Alex Brookes is Conservative Friends of Overseas Territories Director of External Affairs and Engagement. Callum Murphy is Conservative Friends of Overseas Territories Director of Campaigns.
The UK’s decision to dramatically increase gambling duties may be presented as a tidy fix to a domestic political problem. In reality, it is a textbook example of economically short-sighted policymaking – one that risks serious harm to Gibraltar, weakens the UK’s own tax base, and exposes a worrying lack of strategic thinking in Labour’s approach to the Overseas Territories.
Under the new regime, Remote Gaming Duty will rise from 21 per cent to 40 per cent by April 2026, with Online Betting Duty following shortly after. For a sector already subject to significant regulatory and fiscal pressure, this is not a marginal adjustment. It is a near doubling of costs, imposed with little regard for how the industry actually operates – or where it might go next.
That matters because Gibraltar is not a peripheral player in the UK’s online gaming market. It is central to it. Around 75 per cent of Gibraltar’s gaming sector is UK-facing, and through place-of-consumption taxes, Gibraltar-based operators already contribute approximately £750 million a year to the UK Exchequer. That is before accounting for wider economic activity, supply chains, or UK-based jobs supported by firms headquartered on the Rock.
Gaming is also fundamental to Gibraltar itself, accounting for around 30 per cent of GDP and 10 per cent of total employment. For a small, highly specialised economy, shocks of this magnitude are not easily absorbed. Jobs lost cannot simply be replaced overnight, and diversification – something successive UK governments have encouraged – takes time and investment.
Yet the policy seems blind to these realities. By sharply increasing duties on a compliant, well-regulated sector, the UK risks pushing activity offshore – not back to Britain, but into an unlicensed black market in less transparent jurisdictions, beyond UK regulatory reach. The tax rise risks empowering the worst actors in the market while weakening the best. The likely outcome is fewer protections for consumers, lower overall tax receipts, and a weakened position for the very standards ministers claim to support.
This is where the Government’s argument collapses. Gibraltar’s gaming sector is internationally recognised as a “gold standard” regulator. Its legal framework, consumer protections, and anti-money laundering standards are closely aligned with the UK’s own.
The 2025 Gambling Act further strengthens player protection, enforcement powers and regulatory transparency. Industry bodies such as the Gibraltar Betting & Gaming Association have invested heavily in responsible gaming initiatives, including the Gibraltar Gambling Care Association and a Centre of Excellence in Responsible Gaming at the University of Gibraltar. Parliamentary submissions confirm that Gibraltar-licensed operators are subject to extensive social responsibility obligations comparable and in some cases exceeding, those applied directly in the UK.
Equally troubling is the lack of serious engagement with industry on the consequences of this tax rise. Just one day after the UK Budget confirmation, Gibraltar Chief Minister, Fabian Picardo made an urgent appeal to the UK Exchequer Secretary Dan Tomlinson MP, seeking measures to protect Gibraltar’s gaming sector from severe economic consequences – but failed to shift the Government’s stance.
Gibraltar’s Minister for Justice, Trade and Industry, Nigel Feetham, confirmed that officials “spent a substantial amount of time and effort lobbying in the United Kingdom” and setting out the economic consequences of the proposed duty increases to HM Treasury and UK parliamentarians, only to see the final measures proceed unchanged. He described how arguments grounded in economic impact, blackmarket risks and the unique exposure of the Gibraltar economy were heard but “were not accepted” by the Labour Government.
Online gaming is a highly mobile sector and firms respond quickly to sharp changes in fiscal conditions. Two market leading gaming groups, Entain and Evoke are already adjusting strategy, which involves a significant reduction in investment into the UK, cutting thousands of jobs and in some cases repositioning functions elsewhere in Europe. Once investments decisions shift, they are hard to reverse quickly and the long-term cost to the UK tax base far exceed the any short-term fiscal gain.
The political context matters too. This tax rise does not sit in isolation. It forms part of a broader pattern under Rachel Reeves’ fiscal approach: tax increases driven more by ideology and backbench management than by economic coherence. From business taxation to international competitiveness, the approach has been reactive, not strategic.
