Industry Report Ties Gambling Tax Hike to Offshore Market Growth

The gambling industry has spent all year telling anyone who’ll listen that Britain’s new taxes will feed the black market. Now it has a report that says exactly that, with numbers attached. Fresh modelling from H2 Gambling Capital estimates that unlicensed offshore operators took £685 million from UK players in 2025, up from around £200 million in 2019, and projects that figure doubling again to £1.4 billion by 2031. The analysis names the Remote Gaming Duty jump, from 21% to 40% of online gaming revenue since April, as a major headwind that will push more players toward sites outside the licensed system.

The knock-on forecasts are grim reading for the licensed trade. H2 expects online casino revenue to dip this year and fall harder in 2027, with the combined real-terms hit over the two years reaching as much as a fifth to a quarter once reduced bonuses are counted. Online betting gets a stay of execution thanks to the World Cup, then faces its own duty rise to 25% next April. By 2031, the modelling has the licensed market’s share of online turnover sliding from 90% to 78%. If those numbers came true, more than one pound in five staked online would be flowing to operators with no UK licence, no GAMSTOP, no ADR and no obligation to pay anyone anything.

Now, about who’s holding the megaphone

The numbers are scary, but slow down, because the provenance of this report matters as much as its contents. H2 Gambling Capital is a respected data consultancy whose figures get used across the industry, and I don’t doubt the modelling was done in good faith. But the report wasn’t released into the world as neutral scholarship. It’s published by the Betting and Gaming Council, the trade body for licensed operators, and hosted on the BGC’s own website. The BGC’s accompanying press release frames the findings as proof of a Treasury tax raid handing a jackpot to illegal bookies, with its chief executive warning that the only winners from the tax rises will be overseas criminal operators while Britain loses jobs, investment and revenue.

That’s not a neutral commissioning environment. The BGC exists to advocate for its members; it has openly campaigned against the tax rises all year, and keeping the black market’s size at the front of policymakers’ minds is a core part of its stated work. Nor is the timing subtle: an earlier cut of H2’s figures landed days before the Gambling Commission’s board met to consider financial risk assessments, and this fuller version arrives with the betting duty rise on next spring’s horizon. None of that makes the numbers wrong. It makes them advocacy, and advocacy deserves scrutiny the way a press release never scrutinises itself.

The methodology is worth understanding because it explains both the report’s strength and its softness. H2 sizes the offshore market from web traffic, adjusting for bounce rates and time on site, then applies that 2.0x spend coefficient on the logic that offshore brands attract higher-value customers. That’s how licensed sites can hold 96% of web visits yet only 92% of estimated spend. Web traffic is real, observable data. The spend multiplier is an educated guess stacked on top of it, and every forecast in the report inherits that guess compounded over five years.

In fairness, and this surprised me a little, the report’s estimate of where things stand today isn’t actually the controversial part. Run H2’s 2025 figure against the regulator’s own market statistics, and you get a licensed market share a touch over 91%, which sits broadly in line with other independent assessments. There’s a rough consensus forming about the black market’s present size. The fight is over the trajectory, because projecting a doubling by 2028 and a fifth of all stakes going offshore requires believing the worst-case assumptions hold for years, and that’s precisely the leap the industry needs policymakers to make while tax policy is still in play.

Is anyone at the regulator actually listening?

The question is whether the Gambling Commission is receptive to hearing any of this, and my honest reading is a split verdict: receptive to the problem, allergic to the numbers.

On the numbers, the Commission has spent two years politely declining to endorse industry-commissioned estimates. Its own research programme concluded it cannot reliably size the black market at all, and its web traffic tracking, which now extends through February 2026, shows engagement with illegal sites fluctuating rather than climbing, with no sustained growth across the 21 months analysed. Commission officials keep repeating the same things: illegal gambling is a multi-dimensional problem, no single data source captures it, and web traffic estimates carry big margins of error. One senior figure spent the spring publicly swatting away what he called ill-informed commentary around the checks the industry blames for driving players offshore. When the regulator’s own data says “flat” and the lobby’s commissioned data says “doubling”, you can understand why the two sides talk past each other.

And yet, on the problem itself, the Commission is arguably more engaged than it has ever been. It’s deploying £26 million of new government funding on illegal market enforcement over three years. In the last financial year it issued 741 cease-and-desist notices, reported nearly 398,000 unlicensed URLs to search engines with around 267,000 removed, and disrupted more than a thousand sites through takedowns and geo-blocking. It sits on the government’s new Illegal Gambling Taskforce, which is producing the first national risk assessment of Britain’s unlicensed market, and ministers have just extended the ban on unlicensed gambling sponsorship beyond sport. Senior Commission figures now share conference platforms with the BGC’s leadership, and observers at a recent House of Lords committee noted the regulator’s priorities on the black market sounded strikingly in tune with the trade body’s.

So the door isn’t closed. It’s just a very specific door. The Commission will act on the black market as an enforcement problem all day long. What it won’t do is accept the industry’s causal story, that its own checks and the Treasury’s taxes are manufacturing the growth, because its own evidence doesn’t show the growth. And here’s the structural point the whole row tends to obscure: the report’s real audience isn’t the Commission anyway. The Gambling Commission doesn’t set tax rates. The Treasury does, and it’s the Chancellor, not the regulator, that a report blaming a “tax raid” is truly aimed at. Lobbing the findings at the UKGC makes for good theatre, but the cheque this campaign wants signed sits in a different building.

What players should take from this

Strip out the politics, and one part of this stands regardless of whose spreadsheet you trust: the offshore sites at the centre of the argument are a terrible place for your money. That TransUnion finding buried in the coverage, that one in eight young adults say they’ve knowingly been defrauded through an unlicensed betting site, tells you more about the stakes than any turnover projection. Whether the black market is flat or doubling, the individual player who wanders into it has the same protections either way: none.

A report published by the industry’s lobby group has found exactly what the industry’s lobby group has argued all year, and that should shape how much weight you give its scariest projections. But dismissing it outright would be as lazy as swallowing it whole. The present-day sizing is close to consensus, the tax squeeze on licensed operators is real, and the logic that worse value onshore nudges some players offshore isn’t absurd; it’s just unproven at the scale claimed. The regulator, for its part, is fighting the black market harder than ever while refusing to accept the industry’s story about what feeds it. Watch the Treasury, not the Commission, for the next move in this argument. And whatever the true number turns out to be, make sure you’re never part of it.