UK LICENCE FEE INCREASE PUTS THE REGULATED GAMBLING MODEL TO THE TEST
A proposed increase in UK Gambling Commission licence fees, arriving alongside recent tax rises and expanding compliance obligations, is sharpening questions about whether the UK’s regulated gambling market can remain commercially sustainable or whether rising costs risk accelerating offshore leakage.
The British online gambling sector is accustomed to regulatory change. However, the proposal to raise Gambling Commission licence fees by close to 30% from 2026 comes at a moment of heightened financial pressure for licensed operators.
The consultation follows a near-doubling of remote gaming duty announced in the most recent Budget, alongside the rollout of new affordability checks, tighter marketing controls and broader compliance expectations. Taken together, these measures represent a significant increase in the cost of operating in the UK and raise concerns about the long-term competitiveness of the regulated market.
Rather than a standalone fiscal adjustment, the licence fee review is increasingly viewed as a test of whether the UK can maintain high channelisation while continuing to expand regulatory and tax burdens.
A predictable review with difficult timing
The fee review was signposted in the 2023 Gambling Act white paper, which committed to reassessing the Gambling Commission’s funding to ensure it could deliver its expanded responsibilities. The stated objective is to address funding shortfalls and strengthen enforcement capability, including action against illegal operators.
What has unsettled the industry is the timing. The consultation comes only months after substantial tax increases, creating a cumulative impact that many operators believe has not been fully assessed. While each measure may be defensible in isolation, together they contribute to a growing perception that the regulated sector is absorbing repeated cost increases without a clear view of market tolerance.
Funding enforcement and allocating responsibility
One of the most contentious elements of the consultation is the proposal that higher licence fees should help fund enforcement against illegal gambling. Although there is broad agreement that unlicensed operators represent a growing risk, licensed businesses increasingly question whether it is appropriate or effective for the regulated sector to bear the cost of enforcement.
There is also concern that rising regulatory friction may be contributing to the problem enforcement is intended to solve. Reports of increased unlicensed activity have emerged alongside tighter rules and higher operating costs, prompting debate over whether excessive pressure on compliant operators risks driving consumers elsewhere.
If enforcement funding fails to reduce illegal activity, higher fees may be perceived less as a protective measure and more as an additional penalty for compliance.
How the UK compares internationally
In absolute terms, the UK is not the most expensive gambling jurisdiction in Europe. Licence fees are tiered by size and turnover and even with the proposed increase they remain below the highest-cost regimes, such as Italy, where multi-million-euro concession fees apply.
At the lower end of the spectrum, jurisdictions such as Malta continue to offer comparatively low-cost licensing models, while Nordic markets including Sweden and Denmark combine high taxation with significant regulatory charges. Other European markets such as Spain, France and the Netherlands fall between these extremes, often balancing modest application fees with ongoing levies linked to revenue.
What distinguishes the UK is not cost alone but scale and reliance on channelisation. As one of the world’s largest regulated online gambling markets, the UK has historically sustained high levels of consumer participation within the licensed sector. That success has allowed it to support heavier regulation than many smaller markets.
The question is whether that balance remains sustainable.
Compliance costs reshape commercial strategy
Licence fees are only one component of a broader cost landscape. Operators are also preparing for expanded affordability requirements, stricter marketing rules and increased data, technology and reporting obligations. These changes imply higher ongoing compliance costs and in some cases substantial investment in systems and personnel.
This environment is reshaping strategy. Operators must decide where to invest, which products to prioritise and which markets justify long-term commitment. While innovation is often cited as the path forward, innovation itself requires capital, which becomes harder to deploy as fixed costs increase.
For smaller and mid-sized operators in particular, the UK’s risk-reward equation may become less compelling.
Symbolic adjustment or structural shift
The consultation indicates that some additional fee revenue could be ring-fenced for consumer protection and illegal market enforcement. However, scepticism remains about whether such measures will materially offset the broader pressures facing the regulated sector.
If higher fees deliver measurable reductions in unlicensed activity, they may eventually be viewed as a necessary investment. If not, they risk reinforcing perceptions that the UK’s regulatory framework is shifting towards cost recovery rather than market sustainability.
A market at an inflection point
The licence fee consultation highlights a deeper policy dilemma. The UK seeks a well-funded and assertive regulator but also depends on a commercially viable licensed market to deliver consumer protection, tax revenue and effective oversight.
If cumulative costs rise too far, the risk is not an abrupt collapse but a gradual rebalancing marked by fewer operators, reduced product diversity and increased consumer migration to offshore alternatives. Market maturity alone does not guarantee resilience.
The coming years will determine whether the UK can recalibrate its regulatory model to preserve competitiveness or whether it becomes an example of how even established regulated markets can lose ground when economic pressures outpace channelisation.
