UK betting tax rise risks driving punters to black market, says Entain
Entain has warned that a UK betting tax rise could hand a decisive advantage to unlicensed operators, undermining government revenues and consumer protection. The FTSE 100 group behind Ladbrokes and Coral used its half-year 2025 results to urge policymakers to learn from the Netherlands’ costly experiment with higher gambling taxes. This latest Entain tax warning adds fresh weight to the growing industry backlash against proposed changes to UK gambling taxation.
Rob Wood, Entain’s Chief Financial Officer, said: “As evidenced in the Netherlands, it backfires if you put taxes up too high and have too draconian a regime. They have accepted that now over half of the whole market is black.”
The comments land as the Treasury weighs reforms that could see general betting duty harmonised from 15 percent to the 21 percent remote gaming duty rate, with some political voices pushing for even steeper increases. Recently, SiGMA News explored whether these measures amount to a bold fix or a convenient scapegoat for wider fiscal pressures, following former Prime Minister Gordon Brown’s comments about increasing levies on gambling operators.
Industry warns of unintended consequences
Wood argued that any increase would force operators to pass costs onto customers through “worse odds, worse promotions, and worse generosity”, creating space for black market gambling in the UK to grow. With less value on offer, many consumers may see little reason to stay with regulated sites when unlicensed platforms can provide better returns and fewer restrictions.
He pointed to Dutch government figures showing that a tax rise from 30.5 percent to 34.2 percent in January 2025, intended to generate €200 million annually, has instead contributed to a €200 million shortfall as legal gross gaming revenue fell by a quarter. Economists note that the Netherlands’ higher tax rate landed at the same time as stricter marketing and regulatory measures, complicating efforts to measure its true effect. Analysts suggest that a fuller picture of tax impacts could be drawn by examining similar reforms in other regulated markets, alongside economic modelling of optimal rates. However, multiple market studies point to taxation as a major factor in the drop in legal market share.
Market channelisation under threat
“They have accepted that now over half of the whole market is black,” Wood added, warning that the UK could face the same collapse in market channelisation if taxes are set too high. Market channelisation refers to keeping players within licensed, taxed operators rather than losing them to unregulated, offshore sites.
A YouGov poll commissioned by the industry found that 28 percent of UK gamblers would consider turning to unregulated sites if taxes were to rise, with nearly two-thirds expressing openness to black market alternatives.
Player champions say the black market comes with a sting: no promise of your winnings, no one to hear your complaint, and none of the guardrails that licensed sites must keep. They argue that the black market may tempt with better odds but strips away the protections that licensed operators must provide.
How a UK betting tax rise could hit racing
The British Horseracing Authority has launched its “Axe the Racing Tax” campaign, warning that a UK betting tax rise harmonising UK betting duty at 21 percent would cost the sport £66 million annually and put 2,752 jobs at risk. Independent modelling projects that the hit could reach £160 million if duties are harmonised at 40 percent.
The racing sector’s concerns are part of a wider policy fight. As SiGMA News covered in “Racing tax or rural ruin,” the levy debate has become a flashpoint between rural economies and Treasury targets.
Supporters of higher gambling duties, including the Institute for Public Policy Research, present the policy as part of a broader UK gambling reform agenda. They say it could generate £3.2 billion to help tackle child poverty. Critics, however, argue that the short-term fiscal boost will be offset by lost tax receipts as players migrate offshore.
Strong results overshadowed by policy risk
Entain reported first-half net gaming revenue of £2.63 billion, a 7 percent year-on-year increase, including a 21 percent surge in online revenue in the UK and Ireland. Group EBITDA climbed 11 percent to £583.4 million, while its BetMGM joint venture grew 35 percent to $1.35 billion, delivering $109 million in EBITDA. BetMGM’s growth underlines the strength of Entain’s US footprint, a key part of its strategy to offset any downturn in UK revenues.
The company raised full-year guidance to online NGR growth of around 7 percent, with group EBITDA expected between £1.1 billion and £1.15 billion. CEO Stella David described the business as “stronger, fitter and faster”, highlighting growth in women’s sports and innovative betting formats. These gains come as debate over a UK betting tax rise continues to dominate industry and political discussion.
However, the results also included a $66 million provision for a potential fine from AUSTRAC, Australia’s anti-money laundering regulator, relating to compliance at its Australian subsidiary. The company emphasised that it made this accounting provision to prepare for a potential penalty, not to record an already imposed fine. Management described the move as prudent risk management and said it did not anticipate any market disruption.
Lobbying and the autumn budget
The Betting and Gaming Council (BGC) has described the proposed UK betting tax rise as “economically reckless,” warning that it could lead to job losses and damage the regulated market share.
Treasury sources have indicated that options under active consideration include harmonising general betting duty with remote gaming duty at 21 percent, as well as exploring steeper increases. The Treasury will outline the final proposals in the Autumn Budget on 14 October, with changes set to take effect from April 2026.
Critics of the industry have, in turn, questioned the scale and style of operator lobbying, as SiGMA News examined following a Flutter Entertainment and Betting and Gaming Council-organised darts-themed drinks evening for Labour Party staffers. Not everyone’s a fan of the darts-and-drinks diplomacy. Reform advocates say this kind of lobbying makes the public wonder if the industry’s playing straight when it comes to shaping policy.
Balancing tax goals with market stability
As Chancellor Rachel Reeves prepares to deliver the Autumn Budget, both the government and industry must decide how to balance revenue goals with the health of a regulated market. Industry groups, including the BGC, have urged the government to pair any tax reforms with stronger enforcement against unlicensed operators, improved payment blocking, and clearer public education on the risks of the black market.
The bottom line is that Entain’s tax warning places the UK in a familiar regulatory dilemma. Do the government squeeze more from a sector that contributes £4 billion annually and employs over 100,000 people, or hold the line to protect market channelisation?
The Netherlands’ experience will be closely watched, but as Wood put it, “If the government puts taxes up, then ultimately, tax take goes down, not up, because of leakage to the black market.”
Other regulated markets will closely monitor the UK’s approach, as similar debates over gambling taxes shape political agendas and industry strategies.
