Key Points
- Regulus Partners analysed six major UK operators covering 66% of market revenue and found the Remote Gaming Duty doubling had no discernible impact on Q2 results.
- Analysts hold a bearish forecast for 2027, projecting a 12% decline in gaming as deferred pressures fully land.
- UK black market stakes already hit £16.6bn in 2025, tripling since 2019, before the higher cost of the tax hike has even reached consumers.
The Market Looked Fine in Q2 – That Is Precisely What Concerned Analysts
Something unexpected happened when UK online gambling operators reported their Q2 2026 figures. Despite Remote Gaming Duty jumping from 21% to 40% on 1 April, the numbers looked almost entirely unaffected. Gaming revenues were growing. Bonuses were holding up. Nobody appeared to be bleeding.
Regulus Partners studied that data and reached a conclusion that sits in sharp contrast to what the figures suggest on the surface. The consultancy analysed six major operators, accounting for roughly 66% of UK market revenue, and found online betting was broadly flat while online gaming grew around 12%. Entain, Evoke and Super Group all posted UK growth across Q2 and H1. The effect of nearly doubling the tax rate was, in Regulus’s own words, “not remotely discernible.”
The firm was clear this was not reassuring. “The problem for forecasting, and more importantly for operating in the UK online gambling market, is that nothing much will happen until everything does,” Regulus said in its August 2026 analysis.
Why Has the Tax Not Shown Up in the Numbers Yet?
The calm Q2 did not come from nowhere, and Regulus did not treat it as a mystery. The firm identified six reasons why the damage remained invisible, each helping explain why a market running on borrowed stability can look entirely healthy from the outside.
The most important: player behaviour in Q2 was already set before April. Deposits made, bonuses collected, habits formed in prior quarters. Because Remote Gaming Duty falls on operators rather than players directly, consumers had no immediate signal to change anything.
Three consecutive quarters of weak bookmaker results added a further cushion. Those poor results left consumers with roughly £100m of extra money to redirect into gaming, which Regulus estimates could account for up to 7% of Q2 gaming growth.
Operators chose to shield bonusing levels and find savings elsewhere. Regulus is direct about what follows: that approach will not survive as promotion costs rise and the pool of available savings shrinks. When bonuses do fall, revenue will follow.
The competitive environment created its own stalemate. No operator wanted to pull back while rivals stayed aggressive, so the expected consolidation wave simply did not appear. The FIFA World Cup gave a temporary boost, though only Entain and Super Group benefited materially. Major events, Regulus pointed out, leave little lasting trace in longer-term market data.
The final factor concerns scale. Larger operators carry stronger brands and lower relative bonusing costs, insulating them from the duty rise. The businesses most exposed are smaller ones, accounting for around 33% of the UK market, yet they rarely appear in the headline figures that shape the current public narrative.
The Cost Is Already Visible, Just Not Where Most People Look
The Q2 revenue lines may appear healthy. The EBITDA figures at major operators tell a different story, and the tax cost is already landing at the profit level.
Entain had a negative EBITDA of £56m attributed to the UK tax in the H1 2026 financial year. The UK and Ireland online EBITDA was down by 8% to £148m, despite an increase in the net gaming revenues by 13%. Evoke was burdened with an additional gaming duty expense of £46m in H1 compared to last year.
Flutter, which owns Paddy Power, Betfair and Sky Betting and Gaming, swung to a $296m Q2 net loss, with international adjusted EBITDA falling 19% to $476m. The company expects the tax to reduce adjusted EBITDA by around $320m between April and December 2026 before any mitigation, rising to a gross exposure of $540m across all of 2027, when the sports betting duty increase also takes effect.
Kevin Harrington, Flutter’s UK and Ireland chief executive, was direct: “These changes will hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight.”
The Pressure Regulus Expects From Here
This is not an educated guess from Regulus, but rather a forecast using actual figures. The company believes that this tax effect will be seen in the second half of 2026 and much more prominent in the first half of 2027. The company’s outlook on 2027 is quite pessimistic, as it expects a fall of 12% in revenue from gaming.
April 2027 adds another layer. From that date, remote betting duty on online sports betting rose from 15% to 25%, excluding horse racing. The two combined measures represent a structural reset of the economics of running a UK-facing online gambling operation.
Dan Waugh, partner at Regulus Partners, described the mechanism when the duty first took effect: “There is that risk of a spiral effect: where the more operators cut costs to address falling revenue, the more that the revenue falls.”
A Black Market Already Growing Before the Tax Fully Lands
Below the operator metrics lies a trend that significantly complicates the long-term outlook. According to H2 Gambling Capital research, the UK online channelisation rate, which is the proportion of gaming done via licensed operators, has declined from 97% in 2019 to 92% in 2025. The gross gambling yield offshore increased from £200 million to £685 million over this period, while the stakes made at unlicensed operators amounted to £16.6 billion in 2025, over three times higher than in 2019.
H2 projects the licensed market’s share will fall further, to 85% by 2031. The advertising market reflects the same drift: the regulated industry is set to cut advertising spend by 9.2% this year while offshore operators are growing their marketing budgets by 32%, according to separate analysis by WARC.
Waugh had warned directly that around 80% of the statutory levy, which funds gambling disorder treatment services in Britain, comes from online gaming and betting. A sustained migration of players to unlicensed platforms does not simply shrink licensed operator revenue; it cuts the funding available for harm prevention, an outcome that serves nobody.
Expert Analysis
The Q2 results gave the UK gambling industry a quieter few months than many expected. The reasons Regulus identified are structural: habits already set before April, a windfall from three weak bookmaker quarters, operators holding bonuses at the cost of other savings, and competitors too cautious to be the first to pull back. None of those factors removed the underlying pressure. They deferred it.
Smaller operators, carrying thin margins and limited brand protection, are the most exposed as those buffers wear down. The market is not heading for a sudden collapse; the compression Regulus describes is slower and harder to track, with revenue holding longer than expected before repricing sharply. H2 2026 is the first real test of whether that shift has begun. H1 2027, when sports betting duty joins the equation, is where the bearish forecast faces its most serious examination.
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