The UK Betting and Gaming Council has published the results of a new study on higher gambling taxes and their effect on the gaming ecosystem. The study, conducted by PwC, strongly suggested links between over-taxation and a strong black market.
Higher-Tax Countries Experience Bigger Black-Market Struggles
For its study, dubbed Impact of the taxation and regulatory environment on European online betting and gaming markets, PwC took a look into Europe’s various gaming markets, especially those with stricter regulatory frameworks.
PwC listed France, Sweden, and the Netherlands as outliers in terms of stricter regulation. The study also suggested that these markets have significant troubles with the black market, which commands a 57% market share in France, a 35% share in Sweden, and a 37% share in the Netherlands.
PwC contrasted this example with Spain and Denmark, which have opted for a more moderate approach with lower taxes. It added that these countries are experiencing fewer problems with the black market, which commands a share of only 11% there.
The study suggested that Britain’s offshore gaming market is currently occupying a 5% share, marking a significant increase from 3.3% in 2021. PwC noted that this is equivalent to “hundreds of millions of pounds in untaxed, unregulated activity.”
The Tax Hikes Could Miss Their Mark
In addition to suggesting that over-regulation and taxation could have an adverse effect, PwC challenged the popular assumption that higher taxes equal an increase in public revenues. It cited statistics showing that, between 2019 and 2024, countries with tax rates below 25% experienced a stronger growth in tax receipts than higher-tax markets.
PwC explained that this is due to the fact that operators in higher-tax jurisdictions often reduce their marketing and promotions. This makes the regulated market less competitive, leading to a drain to the black market.
The BGC and PwC therefore concluded that increasing the UK’s gaming tax would hurt the economy without achieving the desired long-term benefits.
The report concludes that higher effective tax rates and tighter rules consistently lead to smaller regulated markets, while jurisdictions that liberalise and maintain balanced taxation enjoy stronger growth.
BGC statement
The UK Could End Up Like France or Sweden
Grainne Hurst, the BGC’s chief executive officer, also commented on the matter. While she acknowledged that the UK currently boasts one of the safest gaming markets in Europe, she warned that careless regulation could change that for the worse.
Britain has one of the safest gambling markets in Europe but if the Treasury isn’t careful, we could quickly end up like France or Sweden, with huge black markets contributing nothing in tax, offering zero player protection, and providing no funding for sport or the economy.
Grainne Hurst, CEO, BGC
Hurst encouraged officials to consider well-balanced regulation and fair taxes that ensure a healthy industry.