Brexit will take two years to complete
Dozens of international online gaming companies now call Gibraltar home, thanks to the British territory’s low taxes and easy access to the European Union’s 500 million residents.
According to the Associated Press, gaming accounts for about 25 percent of the territory’s total economy, as well as 40 percent of local corporate taxes and 3,000 of 26,000 local jobs. That all could be put at risk as the United Kingdom exits the EU.
In March, British voters made the choice to leave the EU with the initiative known as Brexit. But Brexit could close off the UK from the rest of the EU, with its hearty appetite for gambling, the AP reports. According to company H2 Gambling Capital, the market could be worth 30 billion euros (US$32.5 billion) per year by 2021, almost twice the current levels.
As the UK withdraws from the union—a process that will take about two years—other low-tax jurisdictions such as Malta could become increasingly attractive to gaming operators.
But the switch may not be that simple, say senior executives of 888, who run one of the world’s biggest online casinos. Earlier this year, they warned that 888’s reach into the EU’s other 27 member countries could be limited in the event of a so-called “hard Brexit” situation in which Gibraltar, like the rest of Britain, experiences a disruption of trade, new tariffs and the possibility that some UK businesses will become ineligible for regulatory licenses in some EU countries.
In its annual report, 888 said it “would reconsider the appropriateness of remaining registered, licensed and operational in Gibraltar in these circumstances” and added that “Malta may be considered as an alternative ‘dot-com’ licensing jurisdiction.”
Ladbrokes Coral and William Hill are also keeping an eye on the developing story. William Hill has established a Brexit Working Group to assess the possible financial, operational and regulatory blowback of Brexit and ensure “suitable arrangements are in place should there be disruption to the Gibraltar border crossing or the availability of any services offered through Gibraltar.”
Employees of Gibraltar’s gaming industry—60 percent of whom commute from Spain—must be worried about their collective fate. That’s the “real worry” for staffers, says Mark Jordan, gaming industry analyst at PwC in London. “How difficult will Spain be?”
Meanwhile, Gibraltar Gambling Commissioner Phill Brear says it’s “sensible, prudent management” for the online gaming industry to prepare for potential Brexit outcomes. “They’re hedging their bets,” he told the AP, in some cases taking out Malta licenses alongside their Gibraltar ones.
