The United Kingdom is one of the most progressive countries in terms of online gambling, with many dubbing it the birthplace of the iGaming industry as a whole. Many online casinos have its headquarters in the UK, including top betting sites like Ladbrokes, Coral, William Hill, Paddy Power and many more. The country prides itself on being one of the most lucrative markets for online gambling in the world, with a majority of the industry’s revenue extracted from the UK. In fact, in 2015, the gambling industry made over £85 billion, with £3.6 billion of that accounting for online gambling from UK players alone. But in the wake of Brexit, will the online gambling industry continue to be as lucrative as it is? In this detailed analysis of the impact of Brexit, we look at how it will affect the gaming industry, specifically online casinos.
When the world awoke to the news that Britain had voted to leave the European Union, many wondered how this decision would influence the global economy. The gaming sector is one of the biggest contributors to the economies of not just the UK, but Gibraltar as well, so it is important to know exactly how this new legislation will affect both markets.
Firstly, let’s talk about the actual legislation. To be fair, the actual legalities for gaming in the EU is a grey area, with different nations experiencing different rules and regulations. The UK operates on a license-based framework, which allows for a lot of freedom in terms of what is legal or not. No official legislation affects all EU members regarding online gaming; therefore, Brexit would not adversely affect UK operators as it is mostly controlled by the UK government. What Brexit could potentially change is the UK and Gibraltar registered gambling companies. Gibraltar-based online gambling platforms will particularly feel the pressure as the British Overseas Territory has a separate jurisdiction and tax system from the UK. Gibraltar sees itself as British territory, even though it is based on the southern tip of Spain. The country’s economy relies heavily on the gambling industry, with a predicted 25% of its overall GDP stemming from gambling. The region employs about 3 400 workers within the online gambling industry, most of whom live in Spain and travel freely to Gibraltar as EU citizens. If Spain closes that border, the jobs of many employees will suffer and its 30 online gambling companies operating out of Gibraltar, including 32Red, Bet365 and William Hill, will be highly affected. These operators may need to relocate to continue its services.
Overall, Brexit will not have a positive effect on the online gambling industry. Not only will it be more difficult for UK-based companies to hire employees outside of its borders, and vice versa, it will also tarnish the country’s influence on the market. Brexit could also negatively impact British betting shops should the country experience an economic crisis. Not only will this increase unemployment, but it will cause consumers to become more frugal and turn their backs on things like gambling in general.
According to the latest data, the UK Gambling Commission revealed that the industry is doing better than ever. But this is likely that, despite the referendum being announced, the country has not yet left the EU. Since the full Brexit is not expected until at least 2019, gambling companies should keep on any changes and plan appropriately. Should the UK fall into a recession after Brexit, the online gambling industry may prove to be one of the more sustainable and resilient sectors, with many experts remaining optimistic about the long-term health of the iGaming industry in the UK beyond Brexit.