UKGC operating costs surge 49% to £60m as National Lottery legal battle escalates

• Total expenditure jumped from £40.41m to £60.31m in 2024-25, with legal costs reaching £14.2m.
• National Lottery litigation consumed £13.4m as Commission defends fourth licence competition.
• Record 9,700 compliance activities delivered alongside £26m treasury funding boost over three years.

The UK Gambling Commission has delivered its most intensive year of enforcement and compliance activity on record, according to its Annual Report and Accounts for 2024-25 published in July 2025.

However, the regulator’s operating costs surged by nearly half as legal battles over the National Lottery’s fourth licence dominated expenditure, raising questions about the long-term sustainability of the Commission’s funding model.

Legal costs dominate unprecedented spending increase

Total operating expenditure during 2024-25 reached £60.31m, representing a 49% increase from the previous year’s £40.41m. The sharp rise was primarily driven by litigation costs related to the fourth National Lottery licence competition.

Legal fees reached £14.2m compared to just £353,000 in 2023-24. Of this total, £13.4m related specifically to defending claims from The New Lottery Company (TNLC), an unsuccessful bidder founded by Richard Desmond.

TNLC has brought two separate claims alleging breaches of the Concession Contracts Regulations 2016. The first challenges the evaluation of the fourth National Lottery competition bids, whilst the second relates to modifications made to the enabling agreement and licence. The trial began in October 2025.

The Commission stated in its annual report:

“The Commission is robustly defending the claims and continues to work with its external lawyers to effectively manage the ongoing obligations up to trial.”

Gambling regulation expenditure totalled £31.89m, whilst National Lottery functions accounted for £28.42m. Within National Lottery costs, £24.67m was spent on the fourth licence competition and related legal challenges, compared to £11.99m in 2023-24.

Employee costs for the year were £27.82m, an increase from £24.00m in 2023-24. The Commission’s staffing increased by 11.5% during the year to support expanded regulatory activities.

Total income from fees and other sources was £27.88m for the year, excluding the £29.14m of Grant-in-Aid funding for National Lottery functions. This means gambling regulation activities ran at a deficit of £3.43m for the year.

Expanded illegal gambling disruption

The UKGC issued 516 cease and desist requests to illegal operators during the year, an increase from 384 in 2023-24, and a further 352 to advertisers and affiliates of unlicensed operators.

The regulator’s engagement with search engines and third-party technology companies proved effective, with 95,705 illegal gambling URLs removed following UKGC referrals to search engines.

The Commission has been particularly active in researching and understanding the illegal gambling market. The regulator recently finalised its comprehensive report on the illegal online gambling market, building on earlier studies examining the scope of illegal operations.

The rise of illegal land-based operations has also drawn attention. Police in Birmingham recently issued warnings over exploitative tactics used by illegal gambling dens, whilst a UK man was sentenced for running an illegal WhatsApp betting operation that failed to pay a customer £269,000.

Some operators have chosen to exit the market rather than face increasing regulatory pressure. GG.bet announced its departure from the UK market at the end of 2025.

Record enforcement activity despite cost pressures

Despite the financial pressures, the Commission undertook over 9,700 compliance activities during the year, compared to over 4,200 in the previous year. This represents almost 3,000 more activities than any previous year in the Commission’s history.

The Commission took enforcement action against 24 operators in total, leading to £4.2m in fines or regulatory settlements. Whilst the penalties are lower than the previous year, the UKGC stated these are “potentially positive indicators coming from the work that the Commission has been doing to raise standards of compliance with our rules and on the part of operators as well.”

Recent high-profile enforcement actions include Betfred being fined £240,000 for online slots breaches and Videoslots receiving a £650,000 penalty over anti-money laundering and safer gambling failures. In another case, Paddy Power Betfair was ordered to pay £2m for regulatory failures.

Record expenditure reflects expanded remit

Total operating expenditure during 2024-25 reached £60.31m, representing a 49% increase from the previous year’s £40.41m.

Gambling regulation expenditure totalled £31.89m, whilst National Lottery functions accounted for £28.42m. The significant increase in National Lottery expenditure included £24.67m on the 4th National Lottery Licence competition and related legal challenges.

Employee costs for the year were £27.82m, an increase from £24.00m in 2023-24. The Commission’s staffing increased by 11.5% during the year to support expanded regulatory activities.

Total income from fees and other sources was £27.88m for the year, excluding the £29.14m of Grant-in-Aid funding for National Lottery functions.

Treasury awards £26m funding boost alongside major tax reforms

Following the November 2025 budget, Chancellor Rachel Reeves announced an additional £26m in funding for the Commission over three years, alongside sweeping changes to gambling taxation.

The budget confirmed remote gaming duty will increase from 21% to 40% starting April 2026, nearly doubling the tax on profits from online gambling. A new general betting duty of 25% for remote betting will launch in April 2027, whilst bingo duty will be abolished entirely from April 2026.