Nowhere is this clearer than in Labour’s treatment of the Overseas Territories. Despite warm words about partnership, decisions with profound consequences for their economies are being taken with minimal consultation and little appreciation of scale. What may appear modest in Treasury modelling can be existential for small, specialised jurisdictions heavily exposed in a single sector. Ignoring these behavioural responses is a policy made in denial.
These concerns were raised repeatedly at the recent UK-Overseas Territories Joint Ministerial Council, where Stephen Doughty himself acknowledged the need for deeper understanding of the scale and vulnerabilities in small economies and the need for sustainable, mutually beneficial economic relationships. Yet the gambling tax rise cuts directly across that message and is seen locally as a direct threat to economic stability. This decision was taken with minimal differentiated treatment for Gibraltar’s unique exposure.
It sends a signal that loyalty, alignment, and good governance count for little when they become politically inconvenient. Rather than co-designing solutions with Territories governments, the UK Treasury’s actions look like Westminster making policy for the OT without substantive input or mitigation for structural vulnerabilities. The result, Gibraltar officials are now forced into damage control rather than constructive economic planning.
There is also a strategic blind spot here. Gibraltar’s success in gaming has anchored high-value jobs, supported cross-border employment, and reinforced the UK’s influence in a globally mobile industry. Undermining that position does not strengthen the UK’s hand; it weakens it – particularly as other jurisdictions stand ready to welcome displaced firms with lower taxes and lighter touch regulation.
None of this is inevitable. The Spring Statement offers the Chancellor an opportunity to reverse course. A more proportionate approach – recognising Gibraltar’s regulatory strength and existing contribution – would protect UK revenues, safeguard jobs, and uphold the principle that good actors should not be punished for political convenience.
At the very least, the Government should pause, reassess the likely behavioural impact of these changes, and engage meaningfully with Gibraltar and the industry. Policymaking grounded in economic reality, not ideological instinct, is not too much to ask.
If Labour is serious about growth, responsibility, and partnership with the Overseas Territories, it must start acting like it. Because right now, this gambling tax rise looks less like fairness – and far more like economic self-harm.
Alex Brookes is Conservative Friends of Overseas Territories Director of External Affairs and Engagement. Callum Murphy is Conservative Friends of Overseas Territories Director of Campaigns.
The UK’s decision to dramatically increase gambling duties may be presented as a tidy fix to a domestic political problem. In reality, it is a textbook example of economically short-sighted policymaking – one that risks serious harm to Gibraltar, weakens the UK’s own tax base, and exposes a worrying lack of strategic thinking in Labour’s approach to the Overseas Territories.
Under the new regime, Remote Gaming Duty will rise from 21 per cent to 40 per cent by April 2026, with Online Betting Duty following shortly after. For a sector already subject to significant regulatory and fiscal pressure, this is not a marginal adjustment. It is a near doubling of costs, imposed with little regard for how the industry actually operates – or where it might go next.
That matters because Gibraltar is not a peripheral player in the UK’s online gaming market. It is central to it. Around 75 per cent of Gibraltar’s gaming sector is UK-facing, and through place-of-consumption taxes, Gibraltar-based operators already contribute approximately £750 million a year to the UK Exchequer. That is before accounting for wider economic activity, supply chains, or UK-based jobs supported by firms headquartered on the Rock.
Gaming is also fundamental to Gibraltar itself, accounting for around 30 per cent of GDP and 10 per cent of total employment. For a small, highly specialised economy, shocks of this magnitude are not easily absorbed. Jobs lost cannot simply be replaced overnight, and diversification – something successive UK governments have encouraged – takes time and investment.
Yet the policy seems blind to these realities. By sharply increasing duties on a compliant, well-regulated sector, the UK risks pushing activity offshore – not back to Britain, but into an unlicensed black market in less transparent jurisdictions, beyond UK regulatory reach. The tax rise risks empowering the worst actors in the market while weakening the best. The likely outcome is fewer protections for consumers, lower overall tax receipts, and a weakened position for the very standards ministers claim to support.
This is where the Government’s argument collapses. Gibraltar’s gaming sector is internationally recognised as a “gold standard” regulator. Its legal framework, consumer protections, and anti-money laundering standards are closely aligned with the UK’s own.
