In late November, the UK Chancellor announced an increase in the gambling tax, raising the Remote Gaming Duty from 21% to 40% by April 2026 and online betting from 15% to 25% by 2027. This decision has sent shockwaves through Gibraltar, where the online gaming sector plays a crucial role. Contributing around 30% of the territory’s GDP and directly employing over 3,400 people out of a population of about 34,000, Gibraltar’s gaming industry also generates approximately a third of the total UK gambling tax receipts, according to Nigel Feetham, Gibraltar’s Minister for Justice, Trade and Industry.
In his December 1 statement, Feetham emphasized the situation’s gravity: “This is an issue of vital importance to Gibraltar and one that may directly and indirectly affect our public revenues.” He highlighted that the UK tax increase is “a tax on revenue, not profit,” with models predicting that the effective tax rate “will increase to between 80–100%.”
The abrupt nature of this tax rise prompted Gibraltar’s Chief Minister, Fabian Picardo, to engage directly with the UK Treasury, emphasizing the potential implications for Gibraltar’s reputable regulatory regime. The core question for operators, regulators, and policymakers is not about the necessity of adaptation but exploring how best to achieve it.
Market Adjustments Underway
Adjustments are already happening across the sector. Ravi Viroomal, business development director at Ramparts, a local legal firm, indicates that the industry currently has an “approximately 25% non-UK focus which will likely increase.” His colleague Andrew Tait concurs, suggesting that operators will likely “push most of the tax onto the consumer,” perhaps by reducing return-to-player percentages, which might make regulated products less competitive when compared to the black market.
Gibraltar’s Gambling Commissioner, Andrew Lyman, foresees even deeper changes due to the tax hike. With UK tax rates rising to near-confiscatory levels for some segments, operators might “take significant costs out of their businesses or look at other options such as orderly market exit or putting themselves up for sale.” He anticipates a smaller UK-facing sector and an increased reliance on automation, potentially at the expense of jobs.
On a December 4 episode of GBC’s current affairs show, Viewpoint, industry stakeholders acknowledged that companies are already revisiting their risk appetites and investment plans. UK-only operators face the toughest challenges, but even diversified groups cannot entirely avoid the impact. Nicholas Macias, Secretary General of the Gibraltar Betting and Gaming Association (GBGA), noted that the shift is evident: “Operators are adjusting. The duty increase has fundamentally changed the economics of the UK market.” He emphasizes that while a full retreat isn’t expected, companies are focusing more on markets conducive to long-term sustainability.
Veteran legal consultant Peter Montegriffo from Hassans International Law Firm described the tax hike as “a shock,” observing that while operators anticipated changes, “perhaps not of this magnitude.”
Impact on Employment and Industry Dynamics
The employment outlook is concerning in the short term. Lyman predicts significant redundancies in the new year, highlighting that although the sector has traditionally absorbed layoffs, this will be challenging due to the economic impact of nearly doubling the RGD rate. Salaries, as a major expense, will likely lead to restructuring cuts across marketing, customer operations, and risk teams.
Macias also foresees short-term employment pressures, with the medium-term outcome depending on how companies restructure their global operations. Hiring is expected to slow as companies reassess costs, though cross-border mobility should remain unaffected.
Viroomal warns that some firms might relocate functions to EU hubs, particularly Malta, if they hold licenses there, potentially shutting down Gibraltar operations. However, with a cross-border agreement due to be formalized in January, the certainty over border flow keeps Gibraltar well-positioned for recruitment.
A Reshaped Sector
The UK Chancellor’s measures have compelled operators to reevaluate their profit and loss statements. Macias states that companies are cutting marketing, bonuses, and operational costs, with downsizing, consolidation, and potential UK exits being realistic for brands heavily reliant on the UK market.
Lyman paints a stark picture: by 2026, the sector “will look very different,” with mergers, market exits, and significant restructuring. Still, he believes Gibraltar will sustain its status as a hub, provided it transitions towards dot.com operators, crypto-adjacent models, and global products beyond the UK’s geographic scope.
Stephen Hodgson, chair of the UK Betting & Gaming Council’s Tax Committee, interviewed on GBC, suggested that the sector would adapt and continue operating, though in a different form.
The Black Market Threat
One significant concern is the potential rise of offshore, unregulated gambling due to the UK tax increase. “The black market is alive and kicking,” warns Lyman, describing the substantial RGD rise as “bordering on reckless.” He criticizes UK politicians for equating revenue with profit and dismissing channelization data.
Viroomal notes that black-market leakage is “already happening” and will worsen if regulated operators must cut bonuses and RTP. Macias echoes this sentiment, arguing that the black market’s allure grows when regulated firms face higher compliance and tax burdens.
Despite lobbying efforts for differentiated treatment or phasing, Gibraltar’s pleas were rejected. The UK Treasury, according to Feetham, acknowledged that social-harm concerns were central for Labour MPs, describing the measures as proportionate. The government now promises mitigation, though options are limited with the tax imposed externally. Gibraltar insists the UK has a “moral obligation” to assist once the full impact emerges.
Pushing for Diversification
Feetham argues that while Gibraltar cannot replace gaming overnight, diversification into fintech, digital services, and AI-driven sectors is underway. The government is accelerating efforts to develop technology-friendly regulations and international financial services licenses.
Tait identifies growth opportunities in crypto gaming, provided regulation supports it. Properly regulated, crypto gaming could attract a new wave of operators, not just in gambling but also in free/social or skill gaming sectors.
Critics contend the government should have preemptively diversified Gibraltar’s economy. Together Gibraltar, a progressive political party, criticized the lack of proactive support in anticipation of these risks. They urge a comprehensive diversification strategy spanning fintech, AI, green finance, maritime services, and tourism.
The upcoming AI Futures and Foresight conference on January 21, 2026, aims to bring together leaders from Gibraltar’s gaming, finance, insurance, law, and technology sectors, fostering the skills, innovation, and regulation needed to leverage AI fully. “Business survival and sustainability can only be facilitated by innovation,” remarks Lyman.
The Road Ahead
Despite the challenges, Gibraltar’s industry is renowned for its resilience. While the UK tax rise will shrink the UK-facing sector, it will also hasten Gibraltar’s evolution from a UK-centric base to a more globally-oriented digital services hub.
Nevertheless, the transition will be painful, with job losses, reduced investment, and potential black-market expansion before regulators catch up. Gibraltar’s task is to ensure that what emerges is not just a smaller industry but a more agile one.
4.6/5
