The UK’s offshore online gambling market has already expanded sharply, and the government’s latest tax increases are expected to push more customers away from licensed operators, according to H2 Gambling Capital.
The gambling data and market intelligence consultancy estimated that offshore gross gaming yield increased from £200m in 2019 to £685m in 2025. Offshore turnover rose from £5bn (US$6.7 billion) to £16.6bn over the same period, with much of the increase occurring between 2023 and 2025.
H2 forecasts that offshore gross gaming yield will reach £1.4bn by 2031, while turnover is expected to increase to £36bn. These estimates indicate that the movement towards offshore operators began before the latest tax changes. However, H2 expects the higher duties imposed on licensed businesses to accelerate that trend by weakening the value and competitiveness of regulated products.
Channelisation, which measures the proportion of gambling activity taking place through licensed operators, fell from 97% in 2019 to an estimated 92% in 2025. H2 expects the licensed share of gross gaming yield to decline further to 85% by 2031. Measured by turnover, the regulated market’s share is forecast to fall from 90% in 2025 to 78%.
Its offshore estimates are based on website traffic, bounce rates, time spent on gambling sites and an adjustment intended to reflect the higher spending profile of customers attracted to offshore operators.
For the UK, H2 applies a spending multiple of two to offshore visitors compared with users of licensed sites. Its modelling suggests regulated operators capture about 96% of website visits but only 92% of customer spending. The consultancy described the increase in Remote Gaming Duty from April 2026 as a significant pressure on licensed operators.
Higher taxation can lead businesses to reduce bonuses, promotional spending and returns to players as they seek to protect margins. H2 argues that this may make offshore platforms more attractive to customers seeking higher value or fewer restrictions.
Licensed online casino gross gaming yield increased by 14% to £5.7bn in 2025 but is forecast to decline by 1% to £5.64bn this year. A further 5% fall to £5.39bn is expected in 2027.
Online betting is forecast to perform more strongly during 2026 because of the FIFA World Cup, with gross gaming yield increasing by three percent to £2.52bn H2 expects revenue to fall to £2.47bn in 2027, when the tournament effect recedes and the Remote Betting Duty rate increases to 25%.
The report estimates that the combined effects of taxation and related operating changes could reduce regulated market growth by between 15 and 20%
Total UK online gross gaming yield, including licensed and offshore activity, is forecast to rise only modestly from £8.8bn in 2025 to £9.6bn in 2031. After inflation, H2 expects the market to decline by about 12% during this period.
The findings do not prove that the latest tax increase has already caused customers to migrate offshore. The duty change took effect after the illegal market had already grown substantially. They do, however, suggest that higher costs for licensed operators could accelerate an established shift.
Grainne Hurst, Betting & Gaming Council CEO, said the main beneficiaries would be overseas operators offering none of the protections attached to the regulated market.
The central policy question is whether the additional tax revenue generated from licensed operators will outweigh the losses created if more customers move beyond the reach of British regulation.
