The UK’s offshore online gambling sector is set for significant growth following an increase in the government’s Remote Gaming Duty (RGD), according to recent analysis from H2 Gambling Capital.
The firm’s latest modelling underscores a considerable upswing in offshore gambling activity. Offshore gross gaming yield (GGY), which measures operator revenue after player payouts, is expected to rise dramatically from about £200 million in 2019 to an estimated £685 million by 2025. During the same period, offshore turnover is forecasted to surge from approximately £5 billion to £16.6 billion, effectively doubling between 2023 and 2025.
H2 Gambling Capital’s evaluation of the offshore gambling market employs comprehensive web traffic analysis, refining it with parameters like bounce rates, time spent on websites, and a “spend coefficient” that highlights customers who prefer offshore brands. For instance, H2 applies a 2.0x spend multiple for offshore visitors in comparison to onshore ones, helping clarify why licensed sites capture roughly 96% of web traffic but only around 92% of spending.
Looking ahead, offshore GGY is projected to reach approximately £1.4 billion by 2031, denoting a compound annual growth rate (CAGR) of 12.7% from 2025. Offshore turnover is anticipated to climb to about £36 billion by the same year. The percentage of online gambling conducted through UK-licensed operators, identified as “channelisation,” is projected to fall from 97% in 2019 to an estimated 92% by 2025 and further to 85% by 2031. This trend suggests the licensed market's share of turnover will decline from 90% in 2025 to 78% by 2031.
Overall, the UK online GGY, which combines onshore and offshore figures, is forecasted to grow modestly from £8.8 billion in 2025 to £9.6 billion in 2031, translating to a nominal CAGR of 1.4%. However, this figure masks an underlying real-term decline of about 12%.
A primary factor influencing the growth of the offshore market is the increase in the RGD set to take effect in April 2026. H2 characterizes this tax hike as a “significant headwind” for onshore operators, likely leading to a migration of players to offshore platforms.
For online casino games, GGY is projected to grow by 14%, reaching £5.70 billion in 2025. In contrast, online betting GGY is expected to decline by 6% to £2.45 billion, influenced in part by diminished hold margins, even as turnover rises by 5%. Data from regulators also suggests a notable decrease in activity, with the number of active players falling by 7% and the amount of bets placed decreasing by 6%.
For 2026, iGaming GGY is forecast to drop slightly by 1% to £5.64 billion, reflecting residual growth from the previous year, increased promotional spending by operators, and lower advertised return-to-player (RTP) rates on slot games. A more substantial impact is anticipated for 2027, with iGaming GGY expected to fall by 5% year-over-year to £5.39 billion. Over the 2026-27 timeframe, the cumulative nominal GGY decline is estimated at 6%, equating to an approximate 11% drop in real terms.
H2 estimates that the overall headwind resulting from the duty increase and related factors might reduce growth by 15%-20%. Real-term repercussions could see declines on a gross gaming revenue (GGR) basis of up to 20%-25% during 2026-27, particularly due to reduced bonuses.
Online betting is predicted to show relative resilience in 2026, buoyed by the World Cup, with GGY expected to increase by 3% to £2.52 billion. Nevertheless, as the event's influence wanes and the RGD rises to 25% beginning April 2027 for remote betting, GGY is projected to dip to £2.47 billion in 2027. A report from credit reference firm TransUnion indicates that approximately one in eight young adults, particularly those aged 25-34, have experienced fraud through unlicensed betting sites.
Offshore operators are likely to reap the greatest rewards from this shift, although by 2031, onshore activities are still expected to constitute the majority of UK GGY, approximately £8.2 billion of the projected total of £9.6 billion.
Grainne Hurst, chief executive of the Betting and Gaming Council, responded to the report with frustration regarding the influence of the unregulated market, stating, "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."
