A few days ago, British Prime Minister Boris Johnson lost a significant vote in parliament, which resulted in some Members of Parliament taking control of the parliamentary timetable. They revealed plans for introducing a bill which is aimed at blocking a no-deal Brexit by making Johnson ask the European Union for an extension.
The Prime Minister has shared that he will seek permission from the parliament for a quick general election on October 15th. So, according to experts, nothing has been decided yet, and there is a 50/50 chance for Brexit to happen. The tough political situation, however, has been causing serious turbulence in all sectors of the local economy, including gambling.
As Casino Guardian has already explained, there would be consequences for businesses in the UK both in case of a “soft” and a “hard” Brexit, but they would undoubtedly be more severe if the UK leaves the EU without an agreement. The gambling industry of the country is also expected to be shaken by the UK’s exodus from the European Union, especially the online gambling sector which has been preferred by many offshore gambling companies.
In fact, the reflux of offshore gambling companies from the UK to other destinations has already started, as operators fear they would be hit hard by the Brexit. The latter is expected to have a direct impact on the tax-efficient savings which have been beneficial for online gambling sites hosted in the UK and British Overseas Territories such as Gibraltar over the past few years.
Moreover, Brexit would have an impact on domestic taxation, which is another important aspect of the online gambling sector’s troubles associated with the country’s exodus from the EU.
Both Retail and Online Gambling Sector of the UK Face Difficulties
For years, the UK has been considered the forefront of gambling innovation and prosperity. The local gambling and horse and greyhound betting markets have become a preferred destination for online gambling operators who would like to attract punters from all over the world.
Both land-based and online gambling operations in the country have been quite successful for years. Experts, however, are now unsure whether this trend would remain unchanged, considering the turmoil caused by recent Brexit talks and quickly changing environment.
Back in April, the UK Government officially imposed the new reduced maximum stake for land-based fixed-odds betting terminals (FOBTs), slashing the value from £100 to £2 under pressure for stricter responsible gambling measures. Apart from fears that the measure could lead to thousands of job losses, the implementation of a considerably smaller betting stake would lead to a significant reduction in the yearly gambling tax revenue for the Government. But the UK authorities took things further, after recently announcing their intention to increase the online gambling tax rate from 15% to 21%. This change is expected to be brought into action in October 2019.
Unfortunately, regardless of the large number of online gambling operators hosted by the UK and British Overseas Territories such as the Isle of Man, Gibraltar and Jersey, the exodus of the UK from the EU, and especially a no-deal Brexit, would seriously hurt online gambling operations in the country, as well.
No-Deal Brexit Would Make Free Movement of Goods, Services, People and Capital between UK and EU Impossible
The so-called “Four Pillars”, which include the free movement of goods, services, people and capital, is probably one of the most important concepts on which the entire philosophy of the European Union is based. As part of this concept, it has been possible for many British online gambling companies to move their headquarters to other locations, and the other way round. In addition, the free movement of employees has also been possible without special visas and other complications.
The upcoming Brexit, however, is to bring serious turmoil to the gambling sector, as the “Four Pillars” would no longer be present, especially in case of a no-deal Brexit. For the time being, the European Union and the UK are still no closer to making an agreement on the final terms of the UK’s exodus from the Union. The two parties have remained unable to come to an agreement on the terms of the UK’s initial withdrawal, which has only extended the deadlock between them.
The thing is that even an agreement is made, there would be turmoil in the gambling businesses on the territory of the UK and the British Overseas Territories. The situation would be even tougher if the parties do not reach an agreement and a no-deal Brexit is executed. Leaving the European Union without an agreement is expected to cause a severe regulatory conundrum for the gambling industry in the UK, especially for the companies based offshore in destinations such as Gibraltar and the Isle of Man.
No-Deal Brexit Would Probably Have Direct Impact on Gamblers, Too
As mentioned above, leaving the EU without an agreement would probably lead to an increase in gambling tax rates. This, however, would affect not only online gambling operators but consumers, as well.
The UK players have not been obliged to pay any tax on their gambling winnings since 2001. For the time being, it is unlikely for such a tax to be brought back but online casinos would need to recoup the additional costs which they are expected to face as a result of the country’s exodus from the EU, so higher costs are likely to affect consumers, too.
On the other hand, less online casinos are expected to continue offering their services in the country due to the stricter regulatory regime which is expected to be seen as a result of the Brexit. The problem is that offshore gambling operators would no longer be able to access the benefits of the EU’s single market, and it would not be possible for the country to keep the current rates of tax and duty such gambling businesses pay. This is why many of them are expected to simply leave the UK gambling sector.
As a matter of fact, some online gambling companies, which had their headquarters in British Overseas Territories such as Gibraltar, have already left these locations for “safer” destinations which also offer them more favourable tax regime.
Expected Impact of Brexit on the Online Horse Racing Industry
The last few years have seen brick-and-mortar betting shops take a serious blow in the UK, as the majority of the companies which have been operating in the sector making a decision to go online. The latest development of technologies and the Internet have made things a lot easier for consumers, who are now able to place bets directly from their computers or mobile devices without the need to visit a land-based betting shop.
Horse racing, however, is a sport which involves multiple jurisdictions. And no wonder, because jockeys in the British horse racing sector originate from different nations, and horses come from different countries, as well. Irish jockeys and horses are currently very much involved in the UK horse racing industry.
However, the planned exodus of the UK from the European Union could be a problem, especially if that happens on a no-deal Brexit basis. As explained above, a “hard” Brexit would put an end to the free movement of people, capital, goods and services between the member states of the EU. As a result, this is very likely directly affect the online horse racing industry simply because it would be almost logistically impossible for both jockeys and horses to move from jurisdiction to jurisdiction.