Taking a gamble on tax: Consultation on new single Remote Betting and Gambling Duty April 2025

As more gambling and gaming is conducted online, the current three-tiered system of taxation is seen as unwieldy and no longer fit for purpose. The government has, therefore, proposed a new, single Remote Betting & Gaming Duty (“RBGD”) which would come into force some time after October 2027 and is seeking views on the shape, scope, coverage, administration and enforcement of the new tax via a consultation document. Frustratingly, the rate of this tax would not be determined until the Budget process, but given that current rates range from 15% to 21%, there is a concern that this could result in a significant tax rise for some parts of the industry.

Changes in market practice

Remote gambling has grown significantly over the past decade with a shift to online platforms. The Gross Gambling Yield (“GGY”) from remote gambling in the UK was £6.9 billion in 2023-24, an increase of more than 200% since 2014-15. In the same period, the GGY from premises-based gambling has fallen by 15% from £5.5 billion to £4.6 billion. 

Gambling has a significant impact on the British economy, contributing £3.4 billion annually to the Exchequer. The methods of collecting those taxes have evolved over the decades to reflect industry changes, including the introduction of General Betting Duty in the 1960s and Remote Gaming Duty in 2007. 

In 2014, the government introduced a 'place of consumption' (“POC”) reform, requiring offshore operators to pay UK gambling taxes. Since 2014, a gamble or bet is subject to UK gambling duties if: 

1. the person making the bet is a 'UK person' (for General Betting Duty (“GBD”) and Pool Betting Duty (“PBD”) it is the bet made by a UK person that is taxable. For Remote Gaming Duty (“RGD”), it is a UK person’s participation in remote gaming that is taxable; or 
2. it is made on UK premises where betting facilities are available (not relevant to RGD). 

The current taxes for remote gambling include: 

1. GBD, due at 15% of gross profits, 10% for sports spread bets and 3% for financial spread bets; 
2. PBD, payable on bets not at fixed-odds apart from those on horse and dog racing, at 15% of gross profit
3. RGD payable on the provision of online gaming to a UK customer, due at 21% of gross profit.

Since September 2019, remote gambling has overtaken premises-based gambling in terms of GGY, with a 44% market share compared to 30% for premises-based gambling. The government believes the current tax structure is no longer reflective of real-life distinctions, particularly in relation to remote betting and remote gambling - remote and premises-based products face different commercial pressures and opportunities. It believes that further reform is needed to simplify and modernise the tax system by moving all remote gambling into a single RBGD.

Rationale for a Single Remote Gambling Tax

The government believes that introducing RBGD will cater to the growing remote gambling industry and simplify the process for businesses, harmonising current taxes into a single rate. 

Basic Framework and Scope 

The existing POC framework would continue to be used for RBGD, with bets made by UK persons subject to tax. 

The scope of RBGD would include all remote gambling activities, defined by existing legal definitions. Ancillary remote gambling activities, such as self-service betting terminals, would be included in RBGD unless existing exclusions apply.

On-course betting would remain exempt from gambling taxes, while remote betting activities by on-course bookmakers would be included in RBGD. Spread betting, predominantly a remote activity, would continue to be taxed on a place of supply basis.

Consistency of Treatment for Free Bets, Freeplays and Prizes

The consultation proposes changes to ensure consistent tax treatment for free bets, freeplays and prizes under RBGD. Currently, these are treated differently across RGD, GBD, and PBD, with RGD offering more favourable conditions. Concerns have been raised about the complexity and potential for non-compliance with the re-wagering exception under RGD, which allows operators to reduce their tax liability through contrived arrangements. The consultation suggests reviewing this exception to align with original policy intentions and ensure consistency across RBGD.

For prizes, the government proposes extending RGD provisions to all activities under RBGD, allowing deductions for non-money prizes and encouraging innovation. The aim is to align prize treatment under RBGD with GBD and PBD, permitting deductions only for winning prizes, unlike the current RGD rules which allow deductions for cashback incentives or consolation prizes on losses in certain circumstances.

Registration, Returns, and Sanctions

The government proposes adopting the existing administrative framework for RBGD, including registration and remote filing. The current sanctions regime, which includes civil penalties and cooperation with the Gambling Commission, is deemed sufficient to support RBGD.

Conclusion 

This consultation document has been expected since the previous government was in office, and the proposal to consolidate the three taxes into one has been long trailed. Although the consultation asks a number of questions, it is also interesting to see the areas that are not covered, including prize draws and the rates of tax. The consultation runs for 12 weeks, closing on 21 July 2025.