The consequences of the UK’s decision to part ways with the European Union (EU) are still being felt on the territory of Gibraltar.
The £2.35-billion economy of the Rock, which has been a British overseas territory for about 300 years, has been pretty much dependent on the massive flow of frontier workers who travel from Spain on a daily basis, as well as on Spanish tourists and the limitations brought to the free movement of people have seriously shaken the existing status quo on the territory. For the time being, even after the UK finalised its exodus from the EU, border protocol rules are still unstable.
This has caused some turbulence in Gibraltar’s economy, with the local gambling sector also being affected by the significant changes that took place earlier this year.
As a self-governing British overseas territory, most of Gibraltar’s 34,000 residents are British citizens under the 1713 Treaty of Utrecht. However, the Rock has always had deep ties to neighbouring Spain, which is exactly what causes the problem, as it puts the legal basis of the UK’s claims to the territory, especially considering the fact that the majority of Gibraltar’s residents (96%) voted in favour of remaining in the European Union during the Brexit referendum in 2016.
Negotiated Addition of Gibraltar to the Schengen Area Will Help the Local Gambling Sector
The fact that Gibraltar is under the jurisdiction of the UK but is physically much closer to