The withdrawal of the UK from the European Union (EU) is already a reality but the Brexit and its potential effect on the country’s gambling sector has remained a topic greatly discussed.
For the time being, the UK gambling industry is estimated at about £15 billion on an annual basis. More than 100,000 people are employed in the sector and gambling operators generate tax revenue of about £700 million to the country’s coffers. According to estimates, gambling accounts for 0.5% of the gross domestic product (GDP) of the UK.
Following the Brexit vote, the British pound fell to historic lows and many economises have projected economic difficulties for the country after it leaves the EU. When it comes to the gambling sector, British players may become more loyal to UK-based brands.
As Casino Guardian has already reported, if Brexit hits gambling in the upcoming years, the country’s economy is going to feel it. The UK’s exodus from the EU, however, is expected to bring serious changes in a number of directions. In addition, the gambling sector in the UK is currently experiencing a hard blow because of the coronavirus pandemic, which is generating even larger strain on the industry and the economy.
Apart from that, the fact that the post-Brexit landscape remains unresolved, makes the situation even harder. The discussions on the matter are still complex, and at this stage, it is difficult to predict what will exactly happen in the future. The only thing certain is that changes in the sector are on their way.
Online Gambling Companies’ May See Their Services Disrupted Due to Brexit
Over the years, UK gambling companies and their services have become extremely popular with gamblers from the EU, with some of the largest companies in the sector being based in the UK or its overseas territories.
However, analysts say that Brexit may change access to online gambling, as regulatory obstacles may occur depending on how the negotiations over the country’s withdrawal develop. In case no clear agreement is reached, companies may be forced to make sure their services are in line with the rules of the World Trade organization to adjudicate online gambling tax.
Furthermore, the gambling structure of the UK is relatively complex partly because of the independent jurisdictions that are given the right to regulate online gambling. The UK Gambling Commission (UKGC) is responsible for the sector’s regulation in the UK, but several other regulatory bodies control gambling services in each of the overseas territories of the country – the Gambling Supervision Commission (IoM), the Gibraltar Regulatory Authority, the Jersey Gambling Commission, the Alderney Gambling Control Commission and the Guernsey Gambling Control Commission.
In case a gambling operator wants to offer its services to British customers, it needs to have a licence issued by the UKGC. In addition, companies are also required to pay a 15% point-of-consumption tax. Brexit, however, is expected to bring disruption to this structure. The negative impact may not affect players who prefer using the services of the larger operators but if they are used to placing bets with a gambling company based in the EU, regulations may make their usual betting experience bumpier. According to experts, the worst possible case scenario will see such companies fully cease their operations for British customers.
Gibraltar’s Position on the Gambling Market Remains under Question
The largest British overseas territories that host gambling services are also expected to feel the effect of the country’s exodus from the UK. For example, Gibraltar has traditionally been preferred when it comes to hosting gambling companies because of its favourable taxation laws. Unfortunately, Brexit may put an end to the long-term relationship between gambling operators and Gibraltar, which would have a strong negative effect for the territory, especially considering the fact that the sector is now producing a quarter of the region’s GDP.
On the other hand, Gibraltar has been one of the main points of EU negotiations, especially with Spain. For the time being, it has been officially noted that Gibraltar will keep its presence in the gambling industry, with several contingency arrangements cited in case the talks come to an impasse.
Brexit negotiations have also fuelled speculation that large gambling companies would consider taking steps of moving their operations to Malta. One of the biggest British gambling firms, bet365, has already moved its operation there, saying it was willing to maintain its access to the larger EU market. According to analysts, the uncertainty associated with Brexit could force other operators to make the same move.