On 1 April, Britain’s online gaming firms began handing two-fifths of their profits from casino-style games to the Treasury. Six months later, the sector is still standing. An analysis of six large operators by consultancy Regulus Partners found that online gaming revenue grew by around 12% in the second quarter, even with the new rate in force. Analysts warn that the real test is still ahead, as quarterly accounts catch up with the higher bills. Across the North Sea, the Dutch government has already published its own verdict on a similar experiment. It makes uncomfortable reading for anyone in Whitehall who expects higher rates to mean higher receipts.
What the 40% duty has changed so far
The increase itself was blunt. In the November 2025 Budget, Chancellor Rachel Reeves raised Remote Gaming Duty from 21% to 40%, effective from 1 April 2026, arguing that online gaming carries the highest risk of harm. That went further than almost anyone had predicted. Before the Budget, the Social Market Foundation had urged ministers to raise it to 42%, but most industry observers expected a rate somewhere between 30% and 35%.
For the public finances, the sums are real but modest. The Office for Budget Responsibility estimated that betting and gaming duties would bring in £4 billion in 2025-26, about 0.3% of all receipts. The OBR also warned that operators would pass most of the extra cost on through lower payouts and smaller bonuses, which could cut the expected yield by around a third.
That process has already started. Smaller brands such as Lottomatrix and Small Screen Casinos have left the British market altogether. Evoke, the owner of William Hill, estimated that the tax changes would add up to £135 million a year to its duty bill before any mitigation. The larger groups can absorb the hit for now. For an early sense of what comes next, Whitehall only has to look at the Netherlands.
The Dutch lesson in diminishing returns
The Netherlands raised its gambling tax in two steps, from 30.5% to 34.2% in January 2025 and to 37.8% this January. The government expected the first step alone to bring in an extra €108 million. A joint report by the Ministry of Finance and the regulator Kansspelautoriteit, published in June, found that receipts in 2025 came in just €2 million above the year before. For 2026, the forecast gain is €57 million, against a target of €216 million.
The authors are careful about cause and effect. New player protection rules, including monthly net-deposit thresholds of €300 for under-24s and €700 for older players, shrank the taxable base at the same time. Further deposits above these thresholds are blocked unless an affordability check establishes that the player can bear the financial consequences. Their conclusion is still plain. The higher rate missed its goal, partly because the base it taxed got smaller. The Dutch government sees no reason to change course before a broader review in 2027. Its experience is only one data point, though, and the rest of Europe offers a far messier picture.
Europe has no single rate to match
Setting Britain against its neighbours is harder than it sounds, because there is no European rate to compare against. The EU leaves gambling to national governments, and the result looks like a patchwork. Germany charges 5.3% on every stake placed on virtual slots and online poker, a levy that on some games can exceed the operator’s whole margin. Sweden raised its rate to 22% of gaming revenue in July 2024, and Denmark charges 28%.
Seen from the player’s side, that patchwork looks even more uneven. The list of European online casinos compiled by EU Casino Rank sits alongside a country-by-country overview of gambling laws, showing why a casino licence recognised in one market does not automatically authorise the operator to offer its services in another. Tax follows the same national lines. For the Treasury, the comparison carries a warning. A British player unhappy with thinner payouts at home can still find unlicensed foreign sites that pay no UK duty at all, and every such switch shrinks the base the 40% rate is meant to tax.
Among these markets, Britain now has the highest headline rate on gaming revenue, ahead even of the Netherlands. Supporters of the increase argue that the rate reflects harm rather than greed, and that a well-regulated market can carry a heavier load than its neighbours. That argument will be tested twice over the coming year, first in operators’ accounts and then in the Chancellor’s next Budget.
What the next Budget could bring
The Treasury’s next step is already scheduled. From April 2027, a new 25% rate will apply to online sports betting, up from 15%, while bets on UK horseracing stay at the old level. Taken together, the gambling measures were expected to raise about £1.1 billion by 2029-30.
The Chancellor needs every pound of it. With a £35bn headache hanging over the coming Budget, ministers are unlikely to reverse a rate they introduced only six months ago. Operators, for their part, are still trimming bonuses and payouts to protect their margins. The Dutch report points to the harder question. If the base keeps shrinking, a higher rate can bring in less than planned, and the shortfall tends to show up a year or two later.
Britain chose the steepest headline rate among its large European neighbours, despite early warnings from the Netherlands. The first full year of receipts will show whether the 40% duty raises the money the Treasury expects. If it falls short, a future Budget may have to weigh the rate against the size of the market it is meant to tax.
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