growing up in poverty while gambling companies continue to enjoy record profits,” Ballinger wrote. “Harms from gambling place a huge burden on our public services, costing the exchequer over £1bn a year.

“It’s time to confront these excessive profits, reduce gambling-related harm, tackle poverty and ensure gambling is taxed fairly.”

The Betting and Gaming Council, which represents the industry, said increasing taxes on the licensed sector would only strengthen black market operators.

In a statement, a spokesperson said: “We strongly oppose proposals to raise taxes on the regulated betting and gaming industry. Such a move would be short-sighted, harming jobs, investment and sports funding, while failing to deliver more revenue.

“Every time the treasury squeezes the regulated sector, it strengthens the unsafe black market, which pays no tax, offers no consumer protection and puts UK jobs and growth at risk.”

Dutch rate hike has led to tax revenue decline

Supporters of the industry also point to international examples. A recent increase in gross gambling revenue rates in the Netherlands has triggered a decline in revenue collected by that nation’s exchequer. After a rise from 30.5% to 34.2% was introduced in January, regulator Kansspelautoriteit (KSA) released a report in August revealing the measure will likely result in a €40 million drop in iGaming revenue. This was in contrast to government forecasts of a €100 million rise in GGR for 2025.

Earlier this month, Dutch State Secretary for Taxation Eugène Heijnen ruled out introducing a new policy to make up for an expected decline in online gambling revenue due to tax increases.

Speaking in parliament, he said: “It is true that the estimate for revenue has been revised downwards this year. This picture is broadly consistent with the expectations communicated by the KSA in a recent report.”

The Licensed Dutch Online Gambling Providers trade body suggested the revenue fall was due to several new restrictive measures enacted over the last year. These include bans on untargeted advertising and sponsorships, new deposit limits and the increased tax burden. It called for the government to act on this and revise the current tax framework.

As confirmed by draft legislation, the tax increases were originally scheduled to commence on New Year’s Day 2027, under plans approved in December 2024. However, the timeline has been shortened following a broader spending review by ministers last month.

The government is also accelerating plans to close down the country’s Lottery and Gambling Supervision Inspectorate (IAUI). The regulator will be consolidated into Latvia’s State Revenue Service (SRS) on 1 April – three months earlier than initially expected.

Latvia gambling tax hiked to 18%

From 1 January, Latvia’s gambling taxes on interactive gambling and telephone-based betting revenues will increase from 12% to 15% of GGR and 15% to 18% respectively.

Annual gaming machine taxes will rise from €6,204 to €7,440. Meanwhile, contributions on roulette, card and craps tables will increase from €33,696 to €40,440 per year.

The Ministry of Finance estimates that Latvia’s gambling tax increases will raise €9.2 million. Of that total, €175,000 will be handed to municipalities, with the rest to be pumped into the state budget.

Cost savings

Meanwhile, according to Finance Minister Arvils Ašeradens, the earlier-than-planned closure of IAUA will bring several benefits, including administrative cost savings.

Until the start of April, Latvia’s gambling industry will continue to be overseen by two regulators. The IAUI focuses on regulatory compliance and oversees licensing matters, while the SRS is responsible for tax issues.

However, their responsibilities overlap in several areas. Both have the power to enforce sanctions, conduct investigations and implement anti-money laundering measures.

“The integration of gambling oversight into the SRS will allow us to establish unified management faster, make better use of our resources and deliver higher-quality services to the public,” Ašeradens said.

Spending review

The decisions on gambling taxes and regulation were taken following a government cabinet meeting in late August. Ministers at the meeting discussed the state budget and spending plans across various areas through to 2029.

The government is trying to raise €565 million in additional funds for security, family support and education in the budget for 2026.

A package of draft laws relating to the budget – including the gambling tax increases – will be submitted to Latvia’s Parliament for approval on 15 October.

Across European markets, governments are imposing or proposing steep gambling tax hikes on operators, many of which last year contributed €3.8 billion in taxes to the European economy as a whole, according to the European Gaming & Betting Association (EGBA).

In most cases, policymakers have said they are turning to the sector to help plug budgetary holes. And gambling is a seemingly easy target for governments that can play into the public health argument against the industry.  

“Gambling has traditionally been viewed as a good source of relatively painless government revenue. Tax policies in European countries are also increasingly focusing on excise taxation, particularly environmental and public health excise duties, to raise much-needed public revenue,” explains Virve Marionneau, associate professor and tax expert, as well as director of the Centre for Research on Addictions, Control and Governance at Helsinki University. 

However, the returns from these gambling tax policies are uncertain and are likely to negatively affect the broader sector. So, what lies behind the political decision-making? 

