EY report warns of major UK losses from gambling tax rise

A new economic analysis conducted by Ernst & Young (EY) has projected that the United Kingdom’s proposed gambling tax reforms could lead to a multi-billion-pound reduction in economic activity and a significant expansion of the illegal gambling market. The report, commissioned by the Betting and Gaming Council (BGC), arrives at a critical moment as policymakers prepare for the Autumn 2025 Budget, where new measures to align and increase gambling duties are under review.

The findings paint a sobering picture of the potential economic fallout from higher taxes on betting and gaming operators, raising concerns not only for the licensed industry but also for jobs, public revenue, and the growth of unregulated markets.

Background to the EY analysis

The study, titled Impacts of Changes to Betting and Gaming Taxation, was submitted to His Majesty’s Treasury to inform deliberations ahead of the government’s fiscal announcements. EY was tasked with assessing the likely outcomes of several proposed tax models under consideration, including the alignment of remote and retail duties and increases in excise rates across the gambling sector.

In recent years, the UK gambling industry has undergone a series of regulatory and fiscal changes aimed at promoting responsible gaming and curbing potential harms. However, industry representatives have cautioned that excessive taxation may inadvertently undermine these objectives by driving consumers toward unlicensed, offshore platforms that operate without UK regulatory oversight.

Key findings from the EY report

The EY report’s central finding is that while higher duties may generate short-term revenue gains for the Treasury, the broader economic impact could be significantly negative.

According to the consultancy’s modelling, aligning General Betting Duty (GBD) and Remote Gaming Duty (RGD) at 21% would initially raise approximately £250 million ($332.9 million) in additional revenue for the government. Yet, this increase would be counterbalanced by wider negative effects on the industry’s Gross Value Added (GVA)—a measure of its contribution to the national economy.

EY projected that the change could reduce GVA by around £240 million and lead to the loss of approximately 3,000 jobs across the sector. These losses would stem from reduced player spending, lower operator profitability, and possible closures of physical venues such as betting shops and casinos.

Impact of more aggressive tax proposals

The report also examined more extensive reforms proposed by think tanks such as the Social Market Foundation (SMF) and the Institute for Public Policy Research (IPPR), both of which have advocated for substantially higher duty rates—up to 50%—on remote gaming.

Under those scenarios, EY estimated that total GVA losses could exceed £2 billion, with the negative effects cascading throughout the gambling supply chain, including technology providers, media partners, and hospitality services linked to the sector.

Such outcomes would also likely translate into a notable decline in tax receipts over the long term, as business closures and reduced profitability shrink the overall taxable base.

Methodology and data sources

EY’s analysis was developed using a combination of data from BGC members, Gambling Commission industry statistics, and HM Revenue & Customs (HMRC) tax receipts. The report also incorporated behavioural modelling to account for consumer sensitivity to price changes and regulatory reforms, including those introduced under the UK Government’s 2023 White Paper on gambling reform.

The study emphasised that even modest increases in duty rates can lead to disproportionate shifts in consumer behaviour. When legitimate gambling products become more expensive or less attractive, some players may turn to unlicensed online operators offering lower odds or unrestricted play.

Rising threat from the black market

One of the report’s most significant warnings concerns the potential growth of unregulated gambling in the UK. EY projected that if tax levels were to rise sharply, as much as 8% of all gambling activity could migrate to the black market, where consumer protections, responsible gambling tools, and anti-money laundering safeguards are absent.

This trend poses a dual risk: it undermines the effectiveness of the government’s regulatory framework while also exposing consumers to greater financial and social harms. The BGC has consistently stressed that protecting the integrity of the UK’s licensed gambling ecosystem should remain a top policy priority.

Broader economic implications

Beyond the direct effects on gambling operators, the EY report highlights the broader consequences of duty increases for the UK economy. The gambling sector supports tens of thousands of jobs and contributes billions in taxes and investment each year, particularly in the areas of digital innovation, media, sports sponsorship, and entertainment.

A reduction in this contribution could ripple across multiple industries. For instance, British horse racing—heavily dependent on betting revenue—has already voiced alarm over potential reforms. In August 2025, racing stakeholders staged a one-day strike to protest proposals to align betting duties, arguing that such measures could threaten the financial sustainability of the sport.

