Brexit and the Online Gambling Market in the UK
Of all the incredible political events to take place in 2016, the UK’s vote to leave the European Union was perhaps the most surprising. This is an area where the UK bookies got it completely wrong – offering around 1/6 on Britain to remain in Europe ahead of the count.
Questions were raised as to why the bookies had been so wide of the mark but, more importantly, where does this leave the UK and the gambling industry as a whole? There are wide-reaching issues in the wake of that vote that could change the face of betting as we know it.
There are three key areas where Brexit could have an initial impact on the way UK bettors play online. Firstly, there is the issue of regulation as a whole as the British government considers whether European residents should enjoy the same benefits as their UK counterparts.
Secondly, there is the question of gaming tax: A change in tax laws in 2014 saw a number of operators close their doors to UK players. Could Brexit force another update with more prohibitive regulations and more withdrawals from the British market as a result?
The third most pressing issue for those worried about the impact of Brexit comes in the question of Poker Liquidity. Will we see less players from overseas pouring money into tournaments and therefore affecting the reserves of the operators concerned?
The vote could also have some serious implications for operators who have a base in the UK and it may be that we see some familiar names moving abroad. A company such as Bet365 is a good example; set up in the UK in 2000, they still have a head office in Britain but, as they are located within a member country of the EU, they are subject to EU online gaming regulations and that gives them certain privileges.
Losing those benefits could force a move abroad resulting in a loss of jobs and other positives in the Stoke community where Bet365 are a very active member. If they wish to remain as an EU casino, they will simply have to move away from the UK when the withdrawal process is complete.
It’s easy to forget other British territories that are outside of mainland UK but could suffer greatly from the Brexit vote. These include Gibraltar and the Isle of Man who have both enjoyed great benefits after changes in global gambling laws back in 2005.
Once again, these are territories that have been better off under EU membership and the decision to leave could see a number of operators moving away and finding new premises. For Gibraltar, this could include big market players such as PartyPoker and 888Sport who both have homes on the island.
As for the Isle of Man, this is a territory which has more online gambling licenses than any other. A huge operator here is PokerStars and their potential withdrawal could have a significantly detrimental effect. Whether it’s the UK mainland or one of the offshore territories, the potential issues are the same with possible closure of offices leading to a loss of jobs and a knock on downturn in the local economy.
The Bigger Picture
So what effect could Brexit have on the online UK gambling market? Is there any aspect of the withdrawal from the EU that could see less playing time from UK residents and less money spent with all the operators as a result?
Individual bettors in the UK won’t be directly affected but the question from this point of view is whether there will be the same loyalty to a brand that was previously based in Britain but has had to move abroad due to tax implications.
The gambling market across Europe is said to be worth 15 Billion Euros and as such, it’s one of the largest global industries of any kind. Once again, the focus turns to Gibraltar as the vast proportion of that 15 Billion Dollars comes from the Island. The Rock is therefore EU’s Las Vegas.
As a result of the post-Brexit concerns, the gambling industry has become an unlikely reason for the question of sovereignty to come up once again. This historical conundrum has been a difficult problem for hundreds of years and is one that requires much greater analysis but the thorny issue between Spain and Great Britain is on the table once again.
It would, considering all the points raised so far, be in the interests of the EU for Gibraltar to remain part of a member country and Spain therefore fits that bill. However, it’s not a simple issue to resolve and the UK is not set to simply relinquish sovereignty just so the European Union can continue to benefit from Gibraltar’s gambling revenue.
The Island has already seen a shift since Britain made sure it became part of the same tax laws in 2015. Outlay has increased for operators and a more likely outcome, as opposed to a switch in sovereignty, is that sportsbooks and casinos will move their operations to a more cost efficient country such as Malta.
The Isle of Man and, in particular, Gibraltar, are going to be huge focal points for the gambling industry as the implications of Brexit start to become clear. Nothing will happen immediately however; it will be some time before the paperwork is completed and Britain removes itself from the European Union and the physical process of closing down premises and starting again in another country isn’t a practise that will happen overnight.
For those that make their living in these organisations, support staff could find that their jobs are at risk and that could seriously affect the economy as a whole. Issues post Brexit are complex and very wide reaching. Only time will tell if the decision to leave the EU will have a seriously detrimental effect on the British economy but as far as the gambling industry is concerned, uncertain times lie ahead.