Netherlands gambling tax hike impact already being felt

Let’s first take a look at what’s going on in the Netherlands. Lawmakers there approved a sharp increase in gambling tax, from 30.5% to 34.2% of GGR, starting in January 2025, with a further rise to 37.8% in 2026.

The Dutch Treasury had expected an additional €200 million in tax revenue annually, but figures from the licensed Dutch online gambling providers, represented by VNLOK, suggest that GGR in the first half of 2025 will be down 25% compared to the previous year, resulting in a shortfall of €200 million. 

Both VNLOK and the Dutch regulator KSA have expressed concern about the government’s plan for a further tax increase. 

When taxes increase on gambling operators, they often pass additional costs on to their customers. This could manifest in higher betting odds, higher fees or less attractive bonuses and promotions. As a result, players may turn to the more lucrative but also riskier unlicensed market. 

“The tax hike will have a negative impact on our market. Channelisation rates will decrease. We are worried about that, because we believe a strong legal market is key in combating illegal offerings,” Marloes Derks, spokesperson for KSA, tells iGB. 

Despite this, the Dutch government has stated that its tax policy will not change, even though expected revenue is falling short of expectations.

In accordance with budgetary rules, windfalls and shortfalls in tax revenue are reflected in the balance after policy is adopted. Therefore, the revenue shortfall, from this perspective, is not seen as grounds for a compensatory policy, according to State Secretary for Taxation Eugène Heijnen, who addressed the Dutch parliament earlier this month. 

A strategy doomed to fail 

The Dutch tax hike has drawn attention from other markets. 

“As I understand it, the message from Dutch politics is that they consider the concept of channelisation to be irrelevant. They simply ignore it in favour of various moral views on gambling. And then, of course, it becomes easy to raise taxes,” says Gustaf Hoffstedt, secretary general of BOS, the Swedish Trade Association for Online Gambling. 

He observes a trend across Europe of tightening conditions for licensed gambling companies, with tax increases being just one example. 

“An important component of that trend is the lack of interest in how such deteriorations affect the ability of licensed gambling companies to keep out unlicensed competitors,” Hoffstedt says. 

In his home country of Sweden, the Ministry of Finance was expected to raise €50 million a year through an increase in tax from 18% to 22% on GGR, effective from July 2024. But Hoffstedt – who calls the political reasoning behind the tax hike “profit hunger” – believes those figures are more likely to be around €20 million-$40 million. And it will come at a cost, he adds. 

“Reduced channelisation and around a thousand new gambling addicts as a result of the transition from licensed to unlicensed gambling,” he predicts. 

Trend across Europe 

Looking toward Eastern Europe and Tier 2 markets, Romania has imposed a 27% GGR tax on online operators from July 2025, up from 21%, and is also introducing higher licensing fees.

In the Czech Republic, the government increased the GGR tax for online betting, bingo and poker from 23% to 30% in 2024 to fund public spending. 

In Slovakia, where activity in the online casino market rose by almost 30% year-on-year in 2024, Environment Minister Tomáš Taraba has called the gambling industry “profiteers of human misery”. The government has proposed raising the tax rate for online gambling to 30%. 

Meanwhile, in Germany, every euro wagered on slot machines and poker faces a 5.3% levy. Because of this rule, up to 80% of online slot play now takes place with unlicensed operators, estimates the German Online Casino Association. German online casino tax revenue saw a decline of 16% in 2024 and, since 2022, there has been a 47% drop. 

France is already one of Europe’s most expensive markets to operate in, but the government is planning to expand GGR taxation and charges. It aims to generate an additional €1.6 billion in gambling-related revenue. 

“A few European jurisdictions like Malta and Estonia stand out with exceptionally low tax rates to attract onshore gambling operators. Other countries, like France, use high tax rates as a means to control entry to the market. The aim of French gambling policy has been to keep the number of licensees low,” says Marionneau, tax expert from Helsinki University. 

UK gambling tax decision will affect the whole sector 

And then there is the UK – Europe’s biggest market for online gambling – and for a long time, known in the industry as the voice of reason in Europe when it comes to a balanced approach to gambling regulation. However, for the industry, that perception may be about to change.

In April, the UK government proposed bringing the current three-level tax rate system for remote gambling under one consolidated rate. 

The industry has expressed concerns over the changes, believing it could result in all gambling verticals facing a 21% duty.

Several voices are pushing for a much bigger tax increase on the gambling sector. Among them, former Prime Minister Gordon Brown and the Institute for Public Policy Research (IPPR). They argue that a tax increase on the sector should be used to help fight the rising child poverty in the UK.

IPPR has recommended increasing remote gaming duty from 21% to 50%, and machine games duty from 20% to 50% of operator profit. General betting duty would rise from 15% to 25%, estimating that this could generate around €1.5 billion. 

