PwC & UKGC: High taxes fuel illegal gambling market
The report, titled “Impact of the Fiscal and Regulatory Environment on European Online Betting and Gaming Markets”, analyzes 17 jurisdictions comparable to the United Kingdom, evaluating how tax levels and regulations influence the market channeling (that is, the percentage of spending retained within the legal circuit) and the effective tax collection.
The results show a clear correlation: the higher the tax pressure and regulatory rigidity, the lower the growth of the regulated market and the greater the expansion of illegal gambling.
Between 2019 and 2024, European jurisdictions that increased taxes or tightened their rules recorded a compound annual growth rate (CAGR) of only 6%, while those that maintained or relaxed their regulatory frameworks grew on average by 17% annually.
The trend is also reflected in channeling levels: countries with more restrictive policies saw a drop of several percentage points in the proportion of spending within the legal market, while more open systems managed to increase the share of licensed operators.
“The data shows that excessive regulation and disproportionate tax burdens do not protect the player: they push them to the black market,” the study concludes.
The effect of the tax burden
The PwC report details that jurisdictions with tax rates on GGR (Gross Gaming Revenue) below 25% achieved an average fiscal growth of 13% annually, compared to 9% recorded in countries with higher taxes.
The difference, according to the study, is explained by greater operational sustainability of licensees in markets with more moderate burdens, who can maintain their investment in bonuses, marketing, and technological development, which encourages the player to remain within the regulated circuit.
In contrast, operators in more restrictive environments tend to reduce promotions and advertising spending or increase margins, which deteriorates the user experience and favors migration to unlicensed sites.
Comparative cases in Europe
PwC’s analysis highlights concrete examples:
- France, Sweden, and the Netherlands, with high tax rates and tougher regulatory frameworks, show high rates of participation in the unregulated market.
- In contrast, Spain and Denmark, with more flexible licensing models and moderate tax burdens, record greater channeling and fiscal stability.
These differences reinforce the thesis that the sustainability of regulated gambling depends on the balance between control, competitiveness, and user appeal.
Warning from the British regulator
The CEO of the British Gambling Commission, Gráinne Hurst, warned that the United Kingdom must avoid repeating the mistakes of European countries with excessive regulations:
“Great Britain has one of the safest betting markets in Europe, but if the Treasury does not act prudently, we could end up like France or Sweden, with huge black markets that do not generate taxes, do not protect players, nor contribute resources to sport or the economy,” she stated.
The PwC report is part of the public discussion on the review of the UK’s online gambling tax regime, a central topic in the debate on the balance between revenue collection, consumer protection, and sector sustainability.
Tags: United Kingdom, Gambling Commission, Report on the Impact of the Fiscal and Regulatory Environment on the European Online Betting and Gaming Markets