As the dust settles on months of fierce speculation, the UK is faced with record levels of tax rises. However, given what was widely anticipated, there was some degree of relief for UK betting yesterday.
As the inevitable furore diminishes over time and the industry embarks upon a creative approach to ensure that the impact of the soaring Remote Gaming Duty (RGD) is mitigated, fears that fuelled trepidation for months may not have fully materialised.
Retail betting became the unwarranted target of an abundance of attacks from many political corners. Notably, during a Select Committee hearing, retail shops were described as having descended from places of socialisation to hubs for people with drug and alcohol problems.
As support for Zack Polanski and the Green Party swells in many constituencies, Labour delivered a left-leaning budget. As such, the gambling industry was always set to feel the wrath. Whilst collateral damage is inescapable for the retail sector – should it have felt the full heat of the taxation frying pan, it may well have been fatal for the sector as it looks to survive in a tough environment.
Of course, retail betting scarcely operates in isolation from the online sector. However, one of the major warnings from the industry in the build-up to the budget was that a lack of recognition for the retail sector’s challenges would result in its decimation.
That erosion may well have been avoided, though, as in-person betting and even self-service betting terminals were shielded from the despair inflicted on online gaming via remote gambling duty.
Flutter is one of the biggest UK operators in terms of both its retail and online footprint, but the firm had already made the decision to close around one in 10 of its retail shops and shift its Sky Bet headquarters from Leeds to Malta.
The group issued a stark outlook today, describing RGD increases as ‘very disappointing’. However, the operator still retains an appetite for the UK market.
Largely, even amidst slightly dipping profits that reflect a tough climate, retail has remained a stable business offering for the majority of operators. That being said, the vast retail portfolio of the UK’s betting sector has encountered challenges in recent times, and as the taxman tightens the screws on operator profits, the ice on which the retail sector walks grows thinner.
A despondent reaction
Kevin Harrington, Flutter UKI CEO, commented: “The Chancellor rightly wants to address harm, but these changes will hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight.
“These black-market operators don’t pay tax and don’t invest in safer gambling. At 40 per cent, 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.
“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 today’s changes.”
A thriving racing industry is at the heart of the retail sector. Anyone who has ventured into a high street bookmaker will understand that the day’s race meetings fuel betting shop engagement.
Following the vehement protests of the BHA, which included strike action, racing was also exempted from the tax hikes. In spite of this, much like the retail sector, racing and wider sports for that matter, may well still feel the consequences.
No industry funds sports, especially racing, quite as significantly as the gambling industry, as profits are squeezed for operators; sports sponsorship is likely to take a hit, which means that even though it has shirked the taxation hammer, alternative revenue sources may still need to be explored for racing.
Full house for Bingo
Additionally, the abolition of bingo duty, which stood at 10%, but from 1 April will be eradicated, marks a hugely significant moment for a sector that has provided a centrepiece of many UK towns.
It is worth noting that the vast majority of bingo operators do also have an online presence, so they won’t come away from the budget unscathed, yet decisions to benefit retail bingo will undoubtedly save jobs.
This was acknowledged by John O’Reilly, Chief Executive of Rank, though he did also share some of the pessimism of his counterparts in Flutter and other major gambling PLCs.
He commented: “The announced increase in Remote Gaming Duty in the UK Budget represents a very significant blow to the regulated betting and gaming industry in the UK.
“Whilst 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.
“In the year to 30 June 2025, Rank reported a profit after tax of £44.6m and paid taxes in the UK of £188m. That burden will now increase by a further £40m, and we will look to mitigate the impact where possible.”
This despondency was echoed by the Betting and Gaming Council, as CEO, Grainne Hurst, stated: “Massive tax increases for online betting and gaming announced in the Budget make them among the highest in the world, and are 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.
“Regulated betting and gaming is one of the UK’s few globally successful sectors, generating £6.8bn for the economy, contributing over £4bn in tax and supporting 109,000 jobs, while delivering vital funding for British sport.
“While we welcome the decision not to raise land-based duties and to scrap bingo duty – these excessive online tax increases will undermine jobs, investment and growth across the UK.”
Where we go from here?
Whilst we head into the unknown, one thing is for certain, this week and this Labour budget marked a defining moment for UK gambling. Once a beacon of light for other markets of what a free and thriving market should look like, now a cautionary tale of crippling regulation for many.
As we move into a new era, ironically, we wait to see whether the Chancellor’s gamble will pay off. Online slots are the most profitable element of UK gambling. The UKGC’s annual report detailed that the vertical accounted for over half of the country’s £7.8bn remote gaming gross gambling yield (GGY) during the 2024 financial year.
The government has aggressively pursued the purse strings of the most profitable aspect of UK gambling, giving some leniency to the retail and racing sectors, but consequences will be unavoidable.
For retail, a sector that was already on the brink, it is now faced with a crossroads – a favourable budget may ensure that it becomes a hub of innovation and operators invest further to rally retail growth as tax tightens for online. On the other hand, the risk remains that operators could shrink their high street presence to safeguard themselves from the intensified burden of a new taxation era.
As profitability is all but wiped out – commotion will eventually turn to calm, and UK betting will evolve into a new era – but is that one where iGaming and retail can complement each other to continue to thrive?
