With UK gambling licence costs set to increase alongside existing tax pressures, the UK faces a crucial question: can its regulated gambling sector remain viable or will players migrate to unlicensed alternatives?
Britain’s online gambling sector is no stranger to reform. However, the government’s latest proposal, which entails a near 30% increase in Gambling Commission licence fees as of 2025, comes at a moment when tolerance for additional pressure is wearing thin.
Operators are currently still coming to terms with the almost doubled remote gaming duty announced in the last budget. At the same time, the regulator is advancing tougher affordability requirements, far more restrictive marketing rules, and a wider number of compliance expectations.
Taken together, these measures have created a growing perception that the regulated market is becoming increasingly more compressed from every direction. This is undoubtedly leading to UK players looking for and exploring other alternatives.
Furthermore, the licence fee consultation feels less like a funding exercise and more like a stress test for the UK’s regulatory model. Questions are being raised not just about how the regulator is being funded, but rather whether the UK can successfully maintain a competitive streak in a high-channelisation market without pushing players onto unlicensed operators.
The review of licence fees was first launched in the 2023 white paper, which pledged to reassess the regulator’s funding to ensure it could deliver its reform agenda effectively. While the consultation itself was expected, its timing has struck many operators as poorly judged, arriving soon after a tax increase.
The UK Gambling Commission has been clear that the review stems directly from its white paper commitments, reiterating in its consultation announcement that it is fulfilling a long-standing obligation to revisit its funding model. The proposed fee increases are meant to close any budget gaps and strengthen enforcement capability, especially against illegal operators.
That said, the difficulty lies in its sequencing. These proposals follow closely on the heels of tax changes that are already expected to increase significantly operator costs. For many in the industry, the main concern is not the review itself, but rather that it appears somehow disconnected from the wider financial reality facing licensed operators.
The regulator has taken care to present the consultation as an overdue update rather than an opportunistic grab for revenue. Speaking during an IAGA webinar in January, the Gambling Commission chief executive, Andrew Rhodes, outlined the rationale, noting that the process is linked to broader Cabinet Office considerations.
He explained that, depending on the outcome of these discussions, a public consultation on fee levels would follow, setting out what operators would pay at different tiers and how those funds would support the work of the Commission.
One of the most divisive elements of the consultation is the claim that higher licence fees will help fund enforcement action against illegal operators. While licensed firms broadly accept that the black market is a growing concern, many are questioning whether raising their own costs is the right way to address it or whether it is equitable at all.
Looking across Europe, the UK sits somewhere in the middle of the cost spectrum. Its existing tiered licence fee system already ranges from roughly £3,100 to £67,700 for applications, with annual fees stretching from £4,000 to more than £940,000 depending on turnover. A near-30% increase would push these figures higher still.
Italy remains the standout outlier, with a €7m one-off concession fee alongside additional responsible gambling levies. Despite the expense, the Italian market demonstrates that high fees are not necessarily fatal if the market is sufficiently large and stable.
At the opposite end, Malta continues to offer comparatively low barriers to entry, with modest application costs and annual fees in the region of €25,000. Other mature markets, such as Sweden and Denmark, combine significant regulatory charges with heavy taxation. Sweden imposes an 18% GGR tax alongside application and supervisory fees, while Denmark’s annual charges can exceed DKK5m for large operators.
Elsewhere, Spain and France feature lower entry costs but ongoing fees linked to revenue. The Netherlands raised its application fee to over €60,000 in 2026, with substantial recurring charges. Portugal and Belgium rely more heavily on GGR taxation, with Portugal’s levy reaching as high as 30%.
In that context, the UK is neither the most punitive nor the most permissive jurisdiction. The difference, however, lies in its reliance on high channelisation. The UK has historically succeeded by keeping the vast majority of gambling activity within the regulated system.
Licence fees are only one piece of the puzzle. UK operators are also preparing for expanded affordability checks, stricter advertising controls, and new data and technology obligations. Each carries additional compliance costs, often requiring quite an investment in personnel and systems.
Steve Donaghue, founder of Gambling Consultant, contends that tackling the black market would require regulators to acknowledge that excessive friction in the licensed sector creates demand for illegal offerings, something he believes they are unwilling to do. In his view, the current approach risks allowing the black market to grow unchecked.
Donaghue warns that unlicensed operators could soon account for as much as 20% to 30% of UK gambling activity, bringing with it higher levels of harm and a sharp decline in tax revenues. He characterises this potential outcome as a failure of public policy driven by what he describes as an ideologically hostile stance toward gambling.
The fee consultation makes one thing clear: the UK wants a stronger, better-resourced regulator. However, it also exposes a deeper tension at the heart of gambling policy. If the regulated market becomes too expensive, it risks undermining the very protections it is designed to uphold.
The proposed fee increase may not, on its own, destabilise the sector. Yet when combined with higher taxes, expanding compliance obligations, and a perception of increasing regulatory hostility, it could accelerate a shift toward a smaller licensed market and a growing black market.
Market maturity offers no guarantee of resilience. The coming years will determine whether Britain can sustain a regulatory framework that balances consumer protection with commercial viability, or whether it will join the list of jurisdictions where high costs push gambling activity into the shadows.