March 19, 2018 by

What does Brexit mean to Gibraltar’s Online Casino Activities?

The government of Great Britain, this week, issued a formal assurance to the people of Gibraltar that Gibraltar would continue to enjoy border-free access to its present markets in Britain, at least until 2020, for online gaming, financial services, higher education, and more.  Similar to Malta, Gibraltar earns a large fraction of its governmental revenue from fees it collects for certifying and regulating online casinos and casino online games.

Ongoing Talks

A group called the Joint Ministerial Council (JMC) was set up to hammer out the needed new protocols for post-Brexit UK and Gibraltar matters.  These also include access to university level education for Gibraltarians and matters relating to fishing, financial services, and the environment.  The aspect of the announcement as it relates to online gaming regulation is of paramount importance to Gibraltar.

The announcement was made after a meeting of the JMC that was attended by the highest level representatives of the UK working on Brexit matters and of Gibraltar working on the ramifications of Brexit for the island nation.  The meeting was the culmination of months of work and the announcement demonstrated clearly that Brexit is not and will not a simple matter of closing one office and opening another.

A Future in Doubt

The implications of Brexit on the tiny island nation were completely uncertain at the time of the Brexit vote.  Many speculated that it would send Gibraltar’s online gaming niche—certification and regulation—into turmoil.  The government and people of Gibraltar are both becalmed by the assurance and concerned that 2020 is actually just around the corner.

The assurance was specifically set up to 2020 because every sector—government, business, educational, tourist, and others—must redefine the British relationship with Europe and no one really knows what tat redefinition will look like.  The same goes for the new British relationship with Gibraltar which technically and legally is independent in much of its governance but is also designated a “dependent “area.

UK Committed to Gibraltar

The tone of the assurance clearly was that if by 2020 the new definitions in all the areas affected which would seem to be all of Britain’s relationships with Europe have not been fully and formally threshed out and adopted, the guarantee issued this month to Gibraltar would enjoy a kind of pro forma extension.

Gibraltar Depends on Gaming Regulations

As far as gaming goes, Gibraltar licenses many large online casinos and relies on the European Union’s free market rules for access to British gamers who account for 90% of Gibraltar’s business.  As a dependent territory of Britain, the need for free market access to its predominantly British online gaming base is vital to the governmental viability of Gibraltar.

In Gibraltar there is palpable concern that if the legal situation remains grey for much longer, many of Gibraltar’s licensees would simply move their operation to Malta.  Malta remains in the European Union so the free trade element that it relies on for such a large percentage of its government’s revenues, remains intact and unthreatened.  Gibraltar voted overwhelmingly to stay in the EU.

While the vote in Britain overall was close, fully 94% of Gibraltar’s voters chose to stay in the EU.  Gibraltar depends on the free trade and borderless provisions of the EU for almost all of its economy.  The online gaming regulatory services that Gibraltar provides account for 25% of the island’s entire economy and the gaming industry is the island’s biggest source of employment.

Tiny Country with Large Geopolitical Affect

Gibraltar’s tiny size is a major factor in its present dilemma.  Many of the people who work in Gibraltar’s online casino business actually live across the straits in Spain.  EU rules made it easy for them to cross over every day from Spain to Gibraltar.  The new reality makes that at least a detail in question.

Despite having voted to stay in the EU, primarily for the unique local business concerns, the residents of Gibraltar see themselves as British.  In the aftermath of the Brexit vote, Spain offered a kind of dual citizenship which would have allowed the people of Gibraltar to both leave the EU and stay in it.  This offer was turned down by Gibraltar.

Reactions to the Announcement

Gibraltar’s chief minister, Fabian Picardo, praised the government of Britain in clear and certain terms: “Great care has rightly been taken by the UK and Gibraltar to ensure regulatory standards will be maintained between us in a manner that will be designed to assure customer protection and equivalence on regulatory outcomes going forward.”

While this might sound like standard political boilerplate it is actually a carefully worded and nuanced statement which sees the UK and Gibraltar as partners and places customer assurance at a higher level than Gibraltar’s residents’ assurance.  The reality is that if Gibraltar’s customers—online casinos— are not assured, they will leave Gibraltar’s “regulatory standards” for the same in Malta or elsewhere and the “regulatory outcomes” for Gibraltar would be catastrophic.  As in business generally, the customer’s satisfaction must obtain before the businesses’ owners or employees can reap the benefits of a successful endeavor.

The UK reiterated the importance of Gibraltar to Britain and of the “unwavering commitment to the UK-Gibraltar relationship”.

The leader of the opposition party in Gibraltar, Keith Azopardi, welcomed the announcement and the agreement but made clear that he felt there was widespread over-exaggeration of the agreements announced.  He reiterated that much work yet needs to be done to ensure a smooth transition to the post-Brexit world and to guarantee the future viability of the business sector that is so vital to Gibraltar’s own viability.

Reaction in Britain was also favorable as long-standing friends of Gibraltar expressed their optimism that this is a very positive step in the right direction.  In Gibraltar, the announcement was called a confirmation of promises that had been made months ago to find a way to maintain the strong UK-Gibraltar relationship and to support Gibraltar’s economy.

Future of Gibraltar and Online Casinos

At this juncture, no online casino operators have left Gibraltar.  The extension of the status quo ante until 2020 assures all sides that an agreement will soon be hammered out.  Now it must be hammered out in reality not just in assurances.