Britain’s online gambling industry is used to change. But the government’s latest move, proposing a near-30% rise in Gambling Commission licence fees from 2026, arrives at a particularly awkward time.
Operators are still digesting the near-doubling of remote gaming duty announced at the last budget, while the regulator is also pushing new affordability checks and tighter marketing rules.
The result is a sense that the UK’s regulated sector is being squeezed from every side, just as consumers are becoming more inclined to look elsewhere. The consultation on fees could therefore be seen less as an isolated fiscal exercise than a test of whether the UK can remain a leading regulated market without driving its customers into the black market.
Has the regulator understood the impact?
The Gambling Commission’s fee review was promised in the 2023 white paper, which committed to reassessing the regulator’s funding to ensure it has sufficient resources for its duties and reform agenda. The consultation’s timing has therefore been interpreted by many operators as tone deaf, coming so soon after the tax rise. The Commission’s consultation announcement states the review follows a commitment in the 2023 Gambling Act review white paper to reassess the Commission’s funding.
The proposed increase is intended to plug funding shortfalls and strengthen enforcement, including against illegal operators. But it lands only months after the government announced steep tax rises that are expected to raise the cost of doing business substantially.
Is the review necessary?
The Commission itself has been careful to frame the review as a necessary update.
Its chief executive, Andrew Rhodes, explained the Commission’s views in an IAGA webinar in January.
He further noted that “depending on the outcome” of the Cabinet Office process: “There would then be a public consultation on Commission fee levels – what those fees would be at different points and what they would support in terms of the Commission’s work.”
The question is whether the regulator has understood the cumulative impact of its policy agenda. Alasdair Lamb, partner at CMS, says that while the review “was announced as part of the white paper back in 2023, and shouldn’t, therefore, come as a surprise”, its proximity to the tax hike “suggests a real lack of consideration for the difficult financial position UK operators find themselves in currently”.
For some, the fee rise is less of a crisis than a symbol of the broader pressure on the regulated market. Bethan Lloyd, senior associate at Wiggin LLP, notes that “this is more cost to the regulated industry at a time they could clearly do without it,” but adds that “the licence fee increase isn’t going to be the straw that breaks the camel’s back”. Yet she emphasises that the industry is already facing a far wider set of constraints.
The elephant in the room
One of the most contentious aspects of the consultation is its insistence that higher fees will fund enforcement against illegal operators. The regulated sector broadly agrees the black market is a problem, but it questions whether the fee increase will help and whether it is fair for licensed operators to fund the fight.
Lamb stresses the black market is a universal issue. “The black market isn’t UK-specific; it is something all regulated territories battle to varying extents,” he says. Yet he warns that reports of rising illegal activity in the UK – coming after years of increasing scrutiny and costs for licensed operators – are “probably not a coincidence”.
Lloyd is explicit about the link between tax and illicit demand. She says it is “inevitable that the increased taxes will fuel an increase in traffic to the unregulated market”. She also highlights the uneasy political logic of making licensed operators pay for enforcement: “Funding this from licensed operators is an easy target … a bit like when others are late for a meeting, and those who are on time get chided for tardiness.”
Steve Donaghue, founder of Gambling Consultant, takes a harsher view. He argues that the regulator has no real interest in preventing a black-market explosion because it would require admitting that regulatory friction creates demand for illegal operators. “What is obvious is that the Gambling Commission has no real interest in preventing an explosion in it,” he says, adding that “if it did it would accept that increasing regulatory friction creates the demand for it”.
Donaghue predicts that the UK could soon see a black market accounting for “20%-30%” of activity, with associated rises in problem gambling and a collapse in tax receipts. He calls this “a public policy disaster … down simply to the ideological zeal of an anti-gambling regulator”.
How the UK stacks up against Europe
A comparison with other mature European markets suggests that the UK is not uniquely expensive, but it is not cheap either. The UK Gambling Commission already operates a tiered fee structure, with initial licence costs ranging from £3,100 to £67,700, and ongoing fees from £4,000 to over £940,000, depending on size and turnover. The proposed increase could push these sums higher.
In Europe, the most expensive regime is Italy, which now requires a €7 million one-off concession fee and additional responsible-gaming levies. This makes Italy a distinct outlier and underscores that high fees are not necessarily fatal if a market is large and stable.
