Brexit And The Implications On UK And European Gambling Industry
Brexit is upon us and regardless if it is going to be an agreement or not, is going to change the British business landscape significantly. Gambling is a large industry in the UK, and this is why many people have been asking questions both in Britain and in Europe on what the impact will be.
Unlike many other industries, gambling is not regulated at the central level, and every country has their own laws in regards. So from this point of view punters will not see much different when betting post-Brexit. There might be some non-UK company that could pull out of the markets though depending on how the Brexit deal (or no-deal) will look like eventually.
UK Bookmakers Choice
UK bookmakers will need to decide where to base their operations. Lots have moved from Gibraltar (UK) to EU hubs Malta, and this might have higher costs for them post-Brexit. Those costs are likely to be passed on to the punters in the form of higher house margins.
In this article, we will look at the current situation and try to speculate what is likely to happen for betting companies after the UK has left the EU. There will be pros and cons for the UK gambling industry that will have to be considered and lots will depend on the final agreement with the European Union and if there will be an agreement in the first place.
UK Gambling Industry Health
The UK Gambling industry is going into Brexit in a stable position as is worth more than £15 billion every year. UK companies are also leading abroad, and it is not likely that the EU will shut the doors to them. So gambling is a critical industry and tax contributor to the UK economy.
The 2014 Gambling Act has introduced the Point of Consumption tax which means companies will still have to pay tax in the UK regardless of where they are located. This is not going to change after Brexit.
Gambling Law in the UK
The UK is heavily regulated in regards to Gambling so leaving the EU will not cause problems as current laws will continue to apply. With the 2014 Gambling Act, the UK also covered themselves in regards to those operators that have moved abroad but that are still interested in operating in the UK.
Every betting company that wants to operate in Britain has to own a UK Gambling License and to do so has to comply with the regulations set by the Gambling Commission. Currently, every gambling operator in the UK has to pay a tax of 15% on any business made on UK customers.
EU Gambling Regulation
The most important thing to note when talking about EU Gambling Regulation is that there isn’t a single law for all European countries. Every country has his own rules, and this is a problem for betting companies. So not a lot will change in Europe when Britain leaves the European Union as far as Gambling laws are concerned. The only difference could be that some companies might have to set up offices in Europe or in the UK to continue to offer their services without restrictions. This might mean different taxation and reduced access to some workers leaving in other countries, but realistically for punters, not much will change especially at the beginning.
The Single Market
The Single Market is one of the main advantages of being part of the European Union. Gambling companies have benefitted from this as most of them have relocated in other parts of the EU where taxes are lower and so are costs of employment.
Lots of bookmakers that are in the UK or Gibraltar can offer their services in the EU without having to pay additional tariffs and same has been for EU companies operating in the UK.
After Brexit, the single market will be restricted or not available at all in the UK, and this will mean that both local and European betting companies will have to make a decision: they will either have to have a presence both in the UK and EU or leave one area. By splitting their businesses into UK and EU entities, they will be able to avoid additional costs.
Difficult To Know
In reality though regardless of how Brexit will turn out to be it is difficult that will stop dealing in the UK or Europe just because the industry is very profitable. Additional costs are likely to be passed over to customers which might result in poorer odds and offers.
Employment is also an issue for the gambling industry with Brexit and could increase operators costs. Workers that for example are leaving in Spain and work in Gibraltar or the other way around might not be able to do so anymore.
World Trade Organisation Regulations
If the UK leaves the EU without a deal, the country will fall back on WTO regulations. British-based companies will be excluded from taking part in bidding for anything it is happening in the UK. This might have problems for UK betting companies and also cause uncertainty in regards to those EU companies willing to continue to operate in Britain.
Gibraltar, The Isle Of Man And Alderney
All those three crown dependencies have invested significantly in the betting industry especially online. Gibraltar is probably the most challenging case as it is so close to Spain yet 98% of the population want to remain under the UK laws. More than 60% of the staff that work in the gambling industry leaves in Spain and commute to Gibraltar every day. Post-Brexit Spain might make it very difficult for people to commute and Gibraltar as a gambling hub might become at risk.
It is likely most of the companies will have to relocate away from the crown dependencies to get access to the EU market even if they will lose some benefits in regards to tax and cost of employment. On the other hand, tough new European companies might decide to move n order to have access to the UK gambling market.
Lots of UK companies might open (if they don’t have already) a hub in Malta so to have access to the European Market. In fact, the island will do really well after Brexit as it will become the central gambling hub in Europe since Gibraltar will be marked as a non-EU country. They will have some losses however as some companies will also need to move to establish some presence in the UK, so might move to Gibraltar.
Pound And Euro Value
The main impact for UK gambling companies with Brexit will be the value of the pound. If customers in the UK will have significantly less disposable income due to the pound losing value, this might have a big effect on the gambling industry.
Having said that during poor economic times the gambling industry has done well as people see it as a way to come out from financial troubles. It is difficult to say how it will pan out but surely Brexit as a whole will have a significant impact on betting companies in the UK and abroad.
Pros & Cons For UK Gambling
It is challenging to work out what will be the outcome for UK Gambling of Brexit. UK punters betting in the UK shouldn’t see much difference at all as laws are well defined, and the industry is solid enough with online that has been growing steadily every year.
A negative will be the limitation on staff that lots of companies might suffer due to the end of free movement of people. Leaving the EU will permit to the UK to make new agreements with other countries in the world and this is surely a positive aspect to consider.
Pros & Cons For EU Gambling
All the major UK bookmakers have officed in the EU and will continue to offer their services even though they might be subject to additional taxation if they want to bring those profits back in Britain.
For this reason, EU punters will not see much of a difference after Brexit. Maybe only a bit less value due to higher costs of running those companies.
UK Citizens Betting Abroad Post-Brexit
Similarly, there shouldn’t be significant changes as at the moment every country has their own regulation and ultimately it will depend if the betting site you have an account with is allowed to operate in that country or not.
If you want to know more read our betting from abroad guide.
Will Betting Companies Move Out Of The UK?
Whatever will happen there will be betting companies operating in the UK that will offer betting services to British people. We don’t know how many will stay in the UK. There will be UK gambling companies that will just open more offices in the EU to continue to operate there but this won’t mean they will move out of the UK.
Brexit Best & Worst Case
In the best scenario, Brexit will not have a huge impact on the betting industry that will continue to rise. After all the sporting events are the same, the casino games also and people will not suddenly decide to stop betting. The main issues might be procedural, but that will be solved over some time.
The worst case scenario is that the betting industry will see profits drop sharply with companies going into meltdown. If the UK leaves the EU without a deal, everything might happen under WTO rules. The main impact will be felt in Gibraltar where gambling is a quarter of the country’s GDP. If this happens odds might become less appealing and offers a lot less frequent.