Gambling tax hikes were confirmed today prior to Rachel Reeves, Chancellor of the Exchequer, delivering her budget announcement in the House of Commons, and some of the industry’s biggest players have already felt an impact.

The Office for Budget Responsibility‘s (OBR) forecast report, usually published following the Chancellor’s address to the Commons, was leaked this morning – earning PM Sir Kier Starmer some ridicule from his Conservative opposition during PMQs today.

While there was no mention of gambling taxes in PMQs as Reeves prepared to deliver her budget speech, the OBR report mapped out exactly what levies the industry will be expected to pay from here on out.

Online gaming carries the weight

Remote Gaming Duty (RGD) on online betting and gaming will increase from the current rate of 21% to 40% and bingo duty has been abolished. General Betting Duty (GBD), paid by all types of operators will go up from 15% to 25% as of March 2027.

However, there will be some considerable exemptions from the GBD tax hike. Notably, pool betting, spread betting, horse racing and self-service betting terminals (SSBTs) will all be excluded from the rate increase. This will place the bulk of the retail tax burden on FOBT gaming machines.

This is likely the result of extensive lobbying by both the British Horseracing Authority (BHA) and the Betting and Gaming Council (BGC), while bookmakers including Betfred, William Hill owner Evoke and Ladbrokes Coral owner Entain have warned of widespread shop closures.

“I will also reform gambling taxes in response to the rise of online gambling,” Reeves told the Commons today. “Remote gaming is associated with the highest level of harm so I’m increasing RGD from 21 to 40%, with duties on online betting from 15% to 25%.

“I’m making no change on the taxes on in-person gambling or horse racing, and I’m abolishing bingo duty entirely from April next year. My reforms to gambling rates will raise over £1bn per year by 2031.”

Reeves also confirmed that the two-child limit on childcare benefits will be scrapped, citing the increase in gambling taxes as helping to pay for this – something former PM Gordon Brown and many backbench Labour MPs have been calling for vocally.

The Chancellor’s measures have not gone quite as far as those been called for by Brown, however. Reeves’ measures, which she emphasised were “strictly my choices”, avoided the Gordon Brown–era “polluter principle” long advocated by various think tanks. That approach would have imposed a 50%+ rise on RGD and effectively doubled all major gambling tax bands — the nightmare scenario repeatedly cited by UK licence holders.

Concluding her speech, Reeves exclaimed that “because we are stopping tax avoidance and we are increasing taxes on gambling as a government, today we guarantee the scarping the two child benefit cap”, earning cheers from Labour MPs.

The government has also announced a freeze in casino gaming duty bands in 2026/27. From the 2027/28 financial year onwards, the land-based sector’s taxes will increase based on Retail Prices Index (RPI) upratings.

Remote gaming duty hikes will still hit many online operators, however. Market newcomers, challenger brands, and medium sized operators will likely be hit the most, with the bigger PLCs possessing greater financial weight to ride it out – though their stocks are already taking a battering.

“Well, they say life begins at 40,” said Tom Galanis, CEO of iGaming affiliate marketing group Tag Media, referencing the new 40% RGD rate.

“That’s going to mean something very different today for many employees working for operators, suppliers and affiliates in the regulated UK market.

“An increase of remote gaming duty to 40% will spell the end for many a business in the market, already battle weary from persistent jabs from the regulator over the past few years.

“From April 2026, there simply will not be the margin to sustain the ecosystem as we know it. For many small to medium sized affiliate businesses reliant on the UK, you now have a stark choice.”

Gambling tax fills a gap for Labour

Prior to Reeves taking the stage, Deputy Chair Nusrat Ghani gave MPs a dressing down on “Budget leaks that have reached an unprecedented high this year” – referencing the OBR publishing its report prior to her statement, as a grave error in which it must face full responsibility.

“We are rebuilding our economy,” Reeves asserted when announcing the budget, citing the £22bn black hole in public finances and the need to deliver ‘biggest ever settlement’ for the National Health Service.

As such, Labour’s second budget is designed on the core principles of lowering inflation, providing immediate relief for working families, cutting down government borrowing and national debt – principles upheld by Labour’s promise of never returning to austerity.

Reeves underlined the government should be proud of its record in which it has outperformed all doom and gloom forecasts, as the economy has grown at a rate of 1.3%.

A stable economy allows the Chancellor to keep her “stability rule” – which is for the current budget to be in balance, with more than “twice as much headroom as before in 2029/30 (£21.7bn, up from £9.9bn).

How hard will gambling taxes hit?

According to the leaked OBR forecasts, gambling tax reforms will raise £1.1bn by 2029-30, though also acknowledging that some ‘behavioural changes’ will lead to overall gross gaming yield (GGY) dropping.

The OBR further estimates that betting and gaming tax receipts will increase 9.8% to £4bn in 2025/26, by 24.8% to £5bn in 2026/27, and an average of 4.3% annually to £6bn in 2030/31.

The sector’s increased tax contributions are expected to help reduce government borrowing by 0.8% in 2026/27. This reduction is expected to reach 1.1% across the 2027/28, 2028/29 and 2029/30 financial years and 1.2% in the 2030/31 financial year.

As expected, the impact on the industry is already being felt and likely will be for some time. The share prices of Evoke and Entain, two of the biggest high street betting firms with thousands of shops between them, have already dropped by 6.35% and 24.2% respectively as of the time of writing.

The OBR projects that GGY will fall by around one-third, specifically by £500m, by 2029/30. This is due to operators increasing prices or reducing payouts, leading to decreased demand.

The organisation also seems to have noted potential customer moves to the black market, estimated to account for around 10% of UK betting and gaming activity – and something the industry has been very vocal in warning about over the past few months.

The forecast explained: “The elasticities used to estimate the demand effect also capture potential substitution to the illicit market, and substitution between different forms of gambling due to the tax differentials introduced through this policy.

“We also assume that operators will over time restructure their product offering to minimise tax costs, given the policy creates wide differentials between rates across different forms of gambling, reducing the yield by a further £0.1bn.”

According to the Gambling Commission’s latest stats, GGY stood at £16.8bn for the 2024/25 financial year, 7.3% more than 2023/24, and £12.6bn when lotteries are excluded, 9.3% more than 2023/24. Next year’s will be considerably less.

As expected, reactions to the budget are already flooding in on social media. Ryan Murton, VP – Commercial at online challenger brand Midnite, wrote on LinkedIn: “Rachel Reeves and Labour have decided to try and destroy an entire industry. I am lost for words.“

More reactions can, both positive and negative, can likely be expected over the coming days…..