After Brexit, many business stakeholders were faced with the uncertainty of its impact on various sectors. Following Britain’s push to leave the EU, stakeholders in the country’s gambling sector have expressed concerns about the consequences that the move will have on the industry.
While businesses in different sectors will undoubtedly feel the long-term effects of Brexit, the gambling space projected effects that will possibly come with the UK’s exit from the EU:
- New taxation policies
- Changes in licensing and regulations
- Impact on the overseas territories
The long-term result will be more visible in comparison to the short-term effects because of the progressive changes in legislative measures. Below, you can find an in-depth analysis of each of the possible impacts – and if anything happened over the last two years.
New Taxation Rates and Policies
Once the UK made the final legislative amendments of Brexit, most foreign gambling companies were faced with the possibility of being imposed with high tax rates. It might see several gambling companies based in the UK move to other territories where the tax rates are more favorable for such businesses. However – this has not happened at all over the last two years.
A worst-case scenario was that companies shifted the tax pressure off their backs onto those of players. It is given in any business that the higher the operation cost, the higher the financial burden on customers is. The jury is still out on this but many companies have indeed moved their primary business offshore.
There is also a possibility of taxes being imposed on winnings made by players. Additionally, the gambling companies would be required by the UK government to pay taxes on account of profits made from players who are UK nationals.
In 2014, the tax rate was fixed at 15%, and Brexit is likely to cause an inclination of this figure. Nonetheless, the impact wouldn’t happen immediately, considering the legal processes involved in the formulation and enactment of licensing policies.
Changes in Licensing and Regulations
For a while now, Britain has been the operations base for many top gambling companies in Europe. Noteworthy, the gambling business in the EU wasn’t subject to a centralized regulating and licensing jurisdiction.
Each member of the EU had its policies regulating the industry, as gambling was banned in some countries. Top gambling houses took advantage of this and based their operations in the UK, considering the convenient business atmosphere in the country.
A significant impact on the gambling market in regards to licensing would be felt if the UK left the EU without concrete agreements. The no-deal exit from the EU means that the UK will leave without any trade agreements made. This also did not occur.
Because of the gambling licensing changes made by the government in the year 2014, several gambling companies quit the UK market and moved their operations to other conducive countries in Europe. As of today, major regulating policies have been introduced, such as those concerning the privacy of players and customer service. According to OnlineCasinoGems, Brexit brought about a new rule, which prevents underaged individuals from gambling.
Impact on the Overseas Territories
To this point, Brexit did NOT have a significantly negative impact on the British domestic gambling market. However, whether trade agreements will be made or not, Brexit will certainly affect other British zones located overseas, an example being Gibraltar.
According to Business Matters Magazine, the gambling industry in overseas territories will face numerous challenges. The gambling space of such areas will certainly be affected as a result of limitations in accessing the EU broad gambling market.
Additionally, new taxation policies are likely to affect the overseas markets. Most of the overseas territories have much depended on the EU market when it comes to the customer base, and, therefore, quitting the EU inevitably means abandoning the market.
Worth mentioning, the Britain economic scope has greatly benefited from the gambling markets in its overseas jurisdictions. For instance, Gibraltar has been a popular hub for betting, being the operation base for over sixty globally-known gambling companies.
As members of the EU, the UK gambling firms enjoyed the benefits of tendering and doing business with other EU nations. Brexit will certainly bring this to an end, as most UK companies won’t have the privilege of taking part in bidding processes.
Inevitably, the gambling markets in the overseas territories will significantly feel the impact of the exit, as some of the companies in the industry have foreigners as part of their workforce. However, it wouldn’t pose a significant problem if the foreign workers lived in the UK territories.
Still, some foreign workers, such as the Spanish employees working in firms based in Gibraltar, have to commute across the border daily. Following Brexit, the free movement of workers across borders is bound to be affected.
It is for this reason that gambling firms in foreign territories may lose a large percentage of their workforce. There is a degree of freedom of movement enjoyed by members of the EU, and, therefore, exiting the EU would mean the withdrawal of the free movement benefits.
Brexit’s Impact – The Bottom Line
Even before Brexit, the UK has always had laws and policies in place regulating the gambling space. Noteworthy, the UK was one of the EU states that had proper regulation processes regarding the gambling sector.
Despite the uncertainty, exiting the EU has the possibility of not imposing a significant impact on the domestic UK gambling industry. However, according to BBC, the gambling sector in the UK faced some uncertainty as a result of Brexit.