UK Black Market Forecast To Hit £36bn By 2031; Tax Hikes Bite

The UK black market betting spend could soar to £36 billion by 2031, according to the latest data modelling projections carried out by H2 Gambling Capital.

In its forecast, H2 Gambling Capital, a leading independent authority in the gambling industry intelligence field, suggested the illegal market’s share of online betting will more than double from 10% in 2025 to 22% by 2031. Whereas the proportion of online bets placed with licensed operators will drop from 90% to 78%.

Worrying trends seeping in

There has been a seismic shift in attitudes towards the unregulated market. In 2024/25, the turnover for remote betting was £138.52 billion, and it was thought that by 2028, almost one in five pounds staked could be with unregulated operators.

Assessing the other key takeaways highlighted in the report, illegal gambling revenue could proliferate from £685 million to £1.4 billion by 2031, representing an annual growth of almost 13%.

Over the same period, H2 indicates that the regulated online market will experience a compound annual growth (CAGR) of 0.2%, but this actually translates to a 12% shrinkage in real terms.

Tax hikes bite

Perhaps more worryingly, the online channelisation rate, which refers to the amount of gambling activity carried out through legal channels, has raised some concerns. H2 suggests online channelisation could fall from 92% of gross gambling yield (GGY) onshore in 2025 to 85% of GGY onshore in 2031.

Broken down in real terms, the H2 report notes that online channelisation will drop from 90% to 78% of turnover offshore in 2031. However, the regulated industry has been put on the back foot by the stringent budget unveiled back in November by the Chancellor of the Exchequer Rachel Reeves.

In her raid on the gambling sphere, Reeves revealed an increase in the rate of remote gaming duty (RGD) from 21% to 40% in April 2026, while a separate remote betting duty will come into effect next year.

Although it is estimated these measures could save the UK government as much as £810 million in 2026/27, bettors are starting to take their business elsewhere, and licensed operators are feeling the pain.

Feeding the hands of criminals

The Betting and Gaming Council (BGC) have constantly banged the drum of the importance of Britain’s regulated industry remaining as competitive as possible. Indeed, their figures have shown the betting business supports more than 109,000 jobs and generates more than £4 billion in tax every year.

In their attempt to suppress the black market, the BGC brought out a five-pronged strategy, which included urging social media companies to remove illegal gambling content. And in relation to H2’s figures, the BGC’S CEO, Grainne Hurst, thinks the powers that be need to get a grip on the matter rather than feed the hands of criminal operators.

She said:

“If the ministers keep making the regulated sector less competitive, customers won’t stop betting. They’ll simply take their money to the growing illegal black market, where there are no safer gambling protections, no age verification checks and no taxes paid to the Treasury.

“The only winners from these tax hikes will be criminal operators based overseas. Britain will lose jobs, investment and tax revenue, while consumers are pushed towards operators offering none of the protections found in the regulated market.”