The UK is at a turning point for its online gambling industry. A proposed rise in licence fees, coupled with increased taxation and tighter regulation, raises a worrying question: is the UK’s legal gambling market losing its competitiveness?
A consultation that rekindles concerns
At the end of January 2026, the Department for Culture, Media and Sport (DCMS) opened a consultation on a review of the fees charged by the UK Gambling Commission. The stated aim is to close a growing financial gap within the Commission and strengthen its resources in the face of current challenges.
Three options have been put forward:
- an average increase of 30%, favoured by the Commission itself,
- a more moderate increase of 20%,
- a combination of 20% + 10% specifically dedicated to the fight against illegal markets.
Whichever option is chosen, any changes should come into effect from 1 October 2026, after the end of the consultation scheduled for the end of March.
A sector already under pressure
For many operators, this consultation comes at a particularly delicate time. They have still not digested the substantial increase in the remote gaming duty announced in the last UK Budget, which raises the rate to 40% from April 2026.
At the same time, new affordability rules and tighter marketing restrictions are putting the industry under financial strain. According to a number of industry sources, this is pushing up operating costs at a time when already tight margins are being put under severe strain.
Alasdair Lamb, partner at CMS, goes so far as to say that while the fee review was announced as early as 2023, its proximity to the current tax increase suggests a real lack of consideration for the difficult financial position in which UK operators currently find themselves.
The argument against the illegal market
One of the most controversial points in the consultation is the stated aim of funding the fight against illegal operators via the revenues generated by the fee increase. The regulator claims that these additional resources will enable a significant strengthening of law enforcement and action against unlicensed sites, which divert players outside the regulated framework.
But this logic is contested. For many, linking the increase in fees directly to the fight against the black market is tantamount to making legal operators finance the bulk of their own supervision, which raises questions of fairness.
Other players in the sector are taking a more drastic stance. Steve Donaghue, founder of Gambling Consultant, is one of the most critical voices. In his view, the Commission has no real interest in stemming the growth of the illegal market, because recognising the problem would mean admitting that regulation itself generates demand for unregulated operators. He goes so far as to predict that a significant proportion of the gambling market could shift to illegal gambling, potentially accounting for 20% to 30% of total activity, with disastrous consequences.
The UK and Europe
Compared with other regulated markets in Europe, the UK regime is neither the most costly nor the most flexible. Italy, for example, charges very high initial fees, while countries such as Malta offer much lower costs.
However, the size of the UK market makes it particularly susceptible to fluctuations in cost. If fees and taxes become too burdensome, some observers believe that operators could redirect their activities to competing jurisdictions, to the detriment of the regulated UK market.
A market in delicate balance
In the final analysis, the UK consultation on the increase in licence fees illustrates a public policy that is deeply divided between protecting players, funding regulation and economic competitiveness. The coming months, and the way in which the DCMS takes into account the responses to the consultation between now and the end of March, will determine whether the balance between increased surveillance and market health can be maintained.