The offshore online gambling market in the UK is poised for significant growth following a rise in the Remote Gaming Duty (RGD), according to new analysis from H2 Gambling Capital. Their latest modeling predicts a substantial boost in offshore gambling activity.
Offshore gross gaming yield (GGY), a crucial indicator of operator revenue after player payouts, is projected to soar from around £200 million in 2019 to an estimated £685 million by 2025. Additionally, offshore turnover is expected to jump from roughly £5 billion to £16.6 billion during the same period, with figures approximating a doubling of revenue between 2023 and 2025.
The analysis conducted by H2 Gambling Capital involved a detailed examination of web traffic, adjusting for various metrics, such as bounce rates and the time users spend on gambling sites. A significant factor in their findings is a "spend coefficient," which highlights that high-value customers are increasingly attracted to offshore brands. For the UK market, H2 applies a 2.0x spend multiplier for offshore visitors compared to onshore users, which sheds light on why licensed sites attract about 96% of visits yet capture only around 92% of the total spending.
Looking beyond the short term, H2 forecasts that offshore GGY could reach approximately £1.4 billion by 2031, reflecting a compound annual growth rate (CAGR) of 12.7% from 2025. Additionally, offshore turnover is anticipated to grow to nearly £36 billion by the same year.
The share of online gambling handled by UK-licensed operators has decreased from 97% in 2019 to an expected 92% in 2025. Projections suggest this trend will continue, with estimates indicating a drop to 85% by 2031. For turnover, the licensed sector's share is forecasted to diminish from 90% in 2025 to 78% in 2031.
When combining both onshore and offshore segments, the overall UK online GGY is expected to increase from £8.8 billion in 2025 to £9.6 billion by 2031, marking a modest CAGR of 1.4%. However, this overall growth conceals a real-term decline of about 12% over the same timeframe.
The increase in RGD, set to take effect in April 2026, is seen as a critical factor driving the expansion of the offshore market. H2 identified this tax hike as a significant challenge for onshore operators, likely prompting some players to migrate to offshore options.
In 2025, GGY from online casino games is anticipated to rise by 14% to £5.70 billion, while GGY from online betting is projected to drop by 6% to £2.45 billion, despite a 5% increase in turnover. Activity within the sector seems to be declining overall, indicated by a 7% decrease in active players and a 6% slide in bets placed.
In 2026, iGaming GGY is expected to experience a slight dip of 1% to £5.64 billion, influenced by continued growth from the previous year, increased promotional spending by operators, and lower advertised return-to-player rates on slot games. A more considerable reduction is predicted for 2027, with iGaming GGY likely falling by 5% year-on-year to £5.39 billion, resulting in a total nominal decline of 6% over the 2026-27 period, amounting to about an 11% decrease in real terms.
H2 estimated that the combined negative effects of the duty increase and other factors could hinder growth by 15%-20%. On a GGR basis, the real-term impact might lead to a reduction of 20%-25% for 2026-27. Notably, online betting is expected to show relative resilience in 2026 due to the influence of the World Cup, with GGY anticipated to increase by 3% to £2.52 billion. However, following the event, and as the RGD increases to 25% for remote betting starting in April 2027, GGY is expected to fall to £2.47 billion in 2027.
A study by TransUnion revealed that around 12% of young adults, especially those aged 25-34, have been victims of fraud through unlicensed betting sites. While offshore operators may gain from this shifting landscape, projections indicate that onshore activity will still constitute the majority of UK GGY by 2031, totaling around £8.2 billion out of an overall £9.6 billion.
Grainne Hurst, the chief executive of the Betting and Gaming Council, responded to the report by expressing her concern about the unregulated market's effects. She remarked, "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."
