Gibraltar has a booming economy that has managed to keep its economic growth in double figures, even throughout the economic crisis. The presence of online gaming companies played no small part in this. This small 6.7 square kilometre peninsula in the south of Spain plays host to 33 gaming companies, which make up 60% of all global internet sites in the industry. The sector currently employs over 3,200 people, a number which is continually rising, and generates an estimated 30 billion euros a year. This figure represents 25% of the outcrop’s GDP.
The Rock was the first place to open its doors to online gaming, and the bet certainly paid off. After Victor Chandler upped sticks from London, other companies followed suit, tempted by the advantages that Gibraltar has to offer. It boasts good communication links from within a strong financial environment, corporate tax is at only 10%, and profits from gaming carry just a 1% charge. They maintain their standards by only considering licensing blue chip companies with good financial standing and realistic business plans. It really is a haven for the gaming industry.
At least it was until the United Kingdom threw two very large spanners into the works. The first was a new consumption tax introduced 2014. It required all operators that provide services to UK residents to pay a 15% tax on the GGR (Gross Gaming Revenue). This prompted the Gibraltar Betting and Gaming Association (GBGA) to initiate a case based on the argument that they are a territory of the UK, not an integral part, and that their services were on loan, the same as to any other EU member state. This was overruled in January 2017 with Maciej Szpunar arguing that the UK and Gibraltar are part and parcel of the same package.
This ruling is particularly devastating for a Gibraltar that is now desperate to procure treaties and deals with other EU member states post-Brexit. There’s a simple reason that 96% of voters were Remainers: their economy does not work without access to the single market. It had long been speculated that Gibraltar would be subject to the same treatment as the rest of the UK, despite its geographical position and extremely strong employment links with neighbouring Spain. The ruling was originally limited to the world of gaming, but it’s likely to be applied to nearly all aspects of the economy.
The government of Gibraltar now needs to scramble to reach deals with the UK on several aspects to try to stop the mass exodus of companies that already threatens the peninsula’s economic stability. Ideally, the UK and Gibraltar would keep their access to the single market, allowing Gibraltar to continue enjoying its status as an online gaming hub. However, the Tory government has made their stance on immigration clear, and no freedom of movement means no single market access. This causes a myriad of companies to announce their plans to head to greener, European pastures.
iGaming companies themselves will surely need to start looking for solutions to avoid losing their licences in EU member states due to the recent updates to regulations of some member states. A quick-fix would be to take the lead from companies already registered or based in Malta, and go about obtaining a licence from the Malta Gaming Authority. Moving the company would avoid the Brexit fallout, but Gibraltar will likely be left languishing behind. A sad turn of events for The Rock.
Author Bio: Jaismin Paul