UK Offshore GGY Triples as RGD Tax Hike Looms: H2 Data Offers Cautionary Lessons for US States and LATAM Tax Design

Key Takeaways

• Offshore GGY growth: Climbed from approximately £200 million in 2019 to £685 million in 2025, forecast to reach £1.4 billion by 2031 at a 12.7% CAGR.
• Channelisation erosion: Licensed operators’ share of online gambling fell from 97% in 2019 to 92% in 2025 and is projected to drop to 85% by 2031.
• RGD as headwind: The Remote Gaming Duty increase from April 2026 is cited as a significant driver of player migration to offshore sites.
• Broader implications: UK trends serve as macro case study for tax policy risks in US state gaming and Brazil/LATAM markets.

Offshore gross gaming yield in the UK has climbed from approximately £200 million in 2019 to £685 million in 2025. Offshore turnover has risen from around £5 billion to £16.6 billion over the same period. These figures, which roughly doubled between 2023 and 2025, are directly linked to the forthcoming Remote Gaming Duty increase, per modelling from H2 Gambling Capital as reported by iGaming Business.

Overall UK online GGY, combining onshore and offshore, is projected to increase modestly from £8.8 billion in 2025 to £9.6 billion in 2031. That nominal CAGR of 1.4% masks a real-term decline of about 12% over the period. The data paint a clear picture of structural shift toward unregulated operators.

Offshore Market Expansion in Numbers

H2 Gambling Capital’s sizing relies on bottom-up web traffic analysis, adjusted for bounce rates, time spent on sites, and a spend coefficient that accounts for higher-value customers drawn to offshore brands. For the UK, it applies a 2.0x spend multiple for offshore visitors relative to onshore. This explains why licensed sites capture about 96% of web visits but only about 92% of spend.

Offshore GGY is predicted to reach about £1.4 billion by 2031, delivering a compound annual growth rate of 12.7% from 2025. Offshore turnover is expected to grow to approximately £36 billion by 2031. Onshore activity will still dominate in absolute terms, accounting for around £8.2 billion of the £9.6 billion total GGY projected for 2031.

These projections reflect sustained momentum. The numbers are not abstract. They quantify how tax changes can accelerate migration when the regulated channel becomes comparatively less attractive.

The Remote Gaming Duty Increase as Catalyst

The rise in Remote Gaming Duty from April 2026 has been described by H2 as a “significant headwind” for onshore operators. It is expected to contribute materially to player migration offshore. For online casino games, GGY rose 14% to £5.70 billion in 2025. Online betting GGY fell 6% to £2.45 billion, despite 5% turnover growth, amid weak hold margins.

In 2026, iGaming GGY is forecast to decline marginally by 1% to £5.64 billion. The more pronounced impact hits in 2027, with iGaming GGY expected to fall 5% year-on-year to £5.39 billion. The combined nominal GGY decline across 2026-27 is calculated at 6%, equating to an estimated 11% decline in real terms.

Online betting shows relative resilience in 2026 due to the World Cup, with GGY seen increasing by 3% to £2.52 billion. Yet as that event’s influence fades and RGD rises to 25% from April 2027 for remote betting, GGY is predicted to fall to £2.47 billion in 2027. H2 estimates the effective headwind from the duty increase and related factors could reduce growth by 15%-20%. On a GGR basis, the real-term impact could reach a 20%-25% decline across 2026-27.

Channelisation Decline and Consumer Protection Risks

The proportion of online gambling conducted through UK-licensed operators has already fallen from 97% in 2019 to an estimated 92% in 2025. The share is forecast to drop further to 85% by 2031. In terms of turnover, the licensed market’s share is expected to decline from 90% in 2025 to 78% by 2031.

Grainne Hurst, chief executive of the Betting and Gaming Council, responded to the report by stating: “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.”

A separate study by credit reference firm TransUnion found that one in eight (12%) young adults, particularly those aged 25-34, have knowingly fallen victim to fraud via an unlicensed betting site. This underscores the consumer protection gap that widens as channelisation erodes.

Cautionary Lessons for US States, Brazil and LATAM Tax Design

The UK experience functions as a live stress test for high-tax regimes. When duties rise sharply, the arbitrage opportunity for offshore operators grows. This pattern carries direct relevance for US states weighing tax increases on sports betting and iGaming. It also mirrors concerns in Brazil and LATAM, where proposed rates have raised parallel fears of driving activity back to gray markets.

Operators in those jurisdictions face the same competitive calculus. High onshore burdens can accelerate migration even where licensing regimes offer superior player safeguards. The structural shift is not theoretical. It is measurable in web traffic, spend multiples, and declining channelisation rates.

From an investor standpoint, the data highlight the fragility of projected revenues when tax policy overlooks offshore leakage. Regulators seeking revenue maximization must weigh the long-term erosion of both taxable base and consumer protections. The convergence of fiscal pressure and digital accessibility makes this dynamic particularly acute.

What the Coverage Underemphasizes

The H2 analysis and iGaming Business reporting deliver robust modelling on migration and channelisation trends. What remains underemphasized is the operational playbook regulated operators must adopt to blunt offshore appeal beyond pricing. The coverage focuses on tax as the primary lever but gives less visibility into how client-partners can leverage product innovation, responsible gaming differentiation, and targeted retention to preserve share even in higher-tax environments.

This gap matters. Purely defensive strategies around lobbying for lower rates may prove insufficient. Forward-leaning operators will treat the UK inflection point as a prompt to stress-test their customer acquisition costs, bonusing efficiency, and compliance friction against offshore benchmarks.

What This Means for Operators and Investors

Operators should model their 2027 forecasts with explicit offshore leakage assumptions calibrated to the UK’s 15-20% growth headwind and 20-25% real-term GGR impact. Investors evaluating LATAM or US state opportunities must now price in channelisation risk as a core variable rather than a footnote. For SCCG client-partners, the clearest forward path is to treat balanced tax design as non-negotiable: rates that sustain onshore investment, jobs, and consumer protections while denying criminal operators an easy arbitrage. Jurisdictions that internalize this lesson will define the next wave of sustainable regulated growth.