The Office for Budget Responsibility (OBR) projected these tax changes will generate approximately £1.1bn by the fiscal year 2029-30, though the watchdog warned that yield could drop by around a third due to consumer demand reduction and potential migration to the black market.

Rhodes welcomed the unprecedented support at the BACTA Annual Convention on 27 November, stating:

“Certainly, yesterday we saw some very significant changes in taxation levels in several areas and we will start to see what impacts that may or may not have.”

“As that starts to take shape, I am pleased that the effectiveness of the commission on illegal gambling has been recognised by the treasury with an additional £26m,” Rhodes added.

He emphasised this represented an exceptional level of backing:

“We have always been somewhat hamstrung by the size of our own resources, but this will give us a capability now to do a lot more in the land-based space than we’ve been able to do before. I’m sure we won’t get universal coverage of that, but I think there’s a lot more we will now be able to do.”

Rhodes highlighted that in his two decades of experience on public-sector boards, he had “never seen that level of support” from the Treasury before.

Much of the new funding will be directed towards tackling illegal land-based gambling and strengthening compliance work across the licensed sector.

International cooperation strengthens

The Commission issued a joint institutional statement alongside the regulators of Austria, France, Germany, Italy, Portugal and Spain, stating a shared commitment to consumer protection, market integrity and compliance with licensing requirements.

The UKGC is a founding member and current chair of the International Association of Gambling Regulators (IAGR) working group on illegal gambling, which has forged closer ties with over 35 jurisdictions worldwide.

The Commission increased its international regulatory engagements during 2024-25, supporting newer regulators in the creation of their regimes and continuing operational-level work with established regulatory partners.

Market statistics show growth

Total gross gambling yield for the 2024-25 financial year reached £16.8bn, representing a 7.3% increase compared to April 2023-March 2024.

When National Lottery ticket sales of £7.9bn and £1.1bn in large society lottery ticket sales are excluded, the figure stands at £12.6bn, 9.3% higher than the previous year.

Remote gambling saw the highest turnover of all non-lottery betting and gaming verticals. Gross gambling yield for online betting, casinos and bingo reached £7.8bn, 13.1% more than last year.

This comprised online casinos at £5bn (of which £4.2bn came from slot games), online sports betting at £2.6bn, and online bingo at £165.6m.

Strengthening evidence-based regulation

Tim Miller, Executive Director of Research and Policy at the UKGC, confirmed the regulator’s commitment to evidence-based regulation through its flagship research project.

“The Gambling Survey for Great Britain has already transformed our understanding of how people gamble, providing richer, more reliable insight than ever before,” Miller stated in the annual report.

The Commission published the first official statistics and annual report for the Gambling Survey for Great Britain (GSGB) in 2024. GSGB is described as the largest survey of its kind in the world, with the Commission continuing to publish quarterly participation statistics alongside annual reports.

White Paper implementation progressing

The Commission made progress on implementing the government’s Gambling Act Review White Paper, High Stakes – Gambling reform for the digital age, which contains 62 commitments across government, regulators, industry and other stakeholders.

The UKGC is responsible for delivering 21 of these commitments. During 2024-25, the regulator published multiple consultation responses, fully implemented several measures, and launched the Financial Risk Assessment pilot scheme.

From 6 April 2025, the Statutory Levy commenced, replacing voluntary industry contributions. The levy will be collected and administered by the Commission under UK government strategic direction, with funding directed towards research, prevention and treatment of gambling-related harm.

Enhanced industry engagement

The Commission established an Operator Engagement Forum with the dual aim of assisting industry to remain compliant through sharing knowledge and peer-to-peer best practice, and building more collaborative relationships.

Two events were hosted during 2024-25, with the second attracting double the number of attendees compared to the first. The Commission also established an Industry Forum made up of people working across gambling in Great Britain to provide industry insight into the regulator’s plans and service quality.

Throughout the year, the UKGC held nearly 200 senior-level meetings and engagements with stakeholders including parliamentarians, campaign groups, charities, other government departments, international regulators and partners.

The Commission was recognised for the third consecutive year as a Great Place to Work and was accredited as one of the UK’s Best Workplaces for Women for 2024.

Charles Counsell, Interim Chair, and Andrew Rhodes, Chief Executive, stated in the annual report:

“The substantial work done in 2024-25 gives the Commission a great opportunity to make further steps forward in our work to make gambling safer, fairer and crime free. This is an opportunity everyone at the Commission is fully dedicated to making the most of in the year ahead.”

The Commission’s intensified enforcement activity, expanded international cooperation and commitment to evidence-based regulation reflect its determination to deliver on its statutory objectives whilst adapting to the evolving digital gambling landscape.