New levy rates provoke debate across UK gambling market

The UK government’s impending mandatory gambling levy is generating significant debate within the gambling industry, as details of its structure and implications emerge.

While the levy is designed to address gambling harms, critics warn of its potential impact on operators and the unintended consequences it may have on the sector.

Industry segments receive different levy rates

The levy, set to be introduced through secondary legislation, will adjust contribution rates for various gambling licensees. Online and remote software licensees will see an increase from the initially proposed 1% to 1.1%.

Similarly, land-based casinos and betting operations will face a rise from 0.4% to 0.5%. The sharpest hikes are for arcades and bingo halls, where rates will double from 0.1% to 0.2%. Conversely, certain licensees, such as machine operators and pool betting businesses, will benefit from rate reductions to 0.1%.

One contentious aspect of the levy is the absence of an exemption for smaller operators. Although an initial proposal suggested exempting those with a gross gambling yield (GGY) under £500,000, the government concluded that doing so would exclude approximately 80% of licensees from the levy’s scope.

Instead, a minimal contribution threshold has been set at £10, meaning only licensees with levy obligations below this amount will be exempt.

The complete breakdown of obligations is as follows:

– 1.1% from all online operators (excluding remote betting intermediary trading rooms, society lotteries with remote licences and External Lottery Managers)

– 1.1% from all software licensees

– 0.5% from land-based casinos

– 0.5% from land-based betting operators

– 0.2% from on-course bookmakers

– 0.2% from Adult Gaming Centres

– 0.2% from land-based bingo operators

– 0.1% from Family Entertainment Centres

– 0.1% from pool betting licensees

– 0.1% from all machine technical licensees

The devil’s in the details

Paul Buck, CEO and Founder of EPIC Global Solutions, shared his thoughts on LinkedIn regarding the new levy. He remarked that much of the impact will become clearer over the coming months as further details emerge.

Buck outlined five key perspectives on the levy, expressing concern that the focus should remain on preventing gambling harm and ensuring effective treatment for those affected, rather than celebrating policy wins. The ultimate goal, he emphasised, should be to prevent gambling-related harm and provide meaningful treatment for the individuals impacted.

Highlighting the decision to allocate the levy funds with 50% for treatment, 30% for prevention, and 20% for research, Buck noted that EPIC had previously advocated for this structure during discussions. He also emphasised that a one-size-fits-all approach is not suitable for addressing gambling issues.

Buck elaborated on the NHS’s role as a central commissioner for treatment services, while also stressing the importance of managing the broader ecosystem effectively. He highlighted the need for diverse treatment options and aftercare services that can genuinely save lives.

Organisations such as Gordon Moody, the National Gambling Support Network, and peer support groups like Betknowmore UK and the EPIC Restart Foundation, he noted, provide vital support and should be empowered to deliver varied and accessible solutions.

Buck concluded: “The devil will be in the detail over the next few months”.

Lotteries expect to lose revenue

Society lotteries, such as the People’s Postcode Lottery, will also be subject to the levy. However, their contribution will be set at a lower rate of 0.1%.

Still, these organisations argue that the levy will divert funds from charitable causes. They have previously said the plan could keep as much as £1m a year from going to good causes.

The People’s Postcode Lottery criticised the government’s decision, stating that charities will effectively subsidise efforts to combat gambling harms unrelated to their operations.

A spokesperson told Civil Society Media: “This is a very disappointing decision which ignores the polluter pays principle and negatively impacts charity funding at a time when they are already facing increased costs due to the national insurance rise.”

Growing concerns about black market gaming

The levy coincides with broader regulatory changes that analysts warn could fuel the growth of the UK’s gambling black market. According to a report by Eilers & Krejcik Gaming (EKG), the unregulated market could grow by as much as 32% in 2024, with unregulated net gaming revenue (NGR) potentially reaching £1.5bn.

At the high end of estimates, the black market could account for 14% of the UK’s total NGR, surpassing other European markets like the Netherlands (12%) and Sweden (10%).

Alun Bowden, EKG’s senior vice president of strategic insight, described the black market’s growth as “far too big to ignore.” He pointed to high-value players seeking to avoid stringent affordability checks as a major driver of the trend.

Bowden warned that unless effective measures are implemented, the black market will continue its rapid expansion.

The report, titled The Black Market: An Existential Risk, identified three primary channels for unregulated gambling: offshore online operators, private bookmakers using encrypted messaging platforms like WhatsApp and Telegram, and cryptocurrency-based operators.

Notably, gambling operations on Telegram have flourished despite regulatory crackdowns, reporting significant revenue growth even after high-profile arrests, such as its CEO’s detention by French authorities.

Losing the whales

While some analysts emphasised the black market’s growth, others believe the shift primarily involves high-stakes gamblers — commonly referred to as “whales.”

An industry insider told NEXT.io that stricter compliance measures, including KYC protocols and AML requirements, are pushing such players toward unlicensed operators.

These individuals often place substantial bets via encrypted messaging platforms or phone-based bookmakers, significantly inflating the black market’s value. The insider added that while the black market’s monetary size may increase, this may not indicate a substantial rise in user numbers.

Instead, it could reflect a gradual migration of high-value gamblers away from licensed operators due to stricter financial checks and regulations introduced under the Gambling Act.

The mandatory levy aims to fund initiatives to address gambling harms, but its implementation has sparked concerns about fairness and its potential to stifle legitimate operations.

Simultaneously, the rapid growth of the black market highlights the need for targeted strategies to mitigate risks associated with unregulated gambling.

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