The UK’s offshore online gambling sector is projected to expand following the increase in the government’s Remote Gaming Duty (RGD), according to an analysis from H2 Gambling Capital.
H2 Gambling Capital’s latest modelling highlighted a significant rise in offshore gambling activity.
Offshore gross gaming yield (GGY), a key measure of operator revenue after player winnings, is estimated to have climbed from approximately £200 million in 2019 to £685 million in 2025.
Over the same period, offshore turnover is forecast to increase from around £5 billion to £16.6 billion. Between 2023 and 2025, these figures roughly double.
Offshore GGY predicted to rise
H2 Gambling Capital’s offshore sizing is based on bottom-up web traffic analysis, adjusting for bounce rates, time spent on sites and a “spend coefficient” reflecting higher-value customers who are attracted to offshore brands.
For the UK market, H2 uses a 2.0x spend multiple for offshore visitors relative to onshore visitors, which helps explain why licensed sites capture about 96% of web visits but only about 92% of spend.
Looking further ahead, offshore GGY is predicted to reach about £1.4 billion by 2031. This would register a compound annual growth rate (CAGR) of 12.7% from 2025. Offshore turnover is expected to grow to approximately £36 billion by 2031.
The proportion of online gambling conducted through UK-licensed (onshore) operators, known as “channelisation”, fell from 97% in 2019 to an estimated 92% in 2025. The share is forecast to drop further to 85% by 2031. In terms of turnover, the licensed market’s share is expected to decline from 90% in 2025 to 78% by 2031.
Overall, UK online GGY (combining onshore and offshore) is projected to increase modestly from £8.8 billion in 2025 to £9.6 billion in 2031, a nominal CAGR of 1.4%.
However, this masks a real-term decline of about 12% over the same period.
Impact of remote gaming duty increase
A pivotal driver behind the offshore market’s expansion has been the rise in the RGD from April 2026. H2 described this tax increase as a “significant headwind” for onshore operators and something that would contribute to player migration offshore.
For online casino games, H2 reported GGY rose 14% to £5.70 billion in 2025. However, online betting GGY fell 6% to £2.45 billion, partly due to weak hold margins, despite turnover increasing by 5%. The regulator’s sample data also signalled declining activity, with active players down by 7% and bets placed down 6%.
In 2026, iGaming GGY is forecast to decline marginally by 1% to £5.64 billion, reflecting residual growth from 2025, increased operator promotional spending and lower advertised return-to-player (RTP) rates on slot games.
The more pronounced impact is predicted for 2027, with iGaming GGY expected to fall by 5% year-on-year to £5.39 billion. Over the 2026-27 period, the combined nominal GGY decline is calculated at 6% (an estimated 11% decline in real terms).
World Cup impact
H2 estimated that the effective headwind from the duty increase and related factors could reduce growth by 15%-20%. On a GGR basis, taking into account decreased bonusing, the real-term impact could reach a decline of 20%-25% across 2026-27.
Online betting is forecast to maintain relative resilience in 2026 due to the World Cup, with GGY seen increasing by 3% to £2.52 billion.
However, as the event’s influence fades and RGD rises to 25% from April 2027 for remote betting, GGY is predicted to fall to £2.47 billion in 2027. A study by credit reference firm TransUnion found that one in eight (12%) young adults, particularly those aged 25-34 have knowingly fallen victim to fraud via an unlicensed betting site.
Offshore operators stand to benefit most from this shift although, by 2031, onshore activity is still projected to account for most UK GGY – around £8.2 billion of the £9.6 billion total.
Reaction
In response to the report, Grainne Hurst, chief executive of the Betting and Gaming Council, expressed frustration at the impact from the unregulated market.
“The only winners from these tax hikes will be criminal operators based overseas. Britain will lose jobs, investment and tax revenue, while consumers are pushed towards operators offering none of the protections found in the regulated market.”
Kathryn Evans
Kathryn covers bitesize breaking news with a primary focus on EMEA and US legislation. A proud North Walian, fluent Welsh speaker and lifelong Wrexham FC fan – long before Hollywood came calling.
Original article: https://igamingbusiness.com/sustainable-gambling/growth-uk-offshore-online-market-linked-tax-hike-report-finds/
