Reducing RTP in the UK: A Market Error or a Margin Fix
UK operators are carefully reducing online RTP as tax regulations increase, but industry voices and data from Germany indicate the tactic could eventually backfire.
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Profits decrease when taxes increase. That much is clear. How operators should react is less clear, especially in a developed, extremely competitive jurisdiction like the UK. Reducing return to player on slots to reduce increased tax obligations is one idea that has gained popularity recently and is surprisingly straightforward. It works on paper. Higher hold per spin is associated with lower RTP. However, the math may be straightforward, but the economics are complex, according to a recent report from Regulus Partners. According to the firm’s analysis, reducing RTP is not a better approach in a crowded market and might even backfire.
The argument is more of a developing agreement backed by necessity than a coordinated industry position: many operators seem to be quietly lowering RTP as one of the few readily available profit levers in the face of increased taxes. The argument is no longer theoretical. Operators, suppliers, and analysts are currently debating whether decreasing RTP is a necessary adjustment or a risky shortcut in light of the most recent tax changes in the UK.
Mirage of the easy profit
RTP reduction is obviously attractive. Operators can gain additional margin without changing the basic products by offering different RTP versions of the same game, usually 96%, 94%, or 92%. RTP is unquestionably a pricing lever, according to Helen Walton, co-founder of G Games. Operators are already pulling it. “Standard RTPs have moved from around 96% to 94% in the UK, and 92% is now the requested maximum,” she says. That change can seem insignificant. However, Walton highlights that “a 4% reduction in RTP materially shortens play time and reduces the likelihood of experiencing bonus features, in other words, it changes the entertainment value of the product.”
Regulus Partners makes a similar argument. It claims that RTP decreases can appear as minor percentage adjustments while, in fact, they significantly raise the “price” of gambling. This argument is furthered by Eyal Loz of game developer RubyPlay, who challenges what he perceives to be a fundamental misinterpretation of the straightforward math involved. “People believe that there is only a 4% difference between, for example, 96% and 92% RTP. It sounds insignificant. However, it’s actually 100%, not 4%, he claims. “The cost is when a person bets €1 and the operator takes 4 cents. The expense of entertainment has doubled if that turns into eight cents.
According to this stance, in a market where customers are very sensitive to value, lowering RTP is comparable to boosting prices.
The notice to users during lower RTPs
RTP cutbacks are based on the basic idea that many players are either unaware of or cannot fully understand them. Industry voices, however, are doubtful. Although gamblers might not explicitly calculate RTP, Walton believes that “they feel it in their bankroll.” “Players don’t notice a few percentage points,” she continues, “but that just doesn’t match observed behaviour.”
“Players aren’t stupid,” says Loz in simple terms. When their money runs out, they become aware of it. An hour of enjoyment is now reduced to thirty minutes. Players are therefore intensely aware of session length, its frequency, and perceived fairness, even though they may not read paytables.
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RTP reductions actually show up as slight changes to game dynamics. According to Loz, developers usually change how frequently important events, such as bonus features, occur. “Players may not notice in the short term. However, as time goes on, people receive fewer benefits, and the expenses increase. They eventually sense it. Therefore, he believes, the risk is progressive detachment rather than sudden reaction.
Time span of the benefits
Lowering RTP does result in an initial increase from a financial viewpoint. Walton explains the pattern as follows: “You see a nice bump in GGR at first.” However, a less promising trend follows. Players then notice that their money isn’t lasting as long. The most valuable players are more likely to look elsewhere, especially the black market, as sessions become shorter and less frequent.
This shows a trade-off between lifetime value and margin per spin. Lower RTP improves the former, but it can weaken the latter by reducing engagement and retention. Walton underlines that operators are aware of this. “From a business standpoint, the goal is typically to maximise sustainable lifetime value within a trusted environment rather than to maximise margin per spin.”
Warning from Germany
Germany serves as a warning example, according to Regulus Partners. Because of the nation’s 5.3% turnover tax on online slots, RTPs have been pushed to drop to about 90% or less, which is significantly below the natural level of about 95%.
The results have been severe. The company claims that while the black market has increased to an estimated €2 billion, the licensed slots market’s annual revenue has decreased from about €800 million in 2022 to about €470 million in the second half of 2025.
An industry issue
Germany is not the UK. For the time being, it has more channelization and a more competitive environment. However, this rivalry is mutual. Regulus Partners believes that lowering RTP is unlikely to provide a long-term benefit in such a market. Others may follow if one operator reduces RTP. If everyone does, overall value decreases, and differentiation vanishes. This raises the important question of how sensitive the player base in the UK is to value. The response varies. Casual players may be less sensitive to little changes. Higher-value or more seasoned gamers are probably more price-conscious. These players are most likely to leave, according to Walton.
A Shaky balance
It is hard to ignore the effects. Growth becomes more difficult to maintain in a market when sessions are shorter, frequency drops, and high-value players leave. The main caution issued by Regulus Partners is that this dynamic is especially risky in a market like the UK. The difference between regulated and unregulated products may grow to the point where player behaviour changes if regulated products continue to lose appeal. In the end, whether reducing RTP can increase profits is not the question. Whether it can accomplish this without undermining the fundamentals that support those margins is the question. The solution is still unknown as of right now. However, the evidence indicates that a seemingly simple solution could end up being expensive.
Source: iGB
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