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A leak from the Office for Budget Responsibility has revealed a tax jump far higher than expected, sending operators into rapid reassessment ahead of the 2026 Budget.
A document uploaded early by the Office for Budget Responsibility has confirmed that the UK government will raise remote gaming duty from 21% to 40% from April 2026. The leak arrived hours before the Chancellor’s formal Budget, triggering immediate market reactions and forcing the industry to confront a tax landscape that is markedly tougher than anticipated.
The figures were included in an OBR statement that briefly went live before being removed. Expectations across the sector had centred on a rise into the low thirties. Instead, the government will introduce one of the steepest duty increases the online gambling sector has faced in more than a decade, with an estimated £1.1bn in new revenue expected by 2029.
Government prepares major revenue shift
The leak signals a fiscal strategy built around higher operator contributions and sharp structural changes across UK gambling.
The leaked document outlines how the government intends to plug part of its budget shortfall through higher taxation of online gambling. Under the plan, remote gaming duty will rise to 40% in April 2026, while a new 25% general betting duty will follow in 2027. This excludes self-service betting terminals, spread betting, pool betting and horse racing.
Horse racing, which had mounted a coordinated campaign warning of deep commercial risks, appears to have secured its expected exemption from the reforms. Alongside this, casino gaming duty bands will be frozen for 2026 to 2027 before returning to the usual uprating cycle.
For online operators, however, the duty increase represents a structural cost change that will reshape margins, pricing and payout mechanics across major verticals.
Demand expected to shift under higher duty
The OBR expects operators to pass most of the tax pressure onto consumers, with knock-on effects across betting behaviour and product mix.
In its analysis, the OBR estimated that operators will eventually pass through around 90% of the increased duty by adjusting prices or payouts. This adjustment is forecast to reduce consumer demand sufficiently to cut expected revenue from the measure by £0.5bn by 2029–2030.
The statement also acknowledges the possibility of movement towards unlicensed markets, noting that demand elasticities “capture potential substitution to the illicit market” as well as substitution between gambling verticals with differing tax treatments.
A further reduction of £0.1bn in total yield is forecast as operators restructure their product portfolios to minimise tax exposure. This may include shifting away from higher-duty categories, adjusting RTP positions, reducing bonus spend or reprioritising certain game types.
Political fallout adds pressure ahead of the Budget
The early publication triggered criticism in parliament and intensified scrutiny of pre-Budget briefings.
In Westminster, MPs criticised both the leak and the broader pattern of Budget information circulating ahead of the Chancellor’s announcement. The Speaker condemned the early publication, drawing attention to how fiscal announcements are becoming increasingly difficult to manage.
Despite the political noise, the tax rise remains set for April 2026 unless the government adjusts its plan following sector feedback. For operators, suppliers and investors, today’s leak shifts the timeline for strategic planning and accelerates conversations around cost control, product distribution and long-term UK market positioning.
Source: NEXT.io
