Internal government analysis warned the Treasury that proposed gambling tax revenues were “unrealistic” and flagged risks of black market growth and job losses before Chancellor Rachel Reeves pressed ahead with the Autumn Budget hikes, a Freedom of Information request seen by City AM has revealed.
The FOI shows that the Department for Culture, Media and Sport analysed proposals from the Social Market Foundation and former Prime Minister Gordon Brown, which sought to “tap the sector” to the tune of £2bn. DCMS concluded those projections would not materialise, yet the Treasury proceeded regardless. Remote gaming duty rose from 21% to 40% from April 2026, and a new general betting duty of 25% on remote bets is set to take effect in April 2027.
Revenue Projections and the OBR’s Assessment
The DCMS analysis directly challenged the Social Market Foundation’s revenue forecasts, describing their projected value to Treasury coffers as “unrealistic.” The Office for Budget Responsibility ultimately estimated the new gambling duties would raise £1.1bn — less than half the £2bn figure the SMF had proposed, in part because the SMF called for a higher remote gaming duty rate and increases to the horserace betting levy that were not adopted.
The OBR also identified that behavioural effects would strip roughly £700m from total projected tax gains. Those effects include bettors migrating to unlicensed operators, companies redesigning products to minimise liability under the new rate structure, and operators passing a share of the duty increase to consumers through reduced payouts and higher prices. The OBR acknowledged that behavioural responses to the changes were “uncertain,” leaving tax receipt forecasts on unstable ground.
The DCMS analysis flagged an additional complication around horseracing. It noted that increasing sports betting duties “would significantly damage horseracing due to the low margins the industry receive on racing,” and warned that without a tax carve-out for racing accompanied by a higher Horse Racing Levy, the sector “would be unlikely to feel any benefit.”
Industry Reaction to the FOI Disclosure
The Betting and Gaming Council responded directly to the disclosure. A BGC spokesperson said the FOI release showed that DCMS officials had raised serious concerns ahead of the Budget about the Social Market Foundation’s revenue claims and questioned whether those figures would ever materialise.
DCMS clearly shared the industry’s concerns that sharp tax rises could reduce investment, put jobs at risk and push some customers away from the regulated market towards harmful illegal operators, yet despite these warnings the Treasury chose to press ahead.
A separate industry source was more direct: “DCMS warned the Treasury about the consequences of its gambling tax raid and they ignored it. Every job cut, lost sponsorship, every customer who switches to the illegal market — it’s on them.”
DCMS and the Treasury were approached for comment but had not responded at the time of publication.
Compounding Pressures on UK Operators
The FOI disclosure arrives as UK operators prepare for the April 2026 implementation of the remote gaming duty increase. The scale of the impact has already been quantified by several major operators. Flutter Entertainment estimated a £540m hit from the combined UK tax increases, while Entain put its annual exposure at £200m. Evoke, which owns William Hill in Europe, went further — warning that the Budget’s tax changes would trigger job losses and accelerate black market growth, a position now corroborated by DCMS’s own pre-Budget analysis.
The disclosure adds a layer of political accountability to a policy that the regulated industry has consistently argued was counterproductive. With the April 2026 rate change now weeks away and the 2027 betting duty increase still to come, operators and the BGC are likely to use the FOI material to maintain pressure on both DCMS and the Treasury to revisit the framework before further fiscal decisions affecting the sector are made.
Source: City AM