Industry response and dialogue with the Treasury

The Betting and Gaming Council has described the EY report as an effort to foster constructive dialogue with the government as it considers new tax measures. A spokesperson for the BGC stated that the organisation supports a fair and evidence-based approach to taxation, ensuring that policy decisions protect jobs, investment, and the regulated market’s long-term health.

The Council’s position underscores a broader concern shared across the industry: that excessive fiscal pressure could unintentionally push consumers away from safe, regulated environments toward illegal and unmonitored alternatives.

The BGC has also highlighted its members’ ongoing commitment to responsible gambling, including substantial investment in harm prevention tools, advertising safeguards, and research collaborations. These initiatives, the Council argues, could be jeopardised by new tax burdens that reduce operators’ ability to reinvest in social responsibility measures.

The political context

The debate over gambling taxation has intensified in recent years as the UK government seeks to balance public health objectives with economic considerations. Political and advocacy groups have increasingly called for higher taxes on gambling operators as a means of offsetting potential social costs linked to problem gambling.

However, the industry maintains that responsible regulation—rather than punitive taxation—is the most effective way to mitigate harm while maintaining competitiveness. The government’s forthcoming Autumn Budget is expected to outline whether it intends to adopt any of the proposed duty alignments or rate increases, making this report especially timely.

Legal and regulatory considerations

From a legal standpoint, the EY report also draws attention to the regulatory risks associated with unintended consequences of taxation policy. As unlicensed gambling expands, enforcement challenges grow, particularly in monitoring offshore entities that fall outside UK jurisdiction.

Furthermore, the study indirectly raises questions about compliance and consumer protection obligations under the Gambling Act 2005, which forms the legal foundation of the UK’s gambling regulation. A sudden increase in duty rates, without adequate transitional support, could prompt smaller licensed operators to exit the market, further consolidating industry control among larger players.

Looking ahead

As the Treasury reviews the report’s findings, policymakers face a delicate balancing act: maintaining fiscal prudence while safeguarding the economic and social stability of the regulated gambling market.

The EY study suggests that while limited tax adjustments may be manageable, steep increases could prove counterproductive. The findings provide an evidence-based framework for future policy discussions, highlighting the importance of proportionate reform that supports both public interests and industry sustainability.

The coming months will therefore be crucial. Industry stakeholders, consumer advocates, and government departments will likely engage in further consultation before final decisions are announced in the Autumn 2025 Budget.

Conclusion

The Ernst & Young report for the Betting and Gaming Council serves as a critical intervention in the ongoing debate about the future of UK gambling taxation. While the Treasury’s intent to strengthen fiscal discipline and address gambling-related harms is clear, EY’s analysis underscores the potential risks of overreach.

Higher duty rates, though politically appealing, could paradoxically reduce total revenue, shrink economic output, cost thousands of jobs, and empower unregulated markets. The challenge for policymakers lies in finding a balanced approach that protects consumers, preserves industry viability, and sustains the economic contributions of one of the UK’s most dynamic entertainment sectors.

FAQs

What is the EY gambling tax report?
It is an independent economic analysis by Ernst & Young assessing the impact of proposed gambling tax reforms on the UK economy.

Who commissioned the report?
The Betting and Gaming Council commissioned the study to inform discussions with His Majesty’s Treasury.

What are the main findings?
EY found that aligning duties could initially increase tax revenue but would likely reduce economic output and lead to job losses.

How much economic loss is expected?
The report projects a reduction in Gross Value Added of up to £240 million under moderate reforms and more than £2 billion under aggressive tax scenarios.

What could happen to UK employment?
Up to 3,000 jobs may be lost across betting shops, casinos, and related industries.

Why might illegal gambling increase?
Higher taxes could push consumers toward unlicensed operators offering lower costs and fewer restrictions.

How could this affect horse racing?
British racing, reliant on betting revenues, could face reduced funding and sustainability challenges.

What does the BGC want from the Treasury?
The Council seeks constructive dialogue and evidence-based decisions to ensure fair and sustainable taxation.

Does the report oppose regulation?
No, it supports responsible regulation but warns against excessive taxation that undermines the licensed market.

When will policy decisions be made?
The Treasury is expected to outline its approach in the Autumn 2025 Budget.