The new gambling tax is fizzling out: the illegal market is reaping the benefits
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26 Jul 2026 •
Reading time: 4 minutes
The Netherlands raised the gambling tax to 37.8 per cent on 1 January 2026. The government had expected hundreds of millions of euros in additional revenue, but takings are proving to be significantly lower than forecast. This raises the question of whether the increase in the gambling tax is benefiting the Treasury or, on the contrary, is strengthening the illegal market. The country had already raised taxes in 2025.
According to monitoring carried out by the Ministry of Finance and the Gaming Authority, the impact of the tax increase remains well below expectations. When the rate was raised from 30.5 per cent to 34.2 per cent, an additional €108 million in revenue was anticipated. In reality, these forecasts have hardly materialised. The second stage, raising the rate to 37.8 per cent, also appears to be generating far less revenue than expected.
This is not a negligible difference in a calculation model. It highlights a wider problem: players do not automatically remain loyal to the legal market when it becomes more expensive or less attractive.
A player may simply leave
Many tax models are based on the assumption that the market remains broadly unchanged. The tax increases, so revenue increases accordingly. But online gambling works differently.
If legal operators have to pay more tax, they will have to pass on these costs in one way or another. This may result in less favourable odds, fewer bonuses, reduced margins or more restrictive commercial options. Some players accept this. Others simply look for an alternative.
And that alternative is often just a few clicks away online: an illegal operator without a Dutch licence, with no tax obligations in the Netherlands and without the same duty of care.
The Ksa claims that 91 per cent of players gamble exclusively with legal providers. But when the sums involved are taken into account, the market share is much lower: around 53 per cent. This means that nearly half of the funds could be diverted to the illegal market. This is precisely what makes this tax increase risky.
The calculation doesn’t hold water if the market shrinks
The principle is simple. If the tax rate increases but the legal market shrinks, the measure will generate less revenue than expected. In the worst-case scenario, the rate rises, but the tax base shrinks even faster.
The government then collects less additional revenue than anticipated, whilst the illegal market becomes more attractive to gamblers.
This is precisely the warning that the sector has been issuing for some time now. Excessive tax burdens make legal operators less competitive – not against one another, but against operators who have no regard for the rules.
The UK is also feeling the pressure
The Netherlands is not alone in this situation. In the UK, the Remote Gaming Duty is set to rise to 40 per cent. A new 25 per cent tax on remote betting will also come into force from April 2027.
Entain, the parent company of Ladbrokes and others, is currently cutting around 500 jobs. The company does not directly link this decision to the tax increase, but the timing and the costs speak volumes. According to Entain, this new tax burden represents around £200 million in additional annual costs for its online operations in the UK.
Whilst the Netherlands is primarily facing issues with channelling, in the UK the pressure is clearly resulting in cost-cutting and job losses.
A tax increase is not free money
The lesson is clear: raising the tax on gambling seems simple on paper, but the reality is more complex. Online gamblers are mobile. Illegal operators are aggressive. And legal operators cannot absorb higher costs indefinitely without making their product less attractive.
A tax increase therefore quickly becomes much more than a mere fiscal measure. It also poses a risk of diversion, a risk to consumer protection and an advantage for providers operating outside any regulatory framework.
The question is therefore not merely how much tax the authorities wish to levy. The real question is how much pressure the legal market can withstand before players turn to operators who pay absolutely nothing. This is also a topical issue in Belgium.