Online gambling makes up a large part of the British economy and studies show that nearly half of the population engage in some form of betting with millions spent gambling online every year. The impact of Brexit on the gambling industry is something that many people are speculating on, especially with regard to tax revenues generated from the industry.
Read on to explore the impact that Brexit might have on gambling for both the operators and the players.
Regulations and Licensing
The UK regulates it gambling services very strictly and has operated ‘outside’ Europe for many years in this regard, subsequently some may think Brexit will not have a major impact on the industry. Before the gambling act of 2014, operators didn’t need to have a license from the UK Gambling Commission but since this act, any operator wanting to operate inside the UK, even with servers based outside, has needed to obtain this license. As a result of this, players may find it more difficult to play at new and existing online casinos after Brexit if sites need to get new gambling licenses to be approved to operate in the UK. Other jurisdictions allowed by the UKGC include Gibraltar, Malta and the Isle of Man.
The Future of Gibraltar
One main concern of Brexit in relation to the UK gambling industry is what will happen to Gibraltar. The rock has been the subject of dispute for many years between the UK and Spain and after Brexit its situation looks set to become more precarious. Over 98% of Gibraltarians want to remain part of the UK and not share sovereignty with Spain and this is how the land currently lies. However, as Gibraltar is classed as part of the UK and the UK is leaving the EU, Gibraltar will have to leave too. This could have a huge impact on Gibraltar as many people cross the border with Spain to go to work every day. It is thought that about 60% of the gambling industry staff live in Spain and commute to Gibraltar for work.
Much of the future of Gibraltar and its betting industry relies on the approach of the Spanish government. They could choose to make it more difficult to cross the border to and from Spain and thus render Gibraltar difficult to access from both sides. This could even cause people in Gibraltar to have to leave the land by sea or plane if their land border is closed to them. Of course, this would have a huge impact on all people living in Gibraltar and working there, particularly the jobs within the gambling industry as we move towards Brexit.
Taxes in Gibraltar
Gibraltar is home to 30 gambling companies, including online bingo operators, casino operators and sportsbook operators, who are attracted to the low taxation on the rock. Fixed odds gambling operations were taxed at just 1% of turnover before 2014, so many companies were keen to remain in Gibraltar rather than locate elsewhere where there were higher taxes. Since the 2014 ruling, companies have been forced to move into line with Britain and pay more tax, while they have also had to obtain UKGC licenses to remain open to UK players. However, the situation is still favourable to gambling companies to remain in Gibraltar for the time being.
The Single Market
The single market currently in operation throughout the EU also opens up the industry to 500 million people. However, after Brexit this will be reduced significantly if the UK has to leave the single market. In fact, after Brexit, there is a possibility that many of the gambling companies currently located in Gibraltar will want to leave and relocate elsewhere. Nothing has been openly stated, but the gambling companies are monitoring the Brexit situation and will act accordingly should circumstances change. William Hill has even opened up a Brexit Working Group to keep tabs on the situation.
Potential Problems for Players
Following Brexit, sites may need to obtain new gambling licenses to get approval to operate in the UK, as such this may present a challenge for players looking for new and existing casino sites. Additionally, many workers in the industry might also find they need to relocate to new jurisdictions if Gibraltar ceases to be attractive to companies due to a change in taxation or difficult border crossings with Spain. So there is a lot still up in the air and most of the changes and potential disruptions depend on the continuing negotiations between the UK and the EU.
Another concern is that if Brexit does well for the UK, it might encourage other countries to exit the EU. The gambling industry will be adversely affected if important countries leave the EU because currently the EU exercises control over the member countries to create a safe industry. Without the EU control, each state will have to set its own rules in relation to online gambling and this could lead to them rejecting all foreign gambling operators. This will severely restrict the choices for players and so they could be left worse off with only a few sites to choose from. With low competition this will reduce the number of promotions and bonuses available. This could well lead rise to illegal operations and this will then make players vulnerable to exploitation with no legal protections.
Gambling Legislation
Another issue for sites and players is restrictions and regulations surrounding money laundering. There is currently a treaty in place to give freedom and protection for the consumer with many important areas covered in the legislation, such as gambling addiction. It is likely that the UK would leave this treaty however many other laws exist to prevent money laundering so it is likely that in practice these laws will not be affected as they are not wholly reliant on the EU for their existence.
Many things will change post Brexit and we may see some companies relocating from Gibraltar elsewhere to continue their operations. However in its essence the gambling industry is not likely to change too much in practical terms. Everyone will be watching over the Brexit negotiations as they unfold to see what happens after the UK’s exit, which is set to be in 2019.
