The Art of Cutting Marketing Costs and Staying Competitive
- billing8636
- 1 day ago
- 4 min read
Tax increases don't just hurt margins. They force decisions. And right now, across the UK and beyond, iGaming operators are facing some of the most consequential marketing decisions they'll make this decade.
The UK's gambling tax hike has already reshaped how operators think about spend. And it won't stop there. Massachusetts is on course to raise its sports betting tax to 51%, and similar dynamics are unfolding in regulated markets globally. As taxes climb, margins compress, and marketing the fastest and most flexible cost lever available - is the first thing that moves.
Itai PaZner Dec 10, 2025
Unlike workforce restructuring or technology overhauls, marketing spend can be adjusted almost overnight. The impact on the bottom line is immediate. But the strategic consequences take much longer to play out. The choices operators make today will shape their competitive position for years to come.
Understanding What You're Actually Cutting
Marketing in iGaming breaks down into two broad categories. The first is external -brand advertising, sponsorships, affiliates, paid digital designed to acquire new players and maintain visibility with existing ones. The second is internal: bonuses and incentives delivered through CRM, the tools that keep players engaged once they're in.
Both are under pressure when taxes rise.
Historically, external acquisition marketing accounted for roughly 20–30% of net gaming revenue, while bonuses represented 20–25% of GGR. Under tax regimes of around 20%, efficient operators could hold EBITDA margins in the 15–25% range. When taxes effectively double, that model breaks. Reducing marketing from 25% of revenue to around 15% can recover a portion of lost margin quickly but it's not a decision without consequences.
Brand vs. Performance: Where the Money Is Moving
The most visible shift happening right now is from brand marketing toward performance marketing. Brand spend television campaigns, sponsorships, high-profile ambassadors -is expensive and hard to attribute. Performance channels -paid search, affiliate programs, programmatic -are measurable and adjustable.
When budgets get squeezed, CFOs push CMOs toward what can be proven. We're already seeing this play out. Entain ended 52 years of sponsoring the Coral Cup.
Bet365 cut major racing partnerships. BetMGM stepped back from Newcastle's Fighting Fifth Hurdle after just two years. These are signals, not outliers.
Operators that previously allocated 50% of their marketing budget to brand activity are shifting that figure toward 30% or below. The efficiency gains are real in the short term. But there are long-term costs to consider.
Brand marketing builds something that performance marketing cannot: emotional connection. Awareness, loyalty, organic traffic -these are driven by the broader campaigns, not the transactional ones. As brand spend shrinks, organic traffic tends to follow. And when organic traffic drops, paid acquisition costs rise. The efficiency gain can reverse itself over time.
Operators with high-street retail presence Betfred, Ladbrokes, William Hill have a structural buffer here. A thousand betting shops are effectively a thousand billboards. Purely digital operators don't have that fallback.
Smaller Operators Are Most Exposed
For operators with revenues in the £50–100m range, budget cuts will be far more severe. Many will eliminate television advertising entirely. Some, as I've written previously, will exit the market altogether.
The counterintuitive result is that large operators' share of voice can actually increase even as absolute spend declines -simply because smaller competitors go quieter. Market entry, already expensive in regulated gambling, becomes harder still. New brands will need to outspend revenue significantly just to build awareness. Few will have the financial capacity to sustain that.
AI, CRM and the Efficiency Opportunity
The pressure on bonuses creates risk. Where bonus spend previously represented around 20% of GGR, that figure is trending toward 15% or less. That reduction improves net revenue -but it also creates an opening for unlicensed platforms, which operate without these cost constraints and can offer significantly higher incentives.
The answer is not simply to spend less on bonuses. It's to spend more intelligently. This is where AI-driven CRM becomes genuinely transformative rather than just a buzzword.
Traditional player management relied on broad segmentation high-value, casual, churn risk - with standardised promotional journeys for each category. AI enables something different: treating each player as their own segment. Offers, timing, and messaging can be tailored to individual behaviour at scale, reducing waste while improving relevance. Players less responsive to certain incentives receive alternatives. High-value players get bonuses calibrated to their specific patterns.
Social gaming companies have been doing this for years. They have no real-money prize to rely on, so engagement and retention are built entirely through data, personalisation, and gamification. Real-money operators need to learn from that model.
The Long View
This period is genuinely difficult. But the operators who emerge from it strongest won't necessarily be the ones who cut the most. They'll be the ones who cut the smartest protecting brand presence where it counts, doubling down on performance channels that actually convert retained players, and using technology to do more with less.
The UK is the clearest example of this transformation in progress. But it won't be the last market where these dynamics play out. The operators building smarter, leaner marketing operations now are building a structural advantage that will matter long after the current tax cycle stabilises.
This article is based on Itai Pazner's column originally published by iGaming Expert. Itai Pazner is a global tech advisor, investor, and former CEO of 888 Holdings, writing regularly on iGaming strategy, regulation, and digital innovation. Read the full column on iGaming Expert →
Comments