The UK’s offshore online gambling sector is anticipated to experience notable growth following an increase in the government’s Remote Gaming Duty (RGD), according to a recent analysis by H2 Gambling Capital.
H2 Gambling Capital's latest findings reveal a substantial rise in offshore gambling activities. The offshore gross gaming yield (GGY), which captures operator revenue after player winnings, is projected to jump from approximately £200 million in 2019 to an estimated £685 million by 2025. Alongside this, offshore turnover is expected to surge from around £5 billion to £16.6 billion, almost doubling between 2023 and 2025.
Research from H2 indicates that the growth forecast is based on detailed web traffic analysis, which accounts for bounce rates, time spent on sites, and a “spend coefficient” indicating that higher-value customers tend to gravitate towards offshore brands. In the UK market, H2 applies a 2.0x spend multiple for offshore visitors compared to their onshore counterparts. This dynamic helps clarify why licensed sites receive about 96% of web visits yet only 92% of the spending.
Looking ahead, the offshore GGY is projected to reach around £1.4 billion by 2031, reflecting a compound annual growth rate (CAGR) of 12.7% from 2025. Offshore turnover is forecasted to increase to about £36 billion by 2031. However, the proportion of online gambling conducted through UK-licensed operators, known as “channelisation,” is expected to decline. It is estimated to fall from 97% in 2019 to around 92% in 2025, and further to 85% by 2031. In monetary terms, the licensed market's share is anticipated to drop from 90% in 2025 to 78% by 2031.
For the overall UK online GGY, combining onshore and offshore figures, there is a modest predicted growth from £8.8 billion in 2025 to £9.6 billion by 2031, representing a nominal CAGR of 1.4%. However, this statistic conceals a real-term decline of approximately 12% over the same timeline.
A key factor driving the projected expansion of the offshore market is the increase in the RGD set to take effect in April 2026. H2 describes this tax hike as a significant challenge for onshore operators, likely contributing to player migration to offshore platforms. For online casino games, GGY is expected to rise by 14% to £5.70 billion in 2025. Conversely, online betting GGY is predicted to fall by 6% to £2.45 billion, attributed to weaker hold margins, despite a 5% increase in turnover. Regulation data also indicates declining activity, with active players down by 7% and bets placed down by 6%.
In 2026, the iGaming GGY is forecasted to experience a slight decline of 1% to £5.64 billion, driven by residual growth from 2025, increased promotional spending by operators, and lower advertised return-to-player (RTP) rates on slots. The decline is anticipated to become more pronounced by 2027, with expected GGY dropping by 5% to £5.39 billion, leading to a combined nominal GGY decline of 6% from 2026 to 2027 (an estimated 11% decline in real terms).
H2 estimates that the effective impact from the duty increase and related factors could suppress growth by 15%-20%. When accounting for decreased bonuses, the real-term effect could range from a 20%-25% decline during 2026-27.
Online betting may show some resilience in 2026, buoyed by the World Cup, with GGY expected to rise by 3% to £2.52 billion. However, as the event's influence wanes and the RGD rises to 25% for remote betting beginning in April 2027, GGY is predicted to drop to £2.47 billion that year. A study conducted by credit reference firm TransUnion revealed that 12% of young adults, particularly those aged 25-34, have knowingly experienced fraud from unlicensed betting sites.
While offshore operators are set to gain the most from these shifts, onshore activity is still projected to account for the majority of UK GGY by 2031, estimated at around £8.2 billion of the total £9.6 billion.
In response to the findings, Grainne Hurst, chief executive of the Betting and Gaming Council, expressed concern over the repercussions of 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 that offer none of the protections available in the regulated market."
