Leaked Documents Reveal More Fee Increases for UK Gambling Companies

In another leak, the UK Gambling Commission has revealed plans to increase gambling license fees for operators in the country. The documents, which have since been taken offline, revealed the regulator favors increasing fees by 30%, but has also floated alternative proposals.

The leak occurred on the government’s website, under the URL “Consultations -> Proposed Changes to Gambling Commission Fees.” The page now reads, “The information on this page has been removed because it was published in error. Consultation publication delayed.”

Last year, the UK also leaked its Budget with the Office for Budget Responsibility (OBR) mistakenly publishing plans before Rachel Reeves had made an official statement in parliament.

Reeves later confirmed that the government was raising taxes on gambling companies, including an increase from 21% to 40% on online casinos. Sports betting will also be taxed at 25% next year, up from the current 15%.

Companies have strongly opposed the increases and will likely not be happy with the leaked Commission proposal to increase license fees. In the documents, the Commission recommended a 30% increase to address a budget shortfall. A lawsuit against the Commission over the awarding of the National Lottery to Allwyn has added to the organization’s costs.

With no additional funds, the Commission said it predicts a deficit of £7 million ($10 million) over the next two years, rising to £9.5 million ($13 million) in 2030 to 2031.

Three Options Explored By March

The leak revealed three options under consideration for the license fee increase:

• Option 1: Increase fees by 30% (favored by Commission)
• Option 2: Increase fees by 20%
• Option 3: Increase fees by 20% with an additional 10% to tackle the illegal market

In the documents, the government indicated a preference for option 3. Gambling companies have said that increasing fees will drive more and more users to illegal gambling platforms.

The consultation period will run until the end of March this year, with new fees to be approved and introduced in October. Companies will start paying higher tax rates in April.

The Commission favors a straight 30% increase, which it says will generate an additional £8.7 million ($12 million) in annual funding, effectively covering its forecasted deficit.

Fees Will Vary Depending on Business

Currently, the UK charges companies a sliding-scale license application fee depending on the type of license and the size of the operator. For example, applications for an online casino license are charged at a minimum of £4,224 ($5,800), which can reach £91,686 ($125,000) for companies generating revenue in excess of £1 billion.

The rise in fees will also be calculated based on market share and regulatory risk. Licenses for General Betting Limited, External Lottery Manager, and Society Lotteries will get a flat percentage increase based on current fee levels.

If going with option 2 or 3, the Commission said it will have to make significant cost reductions to deal with the coming deficit. If the government approves a 20% increase, it will need to make savings of £15.8 million ($21.7 million) over the next six years, necessitating a headcount reduction of around 10%.

This, it says, will significantly reduce the efforts it can make in combating illegal gambling. The regulator issued 516 cease-and-desist orders last year and facilitated the removal of 95,705 illegal gambling URLs.

While the Commission argues that gambling companies must pay more to fund its fight against illegal gambling, licensed companies claim raising their costs will lead to a less favorable legal market, driving users to unlicensed platforms.

On the same day as the leak at the government site, UK-based gambling company Evoke released its Q4 earnings. CEO Per Widerström again railed against tax increases, stating, “We continue to believe these tax increases will negatively impact the industry’s economic contribution, customer protection, and will ultimately serve to support further growth in the illegal black market.”