How is the gaming powerhouse bracing itself for layoffs, consolidation and diversification following the UK gambling tax hike news?
When the UK Chancellor in late November unveiled a gambling tax hike in the form of a steep rise in Remote Gaming Duty, from 21% to 40% by April 2026, and online betting from 15% to 25% by 2027, the tremor was felt acutely in Gibraltar.
The territory’s online gaming sector contributes roughly 30% of its GDP, directly employs more than 3,400 people (Gibraltar’s total population is around 34,000), and generates around one-third of total UK gambling tax receipts, according to Gibraltar Minister for Justice, Trade and Industry Nigel Feetham.
His warning came in a statement on 1 December, and it was stark: “This is an issue of vital importance to Gibraltar and one that may directly and indirectly affect our public revenues.” He further noted that the UK gambling tax rises are “a tax on revenue, not profit” and that modelling suggests the effective tax rate “will increase to between 80–100%”, he said.
The scale of the rise was so abrupt that the territory’s chief minister, Fabian Picardo, personally pressed the UK Treasury to consider the implications for Gibraltar’s “gold standard” regulatory regime, as reported by the Gibraltar Chronicle. The question now confronting Gibraltar’s operators, regulators and policymakers is not whether the territory must adjust, but how.
Reshaping market strategies
Across the sector, the recalibration has already begun. According to Ravi Viroomal, business development director at local legal firm Ramparts, there is currently an “approximately 25% non-UK focus which will likely increase”.
His colleague Andrew Tait agrees that operators will inevitably “push most of the tax onto the consumer,” potentially by reducing return-to-player percentages, changes that could render regulated products less competitive relative to the black market.
Gibraltar Gambling Commissioner Andrew Lyman sees even deeper structural effects from the tax hike. With effective UK tax rates rising to near-confiscatory levels for some verticals, he expects operators to “take significant costs out of their businesses or look at other options such as orderly market exit or putting themselves up for sale”, he tells iGB. He forecasts a much smaller and leaner UK-facing sector and an increased move to automation and AI at the expense of jobs.
In an appearance on GBC´s current affairs show “Viewpoint”, aired on 4 December, a panel of industry stakeholders also observed that companies were already revisiting their risk appetites and investment plans, adding that UK-only operators are in the toughest position, but even diversified groups cannot escape the impact.
For Nicholas Macias, secretary general of the Gibraltar Betting and Gaming Association (GBGA) trade body, the shift is already visible. “Operators are adjusting. The duty increase has fundamentally changed the economics of the UK market,” he explains to iGB. While he does not expect a wholesale retreat, he stresses that companies are “leaning more heavily into markets that support long-term sustainability”.
Veteran legal consultant Peter Montegriffo at Hassans International law firm described the change as “a shock” on GBC´s “Viewpoint” programme, noting that operators planned for changes but “perhaps not of this magnitude”.
Employment strongly impacted by gambling tax hike
The near-term employment picture is troubling. Andrew Lyman expects significant redundancies in the New Year.
“We hope these people will be accommodated in the non-UK marketing sector as we pursue our policy to bring marketing within the scope of regulation and to insist that all marketing companies have substance in Gibraltar. Traditionally the sector has absorbed redundancies, but that will be difficult this time due to the level of economic impact caused by a near doubling of the RGD rate”, he says.
Salaries are a major cost centre, and restructuring will inevitably hit teams across marketing, customer operations and risk, he said.
Macias also believes pressure on employment is inevitable “in the short term”, though the medium-term outcome depends on how companies reconfigure their global footprints. He also highlighted that hiring will slow as companies reassess their cost base, though cross-border mobility per se should not be affected.
Ramparts’ Viroomal warns that some firms may shift functions to EU hubs — particularly Malta — if they already hold licences there, potentially “shutting down Gibraltar operations”.
Yet on cross-border labour mobility — vital given thousands of workers commute daily from Spain — the picture is more positive. Lyman says that with “certainty over border flow”, thanks to a cross-border agreement due to be formalised into legislation in January, Gibraltar remains well-placed to recruit. Macias concurs, adding mobility should not necessarily be affected, but hiring will slow down as companies reassess their cost base.
Gibraltar gambling tax impact: A very different look
The UK Chancellor’s measures have forced operators to rethink their profit and loss statements. Macias notes that companies are cutting marketing, bonuses and operational costs. He says downsizing, consolidation and even UK exits are realistic possibilities for the more UK-dependent brands.
