Investors in listed UK gambling groups were warned by at least one analyst this week that the industry is facing a tough year due to plans by the government to introduce a damning tax hike.

Investors in listed UK gambling groups were warned by at least one analyst this week that the industry is facing a tough year due to plans by the government to introduce a damning tax hike.

Oriel, the analyst group, said that while "there are always risks for betting and gaming stocks ahead of the budget," the risks are "greater this year."

In March, Chancellor George Osborne will unveil his budget, and it is expected that it will include higher taxes on internet gambling companies that operate offshore, including William Hill, Betfair and Ladbrokes.

As a result, analysts have downgraded share ratings of some online gambling companies and are urging caution in what it calls UK gambling investment risks.

In 2011, the UK government announced that it would be re-examining the way it taxed companies which operated offshore yet still offered their services to UK gamblers.

Several companies operate from tax havens such as Gibraltar so as to avoid the already high 15% tax rate imposed on the gaming industry by the UK government.

The government, however, wants to force these companies to pay taxes as well, and has said that it would address the issue in the March budget.  Analysts say that the re-examination "could result in gross profits tax introduced for offshore operators in late 2013 or 2014."

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