Britain’s shocking decision to leave the European Union has caused speculation that a global economic crisis is on the cards. Almost all economic and financial sectors are concerned about the effects of Brexit, not least the online gambling industry.
The United Kingdom is the sixth largest market for gaming in the world, and well ahead of countries like Canada and France, where gambling on the internet is also legal. Since the announcement of Brexit, the UK’s position as a gaming leader could be under threat. As a result, the British pound’s value has dropped considerably in the last few months, reaching the lowest value in more than 30 years at $1.33. However, the depreciating pound is not the only worry. Until any further changes happen, the full implications of what Brexit means for the British gambling industry will remain an unanswered question.
The UK is home to six regulatory bodies for online gambling, including the Gibraltar Regulatory Authority located in Gibraltar, which is home to around 30 licensed gambling operators, including 32Red, Bwin and William Hill, to name a few. Other major regulators located in the UK include the UK Gambling Commission, the Isle of Man, and the Alderney Gambling Control Commission. Online betting is currently not governed on an EU level but instead by state, which means the UK enjoys the freedom to make its own regulations regarding gambling on the internet. The big question is what will happen to countries like Gibraltar, which forms part of the EU and has a separate jurisdiction and tax system from the UK.
Despite this, Gibraltar sees itself as a British territory, but since its location on the southern tip of Spain, retaining daily operations could prove catastrophic. The main issue is that the country’s economy relies heavily on the gambling industry, with the online gambling industry employing about 3,400 workers, most of whom live in Spain and travel freely in and out of Gibraltar. In fact, about 10,000 people make the daily commute between Spain and Gibraltar.
If Spain decides to close that border altogether, it would mean either employees will lose their jobs or the major gambling companies will have to relocate to continue their services. Spain’s foreign minister sparked controversy in March when he announced the country would demand control over Gibraltar if Britain were voted out. Whether this was just talk or a legitimate threat, it still made an impact on the iGaming industry and its plans to move forward post-Brexit. Moving to Malta could be a possibility for many of these big online gambling operators as it remains part of the EU and has a similar low corporate tax rate to the Island of Man and Gibraltar. Once Brexit comes into play, companies like Ladbrokes and Paddy Power may well look to Malta to continue operations.
In the wake of Brexit, no sector will remain unaffected. In the gambling industry, in particular, it will be difficult for UK-based operators to hire foreign employees or for these individuals to get jobs in the country. Many major companies will also lose confidence in an economy on the brink of collapse and will take their business elsewhere. What’s more, should the country experience another recession, the unemployment rate could rises and citizens will have to cut down on non-necessary expenditures, with online gambling being the first to go.
Despite all the speculation and hearsay, it will be quite a while before the UK leaves the EU. Nothing will happen overnight, especially if it means closing down premises and starting over in another country. Only time will tell if the decision to leave the EU will have long-term effects on the iGaming industry.