The UK government is expected to present its plans in the 2025 autumn budget on 26 November.

UK government sending mixed signals

The UK’s Betting and Gaming Council has called the proposal “reckless” because it will drive players toward the unlicensed market, a claim that IPPR has chosen to dismiss. 

“There appear to be three drivers here: the economy, policy and politics. HM Treasury keeps all taxes under review and we know that it has been looking at online gambling for a while. It may take the view that the online gambling market can sustain higher levels, which will be unresented by the population at large,” says Dan Waugh, partner at Regulus Partners. 

The government is sending mixed signals regarding its attitude toward the gambling industry, and this has raised alarm bells, he says. 

“The Department for Digital, Culture, Media and Sport (DCMS) adheres to the traditional view that gambling is a legitimate pastime that can involve negative health consequences. It therefore favours a balance of freedom and protection. The Department of Health and Social Care, on the other hand, perceives gambling as the ‘new tobacco’ and wishes to do various unspeakable things to it enroute to prohibition.  

“Prudent operators will be looking at how they can mitigate the costs of any tax increases.” 

Whatever happens in the UK will affect the entire market in Europe, says Hoffstedt. 

“The UK, together with Denmark, has been able to show that it is possible to combine high channelisation with high consumer protection. If channelisation in the UK declines in the future, it will negatively affect all gambling markets in Europe.” 

Hoffstedt hopes that governments will eventually recognise the negative consequences. 

“In the end, it becomes obvious to everyone that a gambling market that lacks consumers – when they’ve gone to the unlicensed gambling market – lacks relevance and legitimacy. It is a strategy that is doomed to fail in every jurisdiction that uses it.” 

The UK think tank has suggested a significant uptick across the current remote gambling tax rates and gaming machines duty could raise over £3 billion ($4 billion) per year.

It recommended increasing remote gaming duty from 21% to 50%, and machine games duty from 20% to 50% of operator profit. This would go along with increasing general betting duty from 15% to 25%, “bringing other sports in line with … horse racing”, it said. Under this increase, the IPPR said the government could generate an additional £1.8 billion in 2026-27.

The proposed machine games levy increase could raise £880m, while the general betting duty rise could generate £450 million.

Such increases could be used to scrap the controversial two-child limit and benefit cap, which was introduced in 2017, the think tank added.

It believes these changes could increase fairness and reduce the complexity in gambling tax infrastructure.

“The industry benefits from unique tax advantages, including a complete exemption from VAT [sales tax] – unlike almost any other consumer-facing sector,” it added. “These reforms would ensure the industry contributes more fairly, reflecting both its profits and the social costs it creates.”

The think tank, which has a track record of influencing political debate, said its proposals targeted the “profitable parts of the gambling industry … where harms are concentrated and revenues have soared”.

According to the report, “over 60% of gambling profits come from just 5% of users, many of whom are at high risk of serious harm”.

Operators pay ‘little or no corporation tax’, says IPPR

IPPR stated that online operators pay “little or no corporation tax”, adding that “in 2021, two of the largest operators paid effective tax rates of just 3% and 4%”.

Justifying the proposal, Henry Parkes, principal economist and head of quantitative research at IPPR, said the gambling industry is highly profitable but is exempt from paying VAT and often pays no corporation tax, with many online firms based offshore.

“It is also inescapable that gambling causes serious harm, especially in its most high-stakes forms. Set against a context of stark and rising levels of child poverty, it only feels fair to ask this industry to contribute a little more.”

Black market ‘unlikely to be a major threat’

The gaming sector is already being threatened by a potential increase to UK gambling taxes as the government undergoes a consultation to consolidate the current three remote gambling tax rates into one.

The industry has warned this could be detrimental for the UK gambling sector and destroy the horse racing industry.

A YouGov survey in June reported that up to two-thirds of players could transition to the black market if costs from gambling tax increases were passed onto the consumer.

Controversially, the IPPR has said the black market is “unlikely to be a major threat” to its proposed reform to more than double gambling taxes.

However, the IPPR suggested such fears are overblown.

“Not only is there little robust evidence to suggest that stronger regulation would drive large numbers of people to the illegal market, there is even less to suggest that altering the rate of taxation will do so,” the IPPR release said.

The sector has acknowledged the black market is a significant threat to it, particularly in the face of tightening regulations, which is pushing players to frictionless options offshore.

Notably, a 2024 survey commissioned by the Betting and Gaming Council (BGC) estimated that up to £2.7bn is staked online with black market operators each year in the UK. The survey also found that more than one in seven gamblers recognise at least one unlicensed gambling brand.

