What We Can Expect From the Gambling Business After Brexit

Whether you’re a Brexiteer or a Remainer, Britain’s exit from the EU is a reality. And while the topic of #Brexit still draws the ire of many keyboard warriors, there is one industry that has not been widely discussed: the ever-popular gambling sector.

The UK gambling industry is worth almost £15 billion every single year. The industry employs over 100,000 people and gambling companies add £700 million to Her Majesty’s tax coffers. Gambling alone accounts for 0.5% of the country’s GDP.

It is clear that if Brexit has a significant negative effect on gambling in the coming years, the economy is going to feel it. But what can we actually expect from the gambling business now that the UK has left the European Union?

How Will Brexit Change Online Casinos?

UK betting companies are also extremely popular with EU gamblers. The best online slots in the UK draw significant punters from beyond British shores, for example. Mainstays such as Ladbrokes, William Hill, and SkyVegas have been operating for many years, increasing the trust factor for many gamblers dipping their toes into online casinos for the first time.

Brexit may change access to online gambling, however. Regulation hurdles may become problematic depending on how negotiations develop. If there is no clear cut agreement, for example, companies may need to revert to World Trade Organization rules to adjudicate online gaming tax.

While the picture is currently not very clear, we may see companies excluding British customers simply to avoid the bureaucratic nightmare of sorting out legal and tax matters. For EU gambling companies, it may be more trouble than it’s worth.

What About Gibraltar?

Gibraltar has been the traditional home for UK casinos. The reason is simple and obvious: favourable taxation laws. However, Brexit may end the long-standing relationship between Gibraltar and Britain. Considering that the gambling industry is responsible for 25% of the region’s GDP, restrictive effects as a result of Brexit will have catastrophic consequences for Gibraltar.

It is also interesting to note that Gibraltar is one of the main sticking points of EU negotiations, particularly with Spain. With the difficult ongoing Brexit process, the gambling industry may have a real and significant effect on the relationship between Britain and the EU.

The official line is that Gibraltar will continue its role as a gambling industry presence, according to Andrew Lyman, Gambling Commissioner for the Government of Gibraltar. He has cited several contingency arrangements in case negotiators come to an impasse, nor does he see Brexit as a ‘doom and gloom scenario’.

Will Companies Move to Malta?

With Brexit speculation making big-name gambling companies nervous, some have decided to make the preemptive step of moving to Malta. Bet365, for instance, moved its operation to the island country, citing its desire to maintain access to the EU market. Further, the company felt that the uncertainty around Brexit forced it to make the move earlier than it may have otherwise.

Other companies have either also followed suit, or already have a base in the country. Mr Green Ltd, for example, already has its headquarters and is registered in Malta. Mr Green’s parent company, of course, is none other than British juggernaut William Hill.

Point of Consumption Tax

The UK’s gambling structure is relatively complex. This is partly due to the various independent jurisdictions that regulate online betting. The UK Gambling Commission (UKGC), for example, is responsible for the United Kingdom. So far, simple enough.

However, the UK is made up of several territories, which each have their own regulatory bodies:

• The Gibraltar Regulatory Authority

• Alderney Gambling Control Commission

• Jersey Gambling Commission

• Guernsey Gambling Control Commission

• Gambling Supervision Commission (IoM)

If a company has British customers, they must have an approved UKGC licence. Companies must also pay a 15% tax at the point of consumption. Brexit will likely have a disruptive effect on this structure.

The impact may not be discernible for players who tend to bet with familiar names such as Ladbrokes or SkyVegas, but if you are accustomed to placing bets with an EU operator, regulations may cause a few hiccups in the usual betting experience. In the worst-case scenario, service may be disrupted or altogether impossible for British players.

The State of Sterling

When the result of the Brexit vote became clear, the pound fell to historic lows. Considering many economists have predicted dire economic consequences for Britain in a post-EU world, it would not be a surprise to see a similar occurrence once the dust has settled.

In terms of the gambling industry, we may see British players opting to remain loyal to UK-based brands. European and perhaps even American options may become prohibitively expensive due to the falling value of the sterling. Conversely, it may make British casinos such as William Hill a more interesting proposition for non-UK punters.

The Effects of Covid-19 and Brexit Combined

The gambling industry is currently undergoing a heavy hit due to Covid-19. Gamblers in the UK and EU alike are often attracted to placing a bet on their favourite sport, be it Premier League football, the European Championships, and the Grand National. Sports further afield, such as NBA basketball and the NFL, have also been cancelled.

The strain on the gambling industry and the economy at large may force negotiators to take a more lenient approach to what are currently strict regulations. Considering the industry is responsible for what will be much-needed tax pounds and euros, we may expect to see some changes to eventual agreements.

Post-Brexit Landscape Is Still Unresolved

Ultimately, this discussion is still somewhat limited by the slow and complex process of Brexit. Untangling the UK from an organization it has formed a key part of for almost 50 years is not a straightforward task.

At this stage, it’s difficult to say what will happen for definite. Nothing is guaranteed, especially considering the slow negotiation between the EU and Britain. One thing is for certain, however: change is coming.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes