While regulators often praise the benefits of regulated online gambling, their policies seem designed to make entry unattractive for operators and investors alike.. The primary method of achieving this is by leveraging costly licensing fees and imposing debilitating annual revenue taxes.

Take India, for instance. While games of chance remain banned in many states, some permit them under varying interpretations of the law. Yet even in these jurisdictions, a proposed 28% general sales tax (GST) on gross gaming revenue (GGR: wagers minus payouts, excluding bonuses) threatens to suffocate the industry.

 Someone Always Pays the Reaper

As regulations grow tighter, slower games, no autoplay, and strict deposit caps, operators face shrinking margins. Combine this with soaring licence fees and taxes, and something has to give. The result? Fewer games, weaker promotions, higher wagering requirements, and ultimately, a diminished player experience.

The reality is that the more regulators limit the revenue-generating ability of an operator while simultaneously increasing the operating costs of a licensed casino, the more likely it is that the player experience will suffer.

To balance the scales, the gaming site will be forced to close some game provider partnerships, which means less access to casino games, they will offer smaller and fewer bonuses and promotions, or require higher wagering and deposits before a player can withdraw winnings.

Nothing foretells the death of a market like its operators being forced to offer less variety, smaller incentives, and limitations on withdrawals.

 UK Gamblers Say NO To Tax Hikes

The UK-based Betting and Gaming Council (BGC) enlisted the services of YouGov to survey local players about their views on proposed tax hikes, both on winnings and on the operators.

While the survey covered several topics, the most important question was:

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Imagine that betting on sports events like horse racing became more expensive because the government increased the amount of tax that betting companies have to pay. How likely or unlikely do you think it is, if at all, that this would make customers turn to unregulated betting sites that don’t have to pay any tax at all?

Of the people surveyed, 65% agreed that it would drive UK punters who “regularly” participate in licensed casino gaming, sports betting, and betting on horse races to unlicensed offshore operators.

BGC Calls For Reason to Win the Day

While anyone using an income calculation that ignores market realities could show how increased taxation benefits government coffers, the fact is that the net effect on the country would be negative.

While the current licensed market generates £6.8 billion for the economy, resulting in £4 billion in taxes, increasing the cost of doing business locally will cause this number to drop. A drop in income will hamper the government's ability to continue supporting the NHS, the English Football League, rugby union, and horse racing organisations - all of which are funded using gambling revenues.

More than 1.4 million Brits already gamble an estimated £4.3 billion at unregulated betting and casino sites. A figure which the BGC says has been showing year-on-year growth - and this is while the market conditions are relatively favourable.

If regulators hope to sustain the economic benefits of a legal gambling sector, they must stop pricing it out of the market before more players vote with their wallets and head offshore.