‘Economically reckless’ says BGC

Responding to the IPPR’s proposal on Thursday the BGC said: “We completely reject the proposals by the IPPR … which will only hit ordinary punters.

“These proposals are economically reckless, factually misleading and risk driving huge numbers to the growing, unsafe, unregulated gambling black market, which doesn’t protect consumers and contributes zero tax.”

The BGC stated that its members contribute £6.8bn to the economy, generate £4bn in tax and support 109,000 jobs.

“Further tax rises … would do more harm than good — for punters, jobs, growth and public finances.”

The BGC also said it was “incorrect to suggest horseracing is taxed at a higher rate” and added it was misleading to conflate the sport’s separate levy with tax.

What can the UK learn from gambling tax hikes in Europe?

Similar changes made in neighbouring markets have indicated tax increases can have a negative impact on the sector and cause players to move to illegal offerings.

In the Netherlands, remote gambling tax was increased in January to 34.2%. Michel Groothuizen, chairman of the KSA, this week said the change had weakened player protection efforts by making it financially more difficult for providers. This has led to a decrease in GGR for the entire market.

Similarly, stakeholders in Germany have long bemoaned strict measures like online slots stakes and higher taxes, which have impacted channelisation over time.

Gordon Brown backing

The IPPR’s proposals have been backed by former UK Prime Minister Gordon Brown.

“Thanks to IPPR’s report, we now know that taxing gambling more fairly would fully fund the first crucial step in the war we must wage against child poverty: ending the two-child limit and lifting the benefit cap,” he said.

“There are many reasons why the highly profitable betting and gaming industry should pay a fairer share towards the cost of UK’s un-met needs. Most important is that it would enable half a million children to be lifted out of poverty in this autumn’s budget, and so help to build our country for the next generation.”

Autumn tax rises

The timing of the report is particularly pertinent.

A separate think tank, the National Institute of Economic and Social Research, warned this week that taxes in the UK must rise in the autumn budget if the government is to meet its self-imposed borrowing goals.

As things stand, the report said, the ruling Labour Party is set to miss its target by £41.2 billion.

The YouGov survey found the majority of respondents had concerns over the impact of higher taxes. Some 65% of players agreed increased rates “would make customers turn to unregulated betting sites” that do not pay tax, if costs were passed on to the consumer.

In April, the treasury announced a tax consultation, proposing replacing three online betting tax rates with a single rate. This consultation launched on 6 May and is due to close on 21 July.

Current rates comprise Remote Gaming Duty (RGD), General Betting Duty (GBD) and Pool Betting Duty (PBD). Remote activities are hit by RGD at 21% of operator profit, while GBD is taxed at 15% of profit and PBD at 15% of net stake receipts.

It is not yet clear what rate the government will set for the so-called Betting & Gaming Duty (BGD), but the sector has expressed concerns the betting tax rate could be increased in line with remote gaming duty as all three rates are consolidated.

Can operators absorb impact of increased tax rate?

Commenting on the issue, Melanie Ellis, partner at Northridge Law, told iGB that although some operators could absorb the impact of a few percent on tax rates, many are already operating on tight margins.

“Particularly, smaller and newer brands who are trying to grow their market share” will be affected, she said.

“The BGC is concerned that bookmakers will be forced to offer less favourable odds to retain a profit margin, but it may be that a tax increase simply leads to a contraction of the market, with only those able to absorb the tax increase remaining in business,” she added.

“This in itself is likely to drive customers to the black market, and unfortunately, it’s those that are most vulnerable who will be most affected.”

BGC previous warned against increased tax on gambling

The BGC has already issued several warnings about the impact of the mooted changes to tax rates. According to the standards body, it could threaten markets such as horse racing.

“This shocking statistic proves what’s at stake if the government forces through a self-defeating tax hike on ordinary punters,” BGC CEO Grainne Hurst said of the YouGov survey findings.

“It’s clear it will not raise more tax. It simply risks forcing huge numbers of customers out of the regulated market, with its world-leading standards on player safety, into the arms of the growing, illegal, unregulated and unsafe gambling black market online.”

BGC: Survey a ‘wake-up call’ for government

Hurst said any tax increase would make a “mockery” of the government’s growth strategy. Labour has been back in power for almost one year having won the 2024 general election by a landslide.

“This is a wake-up call for government,” Hurst said. “Punters have been loud and clear: Hit them with further taxes and they will walk away from sports like racing, straight to the black market, triggering a spiral of decline.”

On this, the BGC highlighted its own recent study on the state of the black market in Britain. This found British players currently wager up to £2.7 billion online via black market operators.

“This growing, unsafe, illegal gambling black market does not contribute to sport,” the BGC said. “It does not pay tax and targets customers who are vulnerable to harm, including the self-excluded.”