Lyman is blunter: by 2026 the sector “will look very different”, with mergers, market exits and heavy restructuring inevitable. However, he believes Gibraltar will endure as a hub — provided it shifts emphasis toward dot.com operators, crypto-adjacent models and global products outside the UK’s geographic reach.
This aligns with the assessment of Stephen Hodgson, chair of the UK Betting & Gaming Council’s Tax Committee, who, interviewed on GBC, predicted that in the medium term the sector would adapt and continue to operate, just in a different shape.
Overall, it remains to be seen whether some brands will simply buckle under the new fiscal landscape, in what can only be described as a genuine stress test of commercial resilience.
Can Gibraltar attract new business?
For Ramparts’ Andrew Tait and Ravi Viroomal, Gibraltar’s evolving regulatory architecture is a competitive asset. The new Gambling Bill 2025, they note, will allow the jurisdiction to “regulate the full value chain”, boosting Gibraltar’s status as a comprehensive regulatory hub.
Lyman is cautiously optimistic. The long-awaited treaty with the EU — still under negotiation — will not restore freedom to provide gambling services across the bloc. But it will secure “a positive impact on business confidence” through frictionless cross-border movement, and reinforce Gibraltar’s position as a multilingual service hub.
Macias said that the immediate priority should be stabilising the existing industry: “If consolidation occurs in the wider market, Gibraltar will be in a stronger position to benefit from it if we maintain regulatory clarity, protect our licensing perimeter and avoid introducing new burdens while operators are absorbing a major external change.”
Black market risk
Experts stress a prominent danger for the UK gambling tax increase could bbe a surge in offshore, unregulated gambling. Lyman says: “The black market is alive and kicking. To raise the RGD rate by so much is bordering on reckless.” He argues UK politicians have adopted “the bad habits of many of their European counterparts”, confusing revenue with profit and ignoring channelisation data.
Viroomal notes that black-market leakage is “already happening”, and will intensify if regulated operators must cut bonuses and RTP. Macias sees the same pattern unfolding: “The competitive pull of the black market naturally grows” when regulated firms absorb much higher compliance and tax burdens.
In his parliamentary statement, Nigel Feetham was candid about the tax measure. “It is bad news. We did not ask for these measures. We lobbied strongly against them. And frankly there was very little more that we could have done,” he said.
Gibraltar asked for differentiated treatment within the UK family; when this was rejected, it pushed for phasing — also refused. The UK Treasury, Feetham said, acknowledged that social-harm concerns were a central driver for Labour MPs, describing the measures as proportionate.
The government now promises mitigation — though options are limited when the tax is imposed externally. Gibraltar — both in politics and within the gaming industry — argues that the UK now has a “moral obligation” to help once the full impact becomes clear.
Diversification: A debate reopened
While Feetham emphasises that Gibraltar cannot replace gaming overnight, he argues that diversification — particularly into fintech, digital services and AI-driven sectors — is already underway. The government is accelerating work on technology-friendly regulation and applications for international financial services licences.
Tait sees growth potential in crypto gaming, provided regulation evolves to support it. “Crypto gaming diversification may be an option — which would require new guidance and codes of conduct from gambling regulators. Properly regulated, this could attract a new generation of operators not just in the gambling but also in the free/social or skill gaming sector, including sweepstakes,” he says.
There has been some acknowledgement of the potential for crypto gambling regulation by the UK Gambling Commission this year. But in the UK, this is likely not going to emerge in the short term.
Critics argue the government should have acted earlier. Together Gibraltar, the progressive political party, released a sharply worded statement on its actions against the UK gambling tax hike: “Equally troubling is the lack of proactive support from our own government to diversify Gibraltar’s economy in anticipation of these known risks.”
They urged a comprehensive diversification strategy spanning fintech, AI, green finance, maritime services and tourism.
But things are moving in that direction. Gibraltar is hosting the AI Futures and Foresight conference on 21 January 2026, aimed at senior leaders in Gibraltar’s gaming, finance, insurance, law and technology sectors to create the right mix of skills, innovation and regulation to ensure AI is fully leveraged by industry. “Business survival and sustainability can only be facilitated by innovation,” says Lyman.
The next phase
For all the anxiety, Gibraltar’s industry is known for resilience.
The UK gambling tax rise will shrink the UK-facing sector, but it will also accelerate the next phase of Gibraltar’s evolution — from a dominantly UK supply base to a more internationally oriented digital services hub.
Still, the transition will be painful: jobs are likely to go, investment will decrease and the black market could expand before regulators catch up. Gibraltar’s challenge now is to ensure that what emerges on the other side is not just a smaller industry, but a sharper one.
