Photo by Krissia Cruz on Unsplash

News from across the pond has revealed British gambling firms poured an eye-watering $2.62 billion into advertising last year – a figure so huge it has triggered fresh calls for the UK government to enforce far stricter taxation on the sector.

In fact, the amount spent dwarfs the $1.57 billion the UK Treasury was able to collect from online casino duties, raising concerns as to why one of Britain’s most profitable digital industries isn’t paying its fair share of tax.

Given that the UK Chancellor Rachel Reeves is under intense pressure to plug the estimated $26.24 billion black hole in the forthcoming UK budget, the topic of increasing gambling taxes has re-entered the political spotlight again.

Operators responded by flipping the narrative, suggesting that increasing duties on the sector would not only damage jobs but also funnel UK consumers towards illicit offshore platforms. While there is a fathom of truth in this, the unflattering optics of their “astronomic” ad budgets perhaps indicate they can absorb further tax levies without initiating this worst-case scenario.

UK gambling firms bracing for impending tax hike

Refuting these claims, UK operators also insist their real marketing spend was far closer to $1.31 billion. However, MPs say their need to publicly downplay the figures suggests the sector is bracing for new regulations, rather than one struggling to survive. 

If the Chancellor indeed raises taxes as expected, it will undoubtedly result in a marked reduction in marketing expenditures, along with a possible period of consolidation, particularly among small to mid-sized operators.

For U.S. gaming investors, this tension will feel all too familiar as America’s gambling sector appears rife for reform after several years of hyper-expansion. 

Despite the recent concerns over market cannibalization from prediction markets such as Kalshi and Polymarket, regulators, too, are of the opinion of taking a tougher stance on targeting sportsbook profits, including powerhouses DraftKings (Nasdaq: DKNG) and FanDuel (NYSE: FLUT).

U.S. gaming claims of customer churn costs mirror UK trend

Whereas UK operators appear to be spending without restraint, the American Gaming Association (AGA) actually reported a 15% drop in overall gambling advertising volume in 2024, with a rather sharp decline in TV marketing expenditure, down 44% from 2021. The report cited on overall familiarity with markets for the reduction in advertising (although that doesn’t seem to have slowed UK operators).

90-Day U.S. Sports Betting TV Spend

Source: EDO AdEnGage

Yet despite last year’s decline, sports betting advertising spending still rose 5%, perhaps a truer reflection of the cost of competing in the crowded U.S. marketplace. 

Over a period of 90 days during last year’s NFL season, FanDuel and DraftKings continued to dominate national TV spend, forking out tens of millions to maintain their top-dog status in a sector notorious for customer churn. PrizePicks, BetMGM (NYSE: MGM), and ESPN BET, which recently split with Penn Entertainment (Nasdaq: PENN), made up the remaining top five spots with a combined spend of $45.8 million.

As treasuries face mounting pressure to raise taxes on both sides of the Atlantic, it seems almost inevitable that industry claims over rising customer acquisition costs will fall on deaf ears. However, from an investor’s perspective, the focus now switches toward which gambling firms may adapt the quickest moving forward.

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