Under pressure: How UK iGaming tax rise will impact affiliates

Most of the focus on the upcoming hike to the UK’s remote gaming duty tax has been on the impact it will have on operators.

But it’s already clear this impact will not stop at the operator level. It will travel down the value chain, and affiliates are likely to feel the pressure almost immediately.

For years, affiliates have been a core part of customer acquisition in the UK. The model has worked because it offered a flexible, performance-driven marketing channel for operators, while providing affiliates with relatively stable and predictable revenue streams.

But when operator margins tighten, as they will do significantly from 1 April when the remote gaming tax is raised to 40 per cent, acquisition budgets are often the first area to be scrutinised. That puts affiliates squarely in the firing line.

In practical terms, higher taxes reduce the profitability of each new customer. Operators must either absorb that cost, pass it on to players or cut expenses elsewhere. Quite possibly all three. Marketing is one of the few levers they can adjust quickly, and affiliate deals are among the most flexible components of that spend.

We are likely to see lower CPAs, tougher rev-share negotiations and stricter performance thresholds. Some operators may simply become more selective, working with fewer partners and focusing only on affiliates that consistently deliver high-value, compliant traffic. For smaller or mid-tier affiliates already operating on tight margins, these changes could make certain deals unviable.

This isn’t just about payouts, either. The tax increase could trigger a broader strategic shift among regulated operators. As acquisition becomes more expensive, many will double down on retention. Instead of aggressively chasing new sign-ups through affiliate channels, budgets may move towards CRM, loyalty programmes and cross-sell initiatives designed to increase lifetime value.

Offshore drift?

That kind of shift changes the affiliate landscape. Operators may run fewer acquisition campaigns, offer fewer deals and concentrate spending on a smaller group of established partners. New entrants will find it harder to break in, and even long-standing affiliates may need to renegotiate their role within the operator’s overall marketing mix.

When margins are squeezed, the market also tends to fragment. One of the more uncomfortable realities of the affiliate sector is that it is highly mobile. Just as many are predicting that a segment of players will move offshore as a result of the tax rise, if the economics of regulated partnerships deteriorate, some affiliates will inevitably start looking elsewhere.

Offshore and grey-market operators often offer higher CPAs and more generous revenue shares, precisely because they are not subject to the same tax and compliance burdens. For affiliates focused primarily on SEO or paid traffic, the temptation to redirect that traffic will be significant.

Will the regulator step in? That’s a question that is far from straightforward. Affiliates with a UK presence cannot assume there will be no consequences for promoting offshore brands. I think that regulators are unlikely to sit on their hands if UK-facing affiliates begin sending large volumes of UK traffic to unlicensed operators.

There is also a broader industry dynamic at play. Some jurisdictions already operate in a grey-affiliate environment, where regulated operators coexist with offshore competitors that still receive significant traffic. If the UK’s regulated economics become too restrictive, there is a real possibility the market could drift in a similar direction.

Market squeeze

The most likely outcome, however, is consolidation. Over the next 12 to 24 months, we may see smaller affiliates exit the UK market altogether, while larger, more professionalised brands increase their share. Operators are likely to trim their partner lists, put more emphasis on closer technical integrations and prioritise affiliates that consistently deliver compliant, higher-value players.

At the same time, compliance expectations are set to rise. When margins are under strain, there is far less appetite for questionable traffic sources or activity that sits in a regulatory grey zone. Operators will naturally gravitate towards partners who can point to clear processes, transparent tracking and a credible, responsible-gambling approach.

That dynamic should push the sector further towards consolidation and professionalisation. Larger affiliates with proper structures, compliance staff and defined governance will be better placed to protect their commercial relationships, while smaller or more informal outfits may struggle to keep up with the new standards.

For affiliates, the strategic response will need to be equally clear. Diversifying into new markets, building stronger direct brands and investing in compliance will become essential. Relying too heavily on a single regulated market or a small group of operator partners will carry even greater risk than it has in the past.

Either way, the impact of this tax rise will be felt far beyond the balance sheet of operators.