Recently released figures for the third quarter of the 2025/26 financial year showed gross gambling yield (GGY) for UK online casinos of £1.5 billion. Will they be able to continue achieving such results in the coming months despite rising costs?
The cost of a UK Gambling Commission (UKGC) license is expected to increase later this year. It’s the latest bad financial news for UK online casinos. Although the online gambling industry continues to show impressive results, there are also concerns about the risk of addiction.
Last year a new compulsory tax came into force. UK gambling sites reviewed by Dailystoke.com had made voluntary payments, with the funds being used to investigate gambling harms and treat those affected. However, the government considered that not all companies were contributing equally and introduced a compulsory levy. The aim is to raise £100 million a year, with part of the funds going to the NHS.
Then came the autumn budget, which included details of an increase in the remote gaming duty. An increase was considered long overdue, but when the rate rose from 21% to 40%, companies were shocked. This will come into force in April this year. There will be a further increase in sports betting tax rates next year.
Stricter regulations were introduced last year and more are expected to come into force in the future. A major rule change last year saw the introduction of maximum stakes for online slots, and this year action has been taken against the bonuses offered by UK online casinos.
The financial results released since the introduction of maximum stakes for online slots have not been bad news for online casinos. Slots represent a large proportion of GGY for sites and in the third quarter the figure was £788 million, up 10% on the same period 12 months ago.
The average session length for players has dropped from 18 minutes to 16 minutes, but sides will be relieved to see the high GGY number. Total BGY was 1.5 billion pounds, up from 1.42 pounds in the second quarter. However, there was a decline of 2% compared to the third quarter of the previous fiscal year.
A consultation period began last month regarding an increase in the cost of a UKGC license. These are required for a company to operate legally in the UK. As you will read, there are many companies that are unlicensed and are causing serious problems for the Treasury, legal operators and players.
The UKGC has a difficult job regulating the gambling industry and regularly investigates companies that may have breached regulations. This led to several companies issuing fines when violations were confirmed. As the UKGC also wants to address the problems caused by illegal websites, their costs have steadily increased and are not comparable to the level of their funding, leaving a deficit that needs to be closed.
That is why they are calling for an increase of an average of 30%, but there are also other options that are currently being discussed in the consultation phase. Other options include a 20% increase and the government’s preferred option. This would result in a 30% increase in royalties, but only 20% would be used for commission-related costs, while the remaining 10% would be earmarked and used only for specific regulatory priorities. This includes strengthening their enforcement capabilities and taking action against illegal operators.
According to the UKGC, an increase of just 20% would result in savings of £15.8m and potentially a 10% reduction in staff numbers by 2030/31. They would find it difficult to continue their current level of investigation into suspected breaches of regulations.
What impact would a further increase in costs on top of mandatory levies and tax increases have on UK online casinos? Tighter regulation is driving players to the black market and this is a worrying problem for legal websites. This is not good news for the players either, as customer protection is not that high and they do not have to adhere to the new rules. The Treasury receives no mandatory levies or tax contributions, so a strong UKGC is needed to lead the fight against the illegal operators.
Top companies like bet365, Flutter Entertainment and Entain are global companies. If regulation continues to increase and costs rise, they could be forced to make cuts in the UK and focus more on foreign interests in South America, the US and Asia.
