The UK’s offshore online gambling market is set to expand sharply through 2031 as a higher Remote Gaming Duty (RGD) pushes players toward unlicensed operators, according to modelling from H2 Gambling Capital.
The firm estimates that the market share held by UK-licensed operators fell by around 5% between 2019 and 2025, and it expects that erosion to continue as the tax rise takes hold.
Offshore gross gaming yield (GGY), a measure of operator revenue after player winnings are paid out, is estimated to have climbed from about £200 million in 2019 to £685 million in 2025. Offshore turnover over the same period is put at roughly £5 billion rising to £16.6 billion, with the figures roughly doubling between 2023 and 2025.
Offshore GGY predicted to rise
H2’s offshore sizing is built from bottom-up web traffic analysis, adjusted for bounce rates, time spent on sites and a “spend coefficient” that accounts for the higher-value customers drawn to offshore brands.
For the UK, H2 applies a 2.0x spend multiple for offshore visitors relative to onshore ones. That gap explains why licensed sites capture about 96% of web visits but only about 92% of spend.
Looking further out, offshore GGY is projected to reach about £1.4 billion by 2031, a compound annual growth rate (CAGR) of 12.7% from 2025. Offshore turnover is expected to grow to around £36 billion over the same horizon.
Channelisation, the share of online gambling conducted through UK-licensed operators, fell from 97% in 2019 to an estimated 92% in 2025, and is forecast to drop to 85% by 2031. Measured by turnover, the licensed market’s share is expected to fall from 90% in 2025 to 78% by 2031.
Total UK online GGY, combining onshore and offshore activity, is projected to rise modestly from £8.8 billion in 2025 to £9.6 billion in 2031, a nominal CAGR of 1.4%. H2 said that headline figure masks a real-term decline of about 12% over the period. The trajectory continues a squeeze already visible in the regulator’s own data, with the UKGC’s final market report showing online GGY up 7% to £1.55 billion in its latest quarter.
Impact of the Remote Gaming Duty increase
H2 identified the RGD increase, which took effect in April 2026, as the main driver behind the offshore market’s expansion. It described the tax rise as a “significant headwind” for onshore operators and a factor that would contribute to player migration offshore.
Online casino GGY rose 14% to £5.70 billion in 2025, according to the analysis. Online betting GGY fell 6% to £2.45 billion, partly on weak hold margins, even though turnover rose 5%. Regulator sample data pointed the same way, with active players down 7% and bets placed down 6%.
iGaming GGY is forecast to slip 1% to £5.64 billion in 2026, reflecting residual growth from 2025, higher operator promotional spending and lower advertised return-to-player (RTP) rates on slot games. H2 expects a sharper fall in 2027, with iGaming GGY down 5% year-on-year to £5.39 billion. Across 2026 and 2027 the combined nominal GGY decline works out at 6%, or about 11% in real terms.
World Cup cushions online betting
H2 estimated that the effective headwind from the duty rise and related factors could reduce growth by 15% to 20%. On a GGR basis, once reduced bonusing is taken into account, the real-term impact could reach a decline of 20% to 25% across 2026 and 2027.
Online betting is forecast to hold up better in 2026, with GGY seen rising 3% to £2.52 billion on the back of the World Cup. As that boost fades and RGD rises to 25% for remote betting from April 2027, GGY is predicted to fall to £2.47 billion in 2027.
The shift toward unlicensed sites carries consumer-protection risks that regulators have flagged repeatedly. A study by credit reference firm TransUnion found that one in eight (12%) young adults, particularly those aged 25 to 34, had knowingly fallen victim to fraud through an unlicensed betting site. The findings echo wider concern about the scale of the black market, with one recent estimate putting unregulated online gambling at $5.9 trillion in 2025.
Even so, licensed operators are still projected to account for most UK activity at the end of the forecast period. By 2031, onshore play is expected to make up around £8.2 billion of the £9.6 billion total GGY.
Industry reaction
Grainne Hurst, chief executive of the Betting and Gaming Council (BGC), criticised the impact of the tax changes and the growth 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 offering none of the protections found in the regulated market.”
The projections set up a test of whether the RGD increase raises the revenue the Treasury is counting on, or whether a widening offshore market erodes the licensed base it is levied against. With the higher betting duty not landing until April 2027, the sharpest effects on the UK’s regulated online market are still ahead.
Source: H2 Gambling Capital
