New analysis by H2 Gambling Capital suggests recent and planned increases to UK gambling taxes could accelerate the growth of the illegal online betting market over the remainder of the decade.
According to the report, the increase in Remote Gaming Duty to 40% from April 2026, combined with lower return-to-player (RTP) levels offered by licensed operators, is expected to encourage more customers to use offshore gambling sites. A further increase in Remote Betting Duty is scheduled to take effect from April 2027.
H2 forecasts offshore online gambling turnover will rise from £16.6bn in 2026 to £36bn by 2031, having grown from £5bn in 2019.
The report also projects that the illegal market’s share of online betting will increase from 10% in 2025 to 22% by 2031, while the proportion of online betting taking place with licensed operators falls from 90% to 78%.
According to the analysis, illegal gambling revenue is expected to increase from £685m in 2025 to £1.4bn by 2031, representing annual growth of almost 13%. Over the same period, H2 forecasts the regulated online market will grow by 0.2% annually and decline by 12% in real terms.
The Betting and Gaming Council (BGC) said the findings highlighted the need to maintain the competitiveness of the regulated gambling market in order to encourage customers to continue using licensed operators rather than offshore alternatives.
The trade body added that continued growth in the illegal market could affect tax revenues, employment and funding generated by Britain’s regulated betting and iGaming sector.
Grainne Hurst, Chief Executive of the Betting and Gaming Council, said: “The Chancellor’s tax hikes are handing illegal gambling operators a competitive advantage.
“Britain has one of the world’s leading regulated betting industries, supporting more than 109,000 jobs, generating £4bn in tax every year and funding some of our most-loved sports.
“But if ministers keep making the regulated sector less competitive, customers won’t stop betting. They’ll simply take their money to the growing illegal black market, where there are no safer gambling protections, no age verification checks and no taxes paid to the Treasury.
“The only winners from these tax hikes will be criminal operators based overseas. Britain will lose jobs, investment and tax revenue, while consumers are pushed towards operators offering none of the protections found in the regulated market.”
