Gibraltar warns UK online gambling tax hikes may hit revenues, jobs

Gibraltar’s government has warned that steep increases in UK online gambling taxes could undermine one of the territory’s most important economic sectors, affecting both public revenues and employment.

In its Autumn Budget on Nov. 26, the UK raised remote gaming duty from 21% to 40% starting April 2026 and increased online general betting duty from 15% to 25% from April 2027. Retail gambling taxes were left unchanged, while bingo duty was abolished. Gibraltar MP and Minister for Justice, Trade and Industry Nigel Feetham KC said the measures make UK online gambling taxes “among the highest rates in the world.”

Feetham told parliament the changes could “directly and indirectly affect our public revenues,” given Gibraltar’s heavy reliance on the online gaming sector, which he described as a “vital pillar of our economy.” The industry accounts for roughly 30% of GDP, employs more than 3,400 people, and generates close to one-third of tax receipts through corporate tax, personal income tax, and social insurance. Gibraltar-based operators already pay £750 million ($1 billion) annually in UK gambling taxes under point-of-consumption rules.

The minister stressed that gambling taxes are “a top line tax charged on revenue and should not be confused with bottom line profit.” Effective tax rates, estimated at 60–65%, could climb to 80–100%, according to modelling cited in the UK. Higher UK taxes would raise operating costs for Gibraltar firms and reduce the amount ultimately paid in Gibraltar corporate tax. If operators cut staff to offset costs, Feetham said, this would directly hit PAYE receipts.

Gibraltar’s online gambling companies are “dual-regulated in Gibraltar and the UK and they pay taxes in both,” Feetham noted, calling the sector a “Gibraltarian success story of which we should be proud.”

He said Gibraltar had spent months lobbying the UK Treasury and MPs, arguing the increases would push business toward the black market and damage a key cross-border industry. “We presented every argument highlighting the economic impact on the UK and not just Gibraltar,including effects on the including effects on the black market and the Laffer Curve,” he said. But he added that political backing for higher gambling taxes in the UK had become “ideological,” with some voices calling for increases “above 50 per cent.”

The UK Treasury told Gibraltar the tax package was a “proportionate way to raise £1 billion ($1.33 billion) for public services,” targeting online gambling because of “higher levels of harm and societal costs.”

Feetham said the changes threaten progress under Gibraltar’s National Tax Strategy, which delivered record tax revenues in July and underpins funding for public services, health care and education. “There is no way of sugar-coating this. It is bad news,” he said.

To mitigate the impact, Gibraltar plans to expand non-UK gaming markets, advance a new Gambling Bill, and accelerate economic diversification across sectors such as AI, blockchain and digital services. Feetham has instructed the Gambling Commissioner to “accelerate this work” to reduce UK dependence.

The minister said the territory must navigate the challenge alongside other pressures, including Brexit adjustments, the aftermath of COVID-19 and inflation. “Replacing an industry as significant as gaming cannot happen overnight,” he said. “Every citizen has a role to play.”

He urged against pessimism, warning: “This is not the time to talk Gibraltar down. We do so at our own economic peril. Any further erosion of confidence would only compound the challenges we face.”