Are Smaller UK Casino Operators Being Squeezed Out by Regulation?

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The UK gambling industry is widely regarded as one of the best-regulated markets in the world, but recent policy and regulatory updates have made conditions even stricter.

Not least with the upcoming 21-percentage-point Remote Gaming Duty (RGD) increase.

With fresh changes announced for April 2026 and 2027, there is growing concern in the UK that smaller operators are being disproportionately affected. The UK market is at risk of being regulated out of the top-tier promotions.

The Rising Cost of Compliance

It is not cheap for licensed casinos in the UK to meet the stringent regulatory requirements, and these costs are rising year on year. The UK Gambling Commission (UKGC) has also implemented stronger oversight. The commission controls everything from user verification to responsible gambling measures and anti-money laundering processes.

For large or well-established casinos, these costs can be absorbed across multiple operational funds without a significant impact on the business. However, smaller and emerging platforms operating on tight margins will struggle to take on the additional financial strain.

Smaller online casinos do not have the economies of scale to spread their risks of increased costs over multiple tranches. Large-scale changes in regulatory requirements may also mean additional and costly developer time to upgrade the existing platform, further adding to their financial burden.

Affordability Checks and Their Impact

The introduction of enhanced affordability checks was done as a measure to offer increased player protection. Digital platforms need to ensure their customers can afford the amounts they are investing. While commendable, it came with a hefty price tag. Platforms needed to implement sophisticated data analysis tools and algorithms, while also ensuring they had enough staff members to handle the additional workload.

Smaller casinos often rely on third-party services to perform these checks, or in some cases, they use manual processes.

Increased costs and complexity mean these processes become more complicated and take longer.

This impacts the user experience and may drive customers to larger brands where the processes are dealt with in-house and seamlessly incorporated into the existing customer journey.

Marketing Restrictions Tighten the Noose

Growing restrictions placed on advertising for online casinos impact operators of all sizes. Regulators have imposed blanket bans on TV advertising before the UK’s 9pm watershed, and there are restrictions on celebrity endorsements.

These restrictions affect smaller casinos more than larger names. Smaller casinos already have tight marketing budgets, which are stretched to cover
traditional advertising campaigns.

By reducing these, companies must compete in a smaller and highly crowded digital space or rely on costly outside-of-the-box efforts that small or fledgling operators cannot always absorb.

Larger organisations have the knowledge, budget and staff size to pivot their marketing efforts. We are likely to see an increase in the number of partnerships formed between smaller and household-name casinos.

But even then, a portion of profits from the smaller site will be owed to the larger brand. This then further limits the profitability of smaller online casinos as when players look to compare trusted UK casino platforms, they are more likely to encounter already established brands above anything else.

The Tax Burden

UK Gambling taxes are calculated as a percentage of the gross gaming revenue (GGR). Thus, operators have a tax liability on all earnings, not just profit. For larger platforms, which likely have multiple revenue streams, it’s a sustainable approach. However, smaller operators, running on meagre margins and bootstrap approaches, often walk the line between profitability and closure.

For online casinos, this is the Remote Gaming Duty (RGD), which currently sits at 21% of total revenue. However, in April 2026, it will increase to 40%. An increase in tax liability of this scale makes it very difficult for smaller operators to survive or even enter the UK market.

Market Consolidation Accelerates

The impact of the enhanced restrictions and increased costs of regulatory adherence is leading to an accelerated consolidation rate among UK online casinos. The pressure placed on smaller platforms results in a high rate of closure or an increase in the number of large operator acquisitions.

Consolidation is not necessarily problematic.

It is more about the way it indicates how tough the market is. This will drive new operators, of any size, to locations with fairer and more sustainable tax rates.

In turn, this results in a UK market dominated by a small selection of big names, reducing the need for innovation and starving UK audiences of choice. The result will be market stagnation and, as mentioned earlier, an increase in the number of users seeking out unlicensed and unregulated platforms.

What It Means for Players For UK players, a reduction in the number of available digital casinos has long-reaching consequences. Fewer operators mean a less crowded marketplace and a reduced need for established platforms to offer enticing bonuses and sign-up rewards. With less competition, sites have less need and drive to develop innovative solutions. New features, new games and back-end technology stacks will falter or stall, making casinos less exciting. Additionally, customer service standards could well slip, as operators need to be less concerned about losing staff.

However, there are also positives to these changes. Players can be more confident in the operational integrity of the remaining platforms and have less to worry about them folding or being unable to afford the payout on larger wins.

The Future of the UK Market

The continued tightening of regulations and the increased financial pressure on online casinos raise substantial questions about long-term sustainability. Regulators almost always make these changes in the name of player protection; however, there is growing concern that changes are being made to deliberately favour large-scale operators.

The rising rate of consolidation could spell the end of the UK digital gambling scene as we know it today.

As choice decreases; customers will soon look for fun and innovative solutions in other digital spaces. The result would be that the UK would be left behind, and the regulations would need to be changed (yet again) to make the market more favourable for new entrants.

There is a delicate balance in the UK market right now, and only time will tell if the current changes are successful.