At the other end of the spectrum, Malta offers a relatively affordable regime, with a €5,000 application fee and around €25,000 annual licence costs. Sweden and Denmark, both mature markets, impose significant regulatory charges alongside heavy taxation: Sweden’s application fee is about SEK400,000 (roughly $44,198) plus supervisory fees based on turnover and an 18% GGR tax, while Denmark’s application fees range from DKK304,000 to DKK426,000, with annual fees ranging up to DKK5.48m depending on turnover.
UK’s reliance on high channelisation
Spain and France have lower initial costs but ongoing charges that can vary widely. Spain’s fees range from roughly €10,870 to €38,000, with annual fees often tied to GGR. France charges between €5,000 and €10,000 for licences, with annual fees of €20,000 to €40,000 depending on licence type. The Netherlands increased its application cost to around €61,300 in April 2026, with ongoing fees above €50,000. Portugal and Belgium combine moderate application fees with substantial revenue taxation, with Portugal’s levy ranging from 12% to 30% of GGR, and Belgium’s ~11% GGR tax on top of licence fees.
In that context, the UK is neither the most expensive nor the most lenient market. But the difference is that the UK is one of the world’s largest regulated online gambling markets, and it has historically relied on high channelisation. Lamb points out that while the UK “isn’t exactly a cheap place to do business”, it has “continued to prosper”. Yet he warns that the combined effect of tax hikes and fee increases “may make some operators that were considering the UK look elsewhere”.
Compliance cost is rising
The licence fee rise does not occur in isolation. Operators are also bracing for widening affordability measures, tighter marketing restrictions and new data and technology compliance demands. These changes will likely increase the cost of compliance, and in some cases may require substantial investment in staffing and systems.
Lamb describes the trend as a broader narrative of “increased regulation leading to increased costs for compliance”. Lloyd agrees and frames the coming years as a strategic challenge for operators. “Innovation is going to be key,” she says. Operators will need to find ways to create attractive products that can be delivered and marketed safely. Yet she warns that innovation requires investment, and that “at a time when costs are being squeezed, operators will need to make a choice as to where they spend – and save – over the coming years”.
Donaghue sees the trajectory as intentionally destructive. He argues that the regulator’s aim is to reduce gambling by restricting it, but that the result will be to push consumers to the black market. “The flaw in their ideology is that the gambling will just go to the black market,” he says, predicting that within three years the UK will face higher problem gambling and lower tax revenues.
Meaningful or merely symbolic?
The consultation suggests that part of the fee increase could be ring-fenced for illegal-market enforcement and consumer protection. But industry voices are sceptical about the value of such measures.
Lloyd argues that consumer protection is already embedded in operators’ obligations under the Licence Conditions and Codes of Practice. Calling it out separately “feels more performative than practical”. She does, however, acknowledge that black-market activity is rising and that investing in technology to tackle it may be necessary. She suggests that if the investment works, it could benefit licensed operators over time, and perhaps even lead to fee reductions in the future. “Once the tech is up and running, perhaps we could expect to see the licence fee reduce in time,” she says.
Lamb is less optimistic. He implies that ring-fencing may not be sufficient if the underlying cost structure makes the UK less competitive. And Donaghue dismisses the idea as window dressing, arguing that without independent audits, it is impossible to prove the funds are being used as claimed. “This is purely a chance to gain more revenue,” he says.
A tipping point?
The fee consultation seems to be a clear sign that the UK government wants a better-funded regulator. But it also highlights a deeper policy dilemma, as industry voices are pointing out. If the UK makes the regulated market too costly, it risks losing the very customers it is trying to protect. The country has long prided itself on high channelisation, and the risk is that the UK may become a cautionary tale of what happens when regulation and taxation push consumers offshore.
The proposed fee rise may not be the sole cause of any collapse, but combined with tax hikes, tighter compliance requirements, and a growing sense that the regulator is pursuing a restrictive agenda, it could push the UK market toward a new equilibrium – one where the regulated sector shrinks and the black market grows.
Market maturity does not guarantee stability, and the next few years will reveal whether Britain can sustain a regulated model that remains competitive, or whether it will become another European jurisdiction where regulation drives gambling into the shadows.
Original article: https://igamingbusiness.com/legal-compliance/regulation/uk-licence-fee-hike/
