Brexit will affect every industry within the UK, including iGaming.
With the clock ticking and still no clear direction on whether the UK is leaving the EU with a deal or not, speculation is flying in every industry that is currently operating within British territory. There’s still so much uncertainty on how businesses and consumers will be affected by the upcoming Brexit on 29th March, but one thing is clear and that is that no industry will be safe from the future repercussions of this monumental event.
Whilst it’s not necessarily making the headlines or at the top of the political agenda, at some point we will have to discuss how Britain leaving the EU will affect the online gambling industry in the UK. iGaming, as it’s more formally known, is a multi-billion dollar global industry, and UK platforms and brands play a strong role in its continuing success. So, what are the hidden implications of Brexit on the iGaming industry in the UK?
Whether we leave with a hard Brexit or no deal at all, the effects will be far-reaching: regulation, online gaming liquidity, taxes and business operations could all potentially be disrupted. Platforms such as Full Tilt, which operate shared liquidity between regulated territories, run regular tournaments and promotions that players from across these territories can enter. This is an obvious area of online poker that could be significantly affected by Brexit, particularly for those start-up platforms and new brands that can only operate within the UK at present.
There are currently six jurisdictions regulating online gaming in the UK: the UK Gambling Commission (UKGC), Gibraltar Regulatory Authority, Gambling Supervision Commission, Jersey Gambling Commission, Guernsey Gambling Control Commission and the Gibraltar Regulatory Authority. With companies operating within each of these jurisdictions, it’s clear that the British iGaming landscape from 30th March 2019 onward will be very different.
Impact on companies Due to the high taxation set by the UKGC (15% point of consumption tax), many of the online gaming world’s leading companies have chosen to make other territories their base of operation. Those based in the Isle of Man, such as PokerStars, or Gibraltar, such as 888, will more than likely be able to retain their current corporate structures, however they may also have to consider relocation to a jurisdiction with free access to the EU market, such as Malta.
Brexit will be much more prohibitive on those new companies or smaller brands starting up within the UK, who won’t be able to tap into that lucrative EU market. EU online gaming regulations state that new licence applicants must either be a member of the EU or the European Economic Area (EEA). Anything that takes us out of the latter will mean these companies will have to decide between staying and paying the higher tax rate, or relocating into the EU, cutting back on jobs and vital contribution to the British GDP.
British Influence will diminish
Despite its almost punitive tax rate in comparison with other jurisdictions, the UKGC is widely known as being the ‘voice of common sense’ in the EU Expert Group and the EU Commission. It’s a strong supporter of industry-wide regulation that allows international gaming liquidity (whereby games such as poker unite players from a number of different territories into a single pool), viewing segregated territorial markets as ‘self-defeating’. The UKGC also argues strongly for tax levels that encourage customers to play in regulated casinos and platforms, instead of cheaper, unregulated sites.
Ultimately, the UKGC’s philosophy is based on principles and fairness, expecting customers to be treated fairly without needing to specifically define what that is. Power is granted to courts to make decisions regarding fairness or unfairness on a case by case basis. The European model, on the other hand, sets specific rules which deems a company to be compliant if it follows such rules, even if the principles behind the regulation aren’t followed. By exiting the EU, the UKGC’s powerful influence on European online casino and poker regulation will diminish, and eventually disappear completely.
A devastated industry
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Caption: British gaming contributes almost £2 billion a year to the GDP
Brexit isn’t just going to affect the future of online poker, casino gaming and sports betting in the UK, it’s currently one of the biggest issues that the UK gaming industry as a whole has to face. Digital entertainment lawyer, Jas Purewal stated in a Guardian interview last December that the industry would be “harmed by a hard Brexit…and devastated by a no-deal”, particularly as this industry contributes just under £2 billion every year to the economy. The end of free movement and workers’ rights being altered, or even curtailed in some cases, affects both employees and businesses: international companies will be less inclined to open branches in a hard Brexit or no deal Britain, and the industry’s talent pool is also likely to shrink significantly. Those home-grown companies, like Games Workshop and Playdemic Ltd, will also have some big decisions to make about whether to stay in a diminishing economy, or make the move to establish their operations in other EU member states.