Brexit – Positive and Negative

Brexit – Positive and Negative

EEG: Apparently the Brexit had no immediate effect over the gambling market. But it’s better to be safe than sorry, now that we know that things are about to change slowly but surely. What can the online gambling industry do to protect itself and its future?

If Brexit does actually happen and there is a growing argument to suggest that it won’t then the only real issues will be the freedom of movement between the UK and Gibraltar and the EU and this will only be an issue really in Gibraltar if Spain decides to act irresponsibly and mess around with the border. Arguably another long term impact will be on the EU’s view on gambling. It was the UK, helped by an Irish Commissioner, which led the charge for opening up markets and putting an end to State monopolies. Without the UK around the negotiating table there will be more chance for countries who like state gambling monopolies, like France and Germany, to ease up on free markets in gambling. I can’t see us going back to the bad old days of just state monopolies but things could possibly go backwards. What this means is that the online industry needs to get politically active and start lobbying to ensure there is no slippage. As for Spain and Gibraltar, I think a nuclear submarine in Gibraltar harbour will help.

EEG: We already know that the United Kingdom has six jurisdictions that regulate the online gambling sector. What will happen to these?

So there is only one jurisdiction for the UK, the UK!. The Isle of Man, Alderney/Guernsey, Jersey are all separate jurisdictions and not part of the EU. Gibraltar is a separate jurisdiction and is part of the EU due to its inclusion in the Maastricht Treaty of 1992. Nothing will change for those jurisdictions who are not part of the E.U. For those who are, the UK and Gibraltar, as I said before it will be issues to do with the movement of people and the right to work that will be the issue but generally not big issues as there will be visas and work permits. Gibraltar has the most risk of life getting annoying and that is down to how childish the Spanish are and that seems directly linked to how badly their economy is, the worse it is the more parts of the Spanish government like to distract people with an attack on Gibraltar.

EEG: Those who own a license and are located in and outside of the UK can be called lucky, for now. How do you think companies that don’t have both licenses will do in the following period?

Europe, with the obvious exceptions is made up of nations who have point of consumption regulations for online gambling. Gambling was the first example of subsidiarity – which means that national law is considered more important than European law. There has never been any desire to make European wide rules. So at a regulatory level it would seem that not a lot should change. The only issue is if the EU decides to punish the UK for leaving. Arguably it could introduce tariffs or other regulatory (non-gambling) burdens. But for individual companies the issue will be about hiring and locating staff but none of these should prove insurmountable unless things get really bad. For those who don’t have licenses in the or in the EU it won’t be an issue unless you want to target either the UK or the EU as a market.

EEG: We’ve been hearing a lot about Gibraltar, as it has in the most sensitive position after the Brexit, regarding online gambling. There are around 3,000 people directly employed by gambling operators in Gibraltar, while approximately 1,000 jobs indirectly rely upon the industry. What will happen to them?

I think Gibraltar will survive and continue to flourish. The problem is, as I’ve said elsewhere, the border. What the Brexiteers forgot that the UK is a large reach and at its edges are borders that potential political flashpoints, Northern Ireland and Ireland and Gibraltar and Spain. With the EU they are open borders and this makes life bearable for the communities there. Close those borders and things have the potential to get nasty. I can unfortunately see British troops having to go back to both and that is never good.

EEG: Even though the UK is the sixth largest market for gambling in the world, as it spends $3.83 billions annually on games, betting is not seen as a strategic industry for the United Kingdom, unlike, for example financial services, life sciences or the creative industries. Can we anticipate a rise in this industry, specifically in the UK, or are we talking about a free-fall?

This is where I think the biggest impact of Brexit will be, the UK economy. Its already slowing down and who knows where it will stop. Britain is one of the largest economies in the EU so when it leaves it takes with it a lot of money that was spent in the EU. Once its out the UK economy will probably shrink and that means less money being spent on EU goods and services. So it will bring down the EU economy as well. All of which will mean less money for anyone to spend on gambling so the forecast is not good. But who knows, maybe leaving the UK will mean the UK economy booms (about 1% of economists think this) and we have seen a gambling boom. My advice, target new markets!

EEG: Do you think tax-related issues resulting from Brexit could be a problem in the following period for the gambling industry?

As I mentioned before there is the chance that if the EU decided to punish the UK for leaving and also show the remaining members that its not worth leaving, they could impose tariffs on the UK apart from that I fear the biggest risk of a tax increase would be a tax raid on UK licensed online gambling operators to gain revenue as the UK economy weakens

EEG: Which are the states that will most likely be affected, and what states are more likely to feel a little to no change at all?

I’m afraid it really is too early to tell

EEG: Do you think that the EU could actually help this industry, lowering license taxes as a response to the situation caused by Brexit?

All gambling taxes and licence fees are set by national governments – VAT is the only one that the EU has an influence on. I can’t see them changing the ruling that certain countries have to charge it on gambling.

EEG: A good business practice is to plan for the unexpected. If you would have unlimited power over this industry, what would you change about it right now in order to make it safer?

I would make the industry’s senior management have to take an IQ test! I would also make every company have to join a trade association. There are too many operators who don’t realise that the industry can be switched off very quickly if it annoys too many politicians. It has to realise that the governments of Malta, Gibraltar, the Isle of Man and Alderney will bend over backwards for it as an industry as it is responsible for such a large parts of their economies. For the majority of countries in the EU and the UK gambling is an acceptable form of tax revenue and that is it. When that acceptance ends, these countries will change their laws and make the industry suffer. We need to do more and be seen doing more about social responsibility and not just about problem gambling. The gambling industry needs to be seen as good citizens and not just cowboys.

EEG: Is it likely that some companies could go bankrupt, or on the contrary, expect a rise of betting companies?

I think consolidation in the industry and increasing CPA costs will make more companies go bankrupt than Brexit

EEG: And lastly, who could benefit the most out of this situation?

Anyone running a visa company??


cva-tip-211x300 Brexit - Positive and NegativeSteve Donoughue MBA- Biography

Steve Donoughue has been a management consultant specialising in the business strategy and politics of the gambling industry for the last twenty years. Becoming KPMG’s gambling consultant after working at the University of Salford’s Centre for the Study of Gambling, Steve has been a freelance consultant for the majority of his career, working around the world on both online and bricks and mortar projects. He has advised most of the major operators and suppliers, governments, trade associations and regulators over this period. Most recently Steve has advised the government of the Turks & Caicos Islands on overhauling their gambling laws and the Dutch Finance Ministry on Casinos Holland. Steve has spoken at, chaired and designed a multitude of gambling conferences over the years and has published many articles, mostly on UK gambling politics. Steve is the Secretariat of the UK Parliamentary All Party Betting & Gaming Group, a part-time PhD student at the University of Westminster where he is researching the history of the Gambling Act 2005 and in 2011/12, Steve was Special Adviser to the UK Parliament’s Culture, Media & Sport Select Committee inquiry into gambling.

Further details about Steve can be found at his website

Iulian Sasaran

Iulian Sasaran

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