Deputy Editor
Poker sites serving the U.K. will be paying almost twice as much tax come April, and players should brace for the cuts that are likely coming to rewards programs and promotions, as the operators try to make up the damage to their bottom lines.
On Wednesday, the U.K. released a budget plan that includes massive tax hikes on most forms of online gambling — iGaming in the short term, with sports betting to follow a year later.
Chancellor of the Exchequer Rachel Reeves delivered a speech on the new budget, but even that announcement didn’t go smoothly. The Office of Budget Responsibility put Reeves on the back foot by accidentally posting the budget to its website ahead of her speech, instead of afterwards.
That particular misstep has some calling for the resignation of OBR Chairman Richard Hughes. Hughes’ office called it a “technical error.”
The silver lining for our peers across the pond is that the players are not charged tax on winnings the way American bettors are.
Details of the UK’s New Tax Plan
Awkward rollout notwithstanding, the hikes amount to essentially a doubling of the tax rate on online casino and poker providers. Rates will go from 21% to 40% in April 2026.
Online sportsbooks will see their tax rates jump as well, from 15% to 25%. That doesn’t go into effect until April 2027, though.
Retail gambling fared much better. Bingo parlors will see their tax rate slashed to 0%, while brick-and-mortar casinos get a rate freeze. Mobile horse betting is unaffected.
“Some parts of the gambling industry, such as racecourses and bingo halls, make a cultural contribution to our country,” said Meg Hillier, chair of the Treasury Select Committee. “This is not the case, though, for online slots and other remote gaming, which can quickly drain the bank balances of vulnerable people after just a few clicks of a button on a phone.”
Reeves said she targeted online gambling due to its “highest levels of harm.” She said she expects the tax hikes to add £1 billion per year to the budget through 2031.
What UK Gambling Tax Hike Means for Poker Players
Increased costs for a business are typically passed on to customers. In that sense, the gambling business is no different from any other industry. For U.K. poker players, that means the fiscal pinch on the operators will likely result in decreased player rewards and/or higher effective rake.
Sven Bertelmann of PokerStrategy, an expert on the European online poker market, told PokerScout that players should expect “lower-value promotions, lower first-deposit bonuses,” among other effects.
International poker sites serving U.K. customers already offer region-specific bonuses and rakeback. The U.K. gambling tax increase amounts to a roughly 24% reduction in after-tax revenue for the sites. Since poker sites typically offer somewhere between 15% and 60% rakeback, poker sites hypothetically aiming to maintain profit levels through VIP reward cuts alone would need to eliminate the lower tiers altogether, while cutting the high tiers by half. In practice, we might be more likely to see a mixed approach, with the pinch distributed across various facets of the product.
To put the 40% tax rate into context for U.S. readers, the only U.S. iGaming tax rate that’s higher is Pennsylvania‘s 54% tax rate, which applies only to online slots, while poker and table games get taxed at just 17%.
The online sports betting hike to 25% is much more modest by comparison. New York has a mammoth 51% rate there. Illinois just jacked its rate up to 40%.
No change was announced to personal taxes on U.K. gamblers. The U.K. doesn’t tax gambling winnings, making it a convenient home base for many poker players who aren’t native to the country.
Other Effects of Tax Change
The U.K. gambling tax hike may have several other downstream effects, the most significant of which is the potential for gamblers to migrate to offshore operators. Politicians levying the increased tax admitted as much, per The Guardian.
“The government expects some customers to bet less and admits that others are likely to switch to the illicit market, as the extra duty is passed on to consumers in the form of less attractive odds and bonuses,” the publication wrote.
Bertelmann echoed those thoughts.
“It is an open invitation to check out poker rooms and casinos that are regulated outside the U.K., but whose license permits market access to the U.K.,” he said.
Bertelmann added that affiliates will also feel the pinch, which could further dilute the market.
Share prices for gambling companies dropped by 1-19%, per Reuters, though some companies saw a quick rebound as investors bought the dip. Some kind of gambling tax hike was expected, so to some extent it may already have been priced in before the specifics were revealed. Gambling operators warned against the hikes, citing decreased industry jobs and investments, as well as the possibility of eventual shutdowns by some companies.
The bottom line is that the government likely wins. Everyone else, from the operators to the players, loses. Players will feel the pain more than anyone else, from experiencing higher costs to possibly moving some of their business to less safe options based outside of the country.
“Will any of this help to protect gamblers?” Bertelmann said. “That is very doubtful.”
Image credit: World Economic Forum/Flickr (License)
