Remote Gaming Duty and Horse Racing: What the 40% Tax Change Means for UK Punters
Available in US
The Budget 2025 Doubled Remote Gaming Duty — but Carved Out Horse Racing
When Rachel Reeves stood up in the Commons to deliver the Budget 2025, the gambling industry held its breath. The Chancellor announced that Remote Gaming Duty would rise from 21% to 40% — nearly doubling the tax on online gambling operators. In the same speech, she confirmed that the tax on horse racing betting would remain at 15% plus the 10% levy. That carve-out was the difference between a manageable adjustment and an existential threat for the racing industry.
I’ve covered regulatory changes affecting horse racing betting for most of my career, and the 2025 Budget was the single most significant tax event in online gambling since the introduction of the point-of-consumption tax in 2014. The 40% rate on remote gaming — covering online casino, poker, and non-racing sports betting — reshapes the economics of every operator licensed in the UK. Understanding what changed, what was protected, and what the downstream effects mean for punters is essential context for anyone betting on British racing in 2026 and beyond.
What Changed: 21% to 40% and the Racing Exemption
Reeves framed the increase explicitly around harm. Remote gaming, she argued, is associated with the highest levels of gambling-related harm, and the duty increase reflects that association. The move from 21% to 40% applies to all remote gambling activities except horse racing betting, which retained its lower rate specifically because of the sport’s economic contribution and the levy mechanism that already funds the industry.
The racing exemption wasn’t generosity — it was pragmatism. Horse racing betting already bears the 10% levy on top of the 15% general betting duty, creating a combined tax-and-levy burden of 25%. Applying the 40% RGD to racing as well would have created an effective tax burden above 50%, which Brant Dunshea, the BHA’s acting chief executive, warned would incentivise operators to reduce their focus on the racing product, make it more expensive for them to operate, and reduce customer incentives and promotions. The industry lobbied hard for the exemption, and the fact that it was granted reflects the government’s recognition that horse racing occupies a distinct economic position within UK gambling.
The exemption preserved racing’s competitive position relative to other gambling products. Without it, operators would have a financial incentive to steer customers towards casino products — which, despite the higher RGD, carry no levy — and away from horse racing. The carve-out prevents that distortion, at least for now.
How Operators Absorb the Tax and What Punters Notice
A 40% tax on remote gaming doesn’t appear on your betting slip, but it filters through to the punter in indirect ways. Operators absorb the duty from their gross gambling yield, which means the money available for customer-facing activity — promotional offers, free bets, enhanced odds, best-odds-guaranteed commitments, and cash-out features — shrinks as the tax burden grows.
Online GGY was growing at 12% year-on-year in the first quarter of 2024-25, reaching 1.46 billion pounds. The 40% RGD on non-racing products will take a substantial chunk of that growth. Operators facing a near-doubled tax rate have three options: reduce marketing spend, reduce customer promotions, or accept lower profit margins. In practice, most will do all three.
For horse racing punters specifically, the exemption provides a buffer. Racing-related promotions — BOG, extra-place offers, enhanced each-way terms — are funded from racing GGY, which is taxed at the lower rate. The promotional environment for racing should remain more generous than for other sports, because the economics allow it. But the knock-on effects of the broader tax increase still matter: if operators cut their overall marketing budgets, horse racing’s visibility within their platforms may decline even if racing-specific promotions are preserved.
There’s also a strategic dimension. Operators might redirect their remaining promotional budget towards racing precisely because it’s taxed at a lower rate, making racing customers more profitable per pound of GGY. That would be a net positive for punters — more competitive odds, better offers, and more promotional activity around racing than around other sports. Whether this plays out depends on each operator’s commercial strategy, but the incentive structure favours it.
What Higher RGD Means for Racing Promotions Long-Term
The 2025 Budget changed the incentive landscape, and the effects will unfold over years rather than months. Three dynamics are worth monitoring.
First, the relative attractiveness of racing to operators. At 15% plus 10% levy versus 40% RGD on other products, horse racing is now the most tax-efficient online betting vertical for operators. That efficiency should translate into sustained investment in racing products — better odds, better streaming, more live markets. The danger is political: if a future budget brings racing’s rate closer to the 40% benchmark, that advantage disappears overnight.
Second, the impact on smaller operators. The 40% RGD hits smaller operators disproportionately because they lack the scale to absorb the cost. Some may exit the UK market entirely, reducing competition and potentially leading to higher overrounds for punters as the surviving operators face less price pressure. In the horse racing space, fewer operators competing for customers means less incentive to offer the sharpest odds or the most generous promotions.
Third, the black-market effect. Higher taxes on regulated operators make the unlicensed market more attractive by widening the cost gap between licensed and unlicensed operations. An unlicensed operator paying no tax can offer better odds, bigger deposit limits, and no affordability friction — and the 40% RGD makes that gap even wider for non-racing products. Whether this leaks into the racing betting market depends on how effectively the regulatory framework contains the migration. For the broader picture on how the betting levy funds racing, the interaction between tax policy, levy income, and operator behaviour is the thread that connects the Budget to the racecourse prize pot.
Tax and Duty Questions Answered
Does the 40% Remote Gaming Duty apply to horse racing bets?
No. The Budget 2025 explicitly exempted horse racing betting from the 40% RGD increase. Horse racing betting continues to be taxed at 15% General Betting Duty plus the 10% Horserace Betting Levy. The 40% rate applies to remote casino, poker, and non-racing sports betting products.
How might higher gambling taxes reduce free-bet promotions for UK punters?
Higher RGD reduces the gross gambling yield operators retain after tax, which in turn reduces the budget available for promotional activity. Free bets, enhanced odds, and welcome offers are funded from GGY, so a higher tax rate means less money to spend on acquiring and retaining customers. For horse racing punters, the impact is softened by the lower tax rate on racing, but overall promotional spend across the industry is likely to contract as operators adjust to the 40% rate on their non-racing products.
Prepared by the Live Betting Horse Racing editorial staff.
