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There is a lot of uncertainty around Europe at the moment. Brexit has had an effect on most areas of business, and it looks likely it is going to continue to disrupt the economy for the foreseeable future. The gambling industry is not immune to the issues that Brexit will create, and in some respects is even more complex than other industries due to the legal barriers that present themselves at all levels of gambling jurisdiction. To counter some of the issues Brexit will create, some of the top online casino companies are choosing to hold gambling licenses by both the UK Gambling Commission and a license by the Gibraltar Betting and Gaming Association, so as to position themselves favourably once the ‘messy divorce’ is finalized.
Low in tax, high in business interest
Gibraltar, having particularly low corporate tax rates, has long been a haven for gambling firms looking to take advantage of this particularly lucrative aspect of life on the island. Also, being part of the UK (albeit an overseas British territory), but also having a physical land border with EU member Spain, Gibraltar will continue to straddle the uncomfortable divide between the UK and the EU, until at least 2020, after both sides of the divide strike a deal to allow Gibraltar unfettered access to both markets. Lobbying from many companies who are based in Gibraltar seems to have pushed the hugely important issue in a direction that should benefit companies registered on the UK outpost, at least during the uncertain transition period that has Gibraltarian business owners in a fluster.
Post 2020, nothing as yet is certain about the future of trade tariffs, tax rates, or any other aspect of business, and with Spain now threatening to veto a Brexit deal because of the sovereignty issues Gibraltar has been privy to over the last 300 years, the waters are looking murkier than ever. This seem to be a bit of a sticking point for both parties, with the UK staunchly defending their sovereignty, and Spain pushing for dual-rule, the current access to the UK market will continue as normal for two years, a deal which should at least placate any worried business owners, while a new, modern deal is produced post-brexit. Spain however, remains unconvinced, and is threatening to put a spanner in the works of the final Brexit agreement.
Whether the ‘Gibraltarian dream’ is about to change dramatically is something that will no doubt worry the vast numbers of online casino operators who have put down their roots on the peninsula since 1998, but this new deal to keep the status quo until 2020 will provide some reassurance to those who need it most. Amongst the concern, there is a case for some optimism, as Gibraltar could find itself in a unique and interesting position post-Brexit. With taxes rates, and trade tariffs currently up in the air, there is no reason to think that all changes that will be made after 2020 will be bad for the companies that have made their home on Gibraltar.
Betting on multiple outcomes
For now, being registered in both the UK and Gibraltar is a good insurance policy for online casinos, and one that we expect to see replicated by many of the companies that reside there. There will of course, be plenty of movement post 2020 if the corporate tax rates should rise, and where these companies decide to put down their roots could be a major boon for other countries looking to cash in on the uncertainty surrounding Brexit, but this is obviously something that Gibraltarians would like to avoid, as they have watched their outpost turn into one of the most lucrative business HQs in Europe. Losing these businesses would be a disaster in their eyes, and the UK government has been doing its best to reassure them that they will do everything possible to keep business interests happy on the peninsula.
The status of Gibraltar is obviously at the heart of all decisions that will be made going forward, with the Elcano Royal Institute citing that Gibraltar is now at the precipice of a decision that could bring about change that puts Gibraltar, Spain, and the UK in equally favourable positions. While Spain may be extremely happy to discuss the changes that may be coming, the UK will no doubt continue to dig their heels in as much as possible. Whether they will be able to maintain a strong footing while so much uncertainty is being felt by all parties, is anyone’s guess.