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European countries with higher tax and regulation of their betting and gaming markets are more likely to see increased black market activity, according to a report produced by PwC and published by the BGC.
The study, Impact of the taxation and regulatory environment on European online betting and gaming markets, draws clear links between restrictive policy regimes across Europe and black-market growth.
Countries such as France (57% black market), Sweden (35%) and the Netherlands (37%) have seen large proportions of their gambling markets move offshore.
By contrast, Spain and Denmark, where tax rates are moderate and licensing systems open, maintain higher levels of onshore participation – with only around 11% of gambling taking place outside the regulated sector.
The report reveals that around 5% of all online betting and gaming in the UK now takes place on unlicensed black-market websites. This is equivalent to hundreds of millions of pounds in untaxed, unregulated activity and marks a sharp rise from a previous estimate in 2021, when the black market was thought to account for only 3.3% of total spend.
The report concludes that higher effective tax rates and tighter rules consistently lead to smaller regulated markets, while jurisdictions that liberalise and maintain balanced taxation enjoy stronger growth.
The findings also challenge the assumption that higher gambling duties increase public revenues. Between 2019 and 2024, countries with tax rates below 25% of gross gaming revenue saw annual growth in tax receipts of 13%, compared to 9% in higher-tax jurisdictions.
Operators facing steeper duties typically cut back on marketing and promotions, the analysis found, making licensed platforms less competitive.
The report shows how operators respond to higher regulatory and tax environments by adjusting gross win pricing, reducing bonuses and reducing spending. This makes the player proposition less attractive.
The findings come as the Treasury prepares its Autumn Budget and reportedly considers potential changes to remote betting and gaming duties.
While Britain remains among the world’s safest and most highly regulated gambling markets, the report demonstrates the potential impact of increasing taxes.
Grainne Hurst, CEO of the Betting and Gaming Council, said: “Britain has one of the safest gambling markets in Europe but if the Treasury isn’t careful, we could quickly end up like France or Sweden, with huge black markets contributing nothing in tax, offering zero player protection, and providing no funding for sport or the economy.
“Well-balanced regulation and fair taxes protect players, raise more revenue for the Treasury, and support thousands of jobs. Unlicensed operators do none of those things.”
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