The offshore online gambling sector in the UK is anticipated to grow significantly, driven by the government's increase in the Remote Gaming Duty (RGD), as revealed in an analysis by H2 Gambling Capital.
According to H2’s latest modeling, offshore gambling activity is expected to see a substantial increase. The offshore gross gaming yield (GGY), a crucial indicator of operator revenues post player winnings, is projected to rise from about £200 million in 2019 to £685 million by 2025. During the same period, offshore turnover is predicted to surge from around £5 billion to £16.6 billion, effectively doubling between 2023 and 2025.
H2’s projections for offshore GGY are informed by a detailed analysis of web traffic tailored for this sector, which considers factors like bounce rates, time spent on sites, and a “spend coefficient” that reflects higher-value customers drawn to offshore brands. The analysis employs a 2.0x spend multiple for offshore visitors compared to their onshore counterparts, illustrating why licensed sites secure about 96% of web visits but only 92% of expenditure.
Looking further ahead, offshore GGY could reach approximately £1.4 billion by 2031, reflecting a compound annual growth rate (CAGR) of 12.7% starting in 2025, with turnover expected to climb to around £36 billion during the same timeframe.
The share of online gambling that takes place through UK-licensed (onshore) operators, referred to as "channelisation," is projected to decrease from 97% in 2019 to an estimated 92% by 2025. This share might further diminish to 85% by 2031, with the licensed market’s turnover expected to shrink from 90% in 2025 to 78% in 2031.
Overall, the total GGY for UK online gambling, which includes both onshore and offshore operators, is forecasted to see a modest increase from £8.8 billion in 2025 to £9.6 billion in 2031, representing a nominal CAGR of 1.4%. However, this growth masks an actual decline of about 12% in real terms over the same period.
A key driver of this offshore growth is the increase in the RGD, which will rise from April 2026. H2 describes this tax hike as a significant challenge for onshore operators, likely fueling player migration to offshore platforms.
For online casino games, GGY is estimated to rise 14% to £5.70 billion by 2025, whereas online betting GGY is expected to drop 6% to £2.45 billion, influenced by weak hold margins even as turnover rises by 5%. The regulator's sample data indicates a decrease in activity, with a 7% drop in active players and a 6% reduction in bets placed.
In 2026, iGaming GGY is likely to decline slightly by 1% to £5.64 billion, signifying a continuation of growth from 2025, augmented by an increase in operator promotional spending and lower return-to-player (RTP) rates for slot games. A more severe decline is anticipated for 2027, with iGaming GGY expected to drop 5% year-on-year to £5.39 billion, resulting in a combined nominal decline of 6% for the 2026-2027 period, translating to an estimated 11% decline in real terms.
H2 approximates that the effective headwinds from the RGD hike could reduce growth by 15%-20%. When factoring in reduced bonuses, the real-term impact might even reach a decline of 20%-25% over 2026-2027. Meanwhile, online betting might show some resilience in 2026 due to the World Cup, with GGY predicted to rise by 3% to £2.52 billion. However, as the event's effect wanes and the RGD climbs to 25% for remote betting in April 2027, GGY may retreat to £2.47 billion in 2027. A study by TransUnion revealed that 12% of young adults, particularly those aged 25-34, have unknowingly become victims of fraud through unlicensed betting sites.
Although offshore operators are expected to gain the most from this shift, onshore activity is still expected to comprise the bulk of UK GGY by 2031, with around £8.2 billion of the projected £9.6 billion total.
Grainne Hurst, chief executive of the Betting and Gaming Council, voiced significant concern regarding the consequences of the unregulated market in response to the report. "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," she stated.
