Last week’s surprising decision of UK voters to leave the European Union can be easily followed by a question: How is Brexit affecting gambling market? The most important and interesting issue here might be the future of Gibraltar, one of the most popular gambling jurisdictions. The area has become popular over the last decade but it has a status of both an overseas territory of the UK and a special economic area of the EU. This fact makes Gibraltar’s future very unclear.
Brexit affecting gambling market in Gibraltar
Gibraltar’s GDP’s huge share is created by the cottage-style online gambling industry. Gibraltar is officially a British Overseas Territory, but Spain also claims sovereignty. The two countries enabled Gibraltar’s entrance to the EU and allowed the area to become a special economic territory. Now, Gibraltar creates a tax-free corporate heaven for companies offering online gambling. Many popular European companies, mostly British ones, relocated there during the last decade. It is not known yet if Gibraltar will be allowed to remain a part of the EU as a special economic area after UK’s leave. The future of Gibraltar remains unclear and it was not revealed yet if the UK protectorate will be allowed to continue providing the European market with online gambling services once the UK pulls itself out.
There is still a chance that Gibraltar will be returned to Spain, but it will not help European gambling companies as Spain has a totally different gambling regulations. Yet, The territory’s chief minister said that Gibraltar is not willing to become sovereign to Spain.
Following Brexit such companies as William Hill, bet365, BetVictor, 888 and Ladbrokes who are based in Gibraltar must now face with the fact that they are having an online gambling license that gives them no legal right to provide their services to the EU single market with the Brexit affecting gambling market. Gibraltar’s economy benefits from the presence of these popular operators and will in turn have to face the fact that these operators might move to other licensing jurisdictions. Interestingly, only 4.1% of Gibraltar voters wanted the UK to leave the EU.
Possible consequences and solutuions
According to experts, the most likely relocation destination will be Malta. The island is already a member of EU, is part of the “Schengen Area” which allows free trade with other EU members and has already become a popular online-gambling industry. The small island to the south of Italy is thus the likeliest “next Gibraltar”. The future of Gibraltar brands will be clear in 2019 but we can expect that some of Gibraltar-based companies will take their stakes and move to more open gambling destinations.
Gibraltar’s chief minister Fabian Picardo told the BBC that he and First Minister of Scotland were looking for options to stay in the EU in spite of the UK’s decision to leave.
Gibraltar’s chief minister Fabian Picardo:There is precedent for such a situation, namely, Greenland voted it wanted out of the EU in 1985 even though remaining part of the Danish Realm became the member of the EU.
Michel Kopec, senior business manager for Better Collective:
Brexit affecting gambling market – Isle of Man
There might also be some troubles with the Brexit affecting gambling market in Isle of Man and Alderney, two other special-status territories of the UK. There was a rumour that Isle of Man based PokerStars could have some problems following the Brexit but they were not confirmed yet. PokerStars holds some other licenses in other global jurisdictions so even if some problems arise, the gambling giant will be able to find an easy solution: to relocate elsewhere.
Isle of Man is a well known online gambling licensing jurisdiction. Such big names as Paddy Power are among its locally based operators. IoM’s residents were not allowed to vote in the referendum as they have never been a part of the EU. Yet, they cooperate with the EU single market by virtue of Protocol 3 of the UK/EU Act of Accession. And here is another issue of Brexit affecting gambling market: Protocol 3 no longer applies after the UK’s decision to leave.
The terms of UK’s negotiated exit will be negotiated, but Gibraltar and IoM would probably not get many seats at the negotiation table so Brexit affecting gambling market’s results for the two territories remain unclear.