Brexit is looming on the horizon and there is no doubt that it is going to change the gambling landscape in Britain and across Europe. UK gaming companies make more money than any other country in the world. Therefore it stands to reason that many people are worried about the effects Brexit could have on punters at home and abroad.
From questions surrounding the Irish border, through to permutations as to what will happen to deals between various Air Traffic Control centres, there are a huge number of issues swirling around regarding what will happen when the United Kingdom eventually leaves the European Union.
The reality is, unlike many EU industries, gambling is not centrally regulated; instead each country has its own laws and licensing arrangements. Consequently, in large part, UK bettors will not notice much difference the day the nation breaks from the EU. However, if you gamble with a non-UK company it is possible that they could pull out of the market.
There will be a substantial effect on bookmakers, who now need to make decisions about where they base their online operations. Many of them are likely to move from UK jurisdictions such as Gibraltar to EU gambling hubs like Malta and the costs of this could have a knock on effect for punters. Tax and trade arrangements could also mean higher costs for betting websites that may end up costing gamblers.
The UK gambling industry is entering Brexit in an incredibly healthy position. Worth over £15 billion annually, there are few markets that can boast such a wealth of resources. Therefore, British betting companies are in a good position to cope with Brexit. British companies also lead the markets abroad: the UK has the richest and biggest gambling operators and therefore it is unlikely the EU will turn their back on them.
Gambling is a massive industry in the UK. In 2017, the gross gambling yield reached £12.6 billion according to the UK Gambling Commission. The income from remote betting, which includes online casinos, poker, etc, went from just over £800 million in 2009 to more than £4 billion by 2017. In other words, gambling is one of the most important industries to the UK economy.
In terms of the current relationship between the EU and the UK, it has certainly been impacted by the political turmoil which has ensued in the aftermath of the shock referendum result. However, the EU does not always take a particularly hands on approach to gambling. They tend to avoid getting directly involved in tax issues. The UK has always been free to move its taxes up and down.
The UK is the most heavily regulated gambling market in Europe and this means leaving the EU should not cause a major headache in terms of regulation at home, as the laws and procedures already in place will continue to apply. The gambling act of 2014 also means that the UK is covered for operators based abroad that still want to operate here.
An important thing to note in relation to gambling in the EU, is that it has a huge slice of the market for gambling companies to try to get a piece of, with the European market accounting for almost 50% of the entire revenue for online gambling in the world.
The problem that betting companies have got is that each member state of the EU is responsible for its own gambling legislation. Indeed, on the 7th December 2017 the European Commission closed its procedures on infringement and complaint treatments when it came to gambling, meaning that it indicated that it’s not an area of priority. Instead of some sort of over-riding policy, there are different laws and rules for each country, state and even city within the European Union.
Thus, in the short-term, not a lot is expected to change post-Brexit in terms of gambling within the EU. UK betting companies that have relevant licenses or authority in EU countries will continue to operate in those markets. EU companies with UK licences will also continue to operate.
But in terms of access, many companies may need to set up offices in the EU - or EU companies set up in the UK - in order to offer their services unrestricted. They may be subject to increased tariffs on profits and have reduced access to foreign workers. However, from a customer perspective not a lot will change immediately.
The Single Market is a way of referencing the entirety of the European Union as one area, as though it has no border or any other sort of obstacle to the way that goods and services move. The idea behind the Single Market is that improves efficiency and raises the quality of goods.
The Single Market is at the crux of everything good about the European Union, enhancing economic growth and making life easier for companies and people living within the EU. Services make up 70% of the economic activity within the EU as well as employment, with companies taking advantage of that in order to offer what they have to other countries around the bloc.
Gambling companies have taken advantage of that in numerous ways, including basing themselves in different parts of the EU that have their own tax rules on profits and cheaper employment. One of the most obvious examples of this is with online casinos that have ‘live’ variations on their games, basing themselves in parts of Europe, such as Bulgaria or Romania, where wages are below average. This enables them to employ people for less money than would otherwise be the case.
Many bookmakers based in the UK - and its jurisdictions such as Gibraltar - have been able to utilise the single market to sell their product in EU countries without any additional tariffs.
Following Brexit it is highly likely the single market will no longer be available or, at least, restricted in the UK; therefore additional restrictions may be placed on EU companies offering gambling services to the UK. This means many companies are now making the decision to split their services, opening new offices in the UK and the EU, to avoid additional tariffs or regulation, in effect splitting their businesses into separate UK and EU entities.
Other companies will simply decide to pull out of markets, therefore post-Brexit some EU-based online bookmakers will no longer accept UK players, and vice versa.
In reality, however, baring a very bad no deal scenario, few operators will actually decide to pull out of the UK or the EU, even if additional tariffs apply, simply because the industry is so profitable. A more realistic scenario is that these additional costs will be passed on to the customers, resulting in less bonuses and promotions.
Employment is another issue for the gambling industry, with many companies currently taking advantage of free movement to allow employees to move between UK offices in gaming hubs such as Gibraltar and EU hubs like Malta. This could become more problematic after Brexit, which again could increase operator costs.
Malta is already a country that has strong ties to the iGaming industry and, in general, should do very well out of Brexit as it will become the single biggest gambling hub within the EU once Gibraltar is classed as a non-EU territory.
Following the EU referendum, Bet365 put plans into action to begin a relocation into Malta. Yet this should not affect existing business too much, with both UK and Gibraltar operations being retained. In reality, Bet365 is a massive betting company and for them it makes sense to split their business into relevant regulatory markets.
In all likelihood, an exit from the EU should not affect the gambling industry too much. It is one of the most robust industries in the British economy and the laws and rules surrounding betting in the UK are such that it seems unlikely that any substantial hit will be taken by companies at the forefront of the industry. The issues that are likely to cause problems are procedural and, therefore, easier to figure out in the long-run.
The other thing that allows UK companies to feel somewhat confident about the impact of a departure from the EU, is the fact that online gambling has seen an increase in recent years.
Conversely, a negative consequence will be that companies are likely going to have to make do with selecting from a narrower pool of staff as there will be less people entitled to work in the United Kingdom moving forward.
It is worth noting that leaving the EU will allow the UK to make new trading agreements with other nations across the globe, which could provide exclusive access to foreign gambling markets for UK companies.
There is perhaps more to be apprehensive about for companies that are located exclusively in the EU. On one side of the coin, the potential absence of major British gambling companies may see their position in the market climb, yet, the reality remains that UK companies have such a large share of the market due to their successful history and this is unlikely to change anytime soon. All of the UK's biggest bookies have offices in the EU and will be able to continue offering services; although they may be forced to pay additional tariffs on profits returning to the UK.
EU gamblers betting with UK based companies, will still be protected by their own national laws on gambling and, in general, by the EU justice system. If a UK company wants to operate in an EU market post-Brexit it will still need to comply with all relevant rules and procedures.
A best case scenario would see Brexit having little significance on the state of play for the gambling industry. The reality tends to suggest that it does not benefit the European Union to make life difficult for companies operating on their shores and seeking to work with the UK. It is entirely possible that they will make a number of exceptions, which would allow gambling companies to keep working with British consumers from bases on mainland Europe.
One suspects that Brexit should not have an overly negative impact on betting companies. Sporting events will still be the same; casino games will continue to operate and people will still want to place bets. As mentioned earlier, the biggest issues are likely to be procedural and that would mean that working through them is just a matter of negotiation. Only time will tell the overall impact Brexit has on the gambling industry - but, for now, the outlook should remain optimistic.