How Would a Hard Brexit Affect UK Gambling Operators?

Monday, January 28th, 2019 | Written by April Bergman
How Would a Hard Brexit Affect UK Gambling Operators?

Now that the likelihood of a “hard” Brexit appears to much higher, UK-based gaming operators and bettors are wondering how a hard Brexit would affect the UK’s gambling industry. Gaming operators might face several consequences from a hard Brexit, though industry experts say the upheaval would be limited due to the UK’s strict regulations.

Companies that base themselves in overseas crown territotories and tax sanctuaries like Gibraltar and the Isle of Man might be forced to relocated — especially Gibraltar’s 30-odd gaming companies.

The 2019 Grand National also might be adversely affected, due to new import restrictions on thoroughbreds. Even jockeys who normally would take place in the Grand National might not be able to attend.

Also, the remaining UK-based online gaming companies might be forced to move out of the United Kingdom, due to an increased tax rate. Otherwise, the impact might not be that great. Let’s take a look at several scenarios.

What is a Hard Brexit?

Brexit, of course, is the British exit from the European Union. No matter what happens, the United Kingdom is leaving the EU on March 29, 2018. For the past two and a half years, Theresa May’s Tory government has been negotiating the UK’s exit.

For most of that time, it was assumed that the UK and EU would agree on an exit strategy and the House of Commons would approve such a deal. If that happened, it would be called a soft Brexit, because it would be done in an orderly fashion with negotiated rules in place.

Twice in the past two months, Theresa May has taken Brexit deals to parliament in hopes of approving the deal. Once, the British prime minister realized she did not have the votes in the House of Commons and chose to delay the vote for six weeks. On the second try, Theresa May’s Brexit deal lost in a historical landslide.

Brexit Possibilities

That increased the possibility of a hard Brexit — the UK leaving the EU without any kind of a deal. The other options do not seem likely. May could renegotiate a Brexit deal, but the EU would have to make concessions it’s not likely to make.

A second Brexit referendum could be called, but most political analysts would say a second national vote would split the country along partisan lines and usher in political chaos. A general election might be called, but Tories of the “Leave” and “Remain” camps do not want to play dice that a Labour victory would happen. The EU and May government might agree to extend the deadline, but that would only delay the inevitable.

At this point, a hard Brexit seems like the likeliest option. So what happens to British gaming interests if that happens?

Gibraltar and Isle of Man

UK gambling regulators in Gibraltar and the Isle of Man might face difficulties. Gibraltar in particular faces an uncertain future. Gibraltar has long profited from the UK’s existence inside the EU, so thirty of the top online gambling brands in the world headquarter there.

Gibraltar is a tiny enclave with only 32,000 residents, though. 60% of the online gambling operators’ workforce commute from Spain over the open border. If a hard Brexit happens, those Spanish workers will not be able to commute the way they once did.

That means Gibraltar’s gaming companies, such as Mansion.com, Bet365, and 888 might have to find new locations inside the EU to base their headquarters. A hard Brexit would be a disaster for Gibraltar’s online gambling industry.

The Isle of Man would be less affected. Its workers are all on the island and would not have to cross international boundaries. Gaming taxes might be higher, though, so the Manx gaming operators would not escape unaffected.

2019 Grand National

The Grand National this year might not get out so lucky. Under the current system, jockeys and horses from the United Kingdom, the Republic of Ireland, and France can move freely across the borders. Under a hard Brexit, riders and race horses from Ireland and France might not be able to enter the Grand National.

A system might eventually be devised. The problem is the Grand National takes place a week after the Brexit deadline. That might not be enough time for racing assets to handle the paperwork and oversight needed to move over a closed border.

The 2019 Grand National therefore could be affected to a high degree. Bettors might see the odds posted late or disrupted entirely. If a hard Brexit happens, expect a certain amount of chaos at the Grand National this year.

Online vs. Land-Based Casino Operators

All in all, land-based casinos and sportsbooks are not likely to be affected that greatly by a hard Brexit. There might be fewer continental Europeans visit London casinos, but most land-based UK gaming companies are far more concerned about the limits on FOBT bets than Brexit at this point.

Online casinos, sportsbooks, sports betting exchanges, and poker sites still based in the United Kingdom could face difficulties, but not as great as one might image. The UK Gambling Commission has one of the most heavily regulated gaming industries in the world, often more regulated and rigid than EU gaming standards.

UK Online Gambling Regulations

For that reason, UK regulations supersede EU regulations. UK-based operators will not have to comply with more stringent standards, so they should be alright without too many changes. As for operating inside the European Union, UK companies likely will not have to adapt too much. Ironically, it is the national character of the EU’s gaming laws which make that so.

To a high degree, members states of the EU follow their own national policies when it comes to online gambling laws. While theoretically the EU assures international standards, countries like Germany, Switzerland, the Netherlands, and Belgium create their own barriers and restrictions. Even those which open themselves to international gaming operators — like Italy, Spain, Sweden, and Norway — have much different regulations from one nation to the next.

Compliance for UK gaming companies should be no more complicated than it has been — and thus nothing new. While tax rates might be higher due to the raising of international boundaries between the UK and the continent, the higher taxes might be negligible compared to the FOBT and Point-of-Consumption Tax increase.

Those are the main effects British gamblers and gaming operators can expect. The Grand National could have a chaotic year, while Gibraltar might be left in the cold. As always, when the giants make war, the little guys get trampled underfoot.