How Tax Increases Affect Casinos in Gibraltar

Pressure to increase taxes on slot machines 

Pressure to raise gambling taxes in the UK once again increases Gibraltar's potential economic impact. A group of 90 Labour MPs has urged Chancellor of the Exchequer John Healey to implement a new tax hike on slot machines in the autumn budget, scheduled for late October. The measure could affect major international companies that maintain significant online gambling operations on the Rock while simultaneously managing betting shops and casinos in British territory.

The initiative comes after the previous budget approved a significant increase in taxes applied to internet gambling. According to information released by GBC, the new tax proposals could lead to the closure of nearly 1,500 betting shops and 34 casinos in the UK.

Gibraltar's Minister for Trade and Industry, Nigel Feetham, has warned that this situation highlights the exposure of the Rock's economy to tax decisions made in London. The Gibonese official defended the need to diversify economic activity to reduce dependence on the British market. "This was always a risk, and it is precisely why I have invested a lot of time and effort, through my international relations programme, in diversifying Gibraltar's economy and reducing our dependence on the UK," Feetham stated.

The minister announced that he will address this issue during his speech at the financial services lunch scheduled for this Monday, where he will emphasize the importance of strengthening the capacity of Gibraltar's economy to deal with external political decisions over which it has little control.

New tax pressure on machines 

The Labour MPs' petition focuses on increasing the tax levied on gaming machines found in betting shops and casinos. According to reports published in the UK, the proposal under discussion contemplates raising the Machine Games Duty rate from 20% to 40%. The goal would be to increase public revenue from this activity, although companies in the sector warn that a hike of that magnitude could jeopardize the profitability of numerous establishments.

The initiative adds to the tax changes the British government has already approved for remote gambling. Since April 1, 2026, the tax on online gambling profits—which includes virtual casinos and internet slots—has risen from 21% to 40%. Furthermore, starting April 1, 2027, online betting will be subject to a 25% rate, up from the previous 15%, with exceptions such as remote bets on British horse racing, which maintain the 15% rate. The British government projects that these reforms combined will contribute over 1 billion pounds annually to public coffers.

The new petition concerning machines should not be confused with those already approved changes: the slot machine tax hike remains a proposal pending budgetary decision. If successful, it would add tax pressure to a sector already facing increased levies on some of its digital activities.

The effect on operators with a presence in Gibraltar

The connection to Gibraltar is explained by the international model of major gaming groups. Several companies operating in the British market also maintain online gambling activities and corporate structures on the Rock. A tax hike on their UK business could reduce their margins and alter their investment, employment, and business organization decisions, although the specific impact will depend on each company and the distribution of its revenues across markets and activities.

British taxation does not automatically apply to all gambling activity conducted from Gibraltar: obligations depend, among other factors, on the type of product and the place of residence of the customers. British regulations establish that operators must pay the corresponding taxes for remote gambling offered to individuals habitually residing in the UK, regardless of where the company is located.

Therefore, a tax hike in the UK does not necessarily imply an equivalent increase in the tax burden on all businesses established in Gibraltar. However, it can affect the results of groups with activity in both territories and, indirectly, their decisions regarding costs, workforce, and future investments on the Rock.