The 2025 Gambling Act further strengthens player protection, enforcement powers and regulatory transparency. Industry bodies such as the Gibraltar Betting & Gaming Association have invested heavily in responsible gaming initiatives, including the Gibraltar Gambling Care Association and a Centre of Excellence in Responsible Gaming at the University of Gibraltar. Parliamentary submissions confirm that Gibraltar-licensed operators are subject to extensive social responsibility obligations comparable and in some cases exceeding, those applied directly in the UK.
Equally troubling is the lack of serious engagement with industry on the consequences of this tax rise. Just one day after the UK Budget confirmation, Gibraltar Chief Minister, Fabian Picardo made an urgent appeal to the UK Exchequer Secretary Dan Tomlinson MP, seeking measures to protect Gibraltar’s gaming sector from severe economic consequences – but failed to shift the Government’s stance.
Gibraltar’s Minister for Justice, Trade and Industry, Nigel Feetham, confirmed that officials “spent a substantial amount of time and effort lobbying in the United Kingdom” and setting out the economic consequences of the proposed duty increases to HM Treasury and UK parliamentarians, only to see the final measures proceed unchanged. He described how arguments grounded in economic impact, blackmarket risks and the unique exposure of the Gibraltar economy were heard but “were not accepted” by the Labour Government.
Online gaming is a highly mobile sector and firms respond quickly to sharp changes in fiscal conditions. Two market leading gaming groups, Entain and Evoke are already adjusting strategy, which involves a significant reduction in investment into the UK, cutting thousands of jobs and in some cases repositioning functions elsewhere in Europe. Once investments decisions shift, they are hard to reverse quickly and the long-term cost to the UK tax base far exceed the any short-term fiscal gain.
The political context matters too. This tax rise does not sit in isolation. It forms part of a broader pattern under Rachel Reeves’ fiscal approach: tax increases driven more by ideology and backbench management than by economic coherence. From business taxation to international competitiveness, the approach has been reactive, not strategic.
Nowhere is this clearer than in Labour’s treatment of the Overseas Territories. Despite warm words about partnership, decisions with profound consequences for their economies are being taken with minimal consultation and little appreciation of scale. What may appear modest in Treasury modelling can be existential for small, specialised jurisdictions heavily exposed in a single sector. Ignoring these behavioural responses is a policy made in denial.
These concerns were raised repeatedly at the recent UK-Overseas Territories Joint Ministerial Council, where Stephen Doughty himself acknowledged the need for deeper understanding of the scale and vulnerabilities in small economies and the need for sustainable, mutually beneficial economic relationships. Yet the gambling tax rise cuts directly across that message and is seen locally as a direct threat to economic stability. This decision was taken with minimal differentiated treatment for Gibraltar’s unique exposure.
It sends a signal that loyalty, alignment, and good governance count for little when they become politically inconvenient. Rather than co-designing solutions with Territories governments, the UK Treasury’s actions look like Westminster making policy for the OT without substantive input or mitigation for structural vulnerabilities. The result, Gibraltar officials are now forced into damage control rather than constructive economic planning.
There is also a strategic blind spot here. Gibraltar’s success in gaming has anchored high-value jobs, supported cross-border employment, and reinforced the UK’s influence in a globally mobile industry. Undermining that position does not strengthen the UK’s hand; it weakens it – particularly as other jurisdictions stand ready to welcome displaced firms with lower taxes and lighter touch regulation.
None of this is inevitable. The Spring Statement offers the Chancellor an opportunity to reverse course. A more proportionate approach – recognising Gibraltar’s regulatory strength and existing contribution – would protect UK revenues, safeguard jobs, and uphold the principle that good actors should not be punished for political convenience.
At the very least, the Government should pause, reassess the likely behavioural impact of these changes, and engage meaningfully with Gibraltar and the industry. Policymaking grounded in economic reality, not ideological instinct, is not too much to ask.
If Labour is serious about growth, responsibility, and partnership with the Overseas Territories, it must start acting like it. Because right now, this gambling tax rise looks less like fairness – and far more like economic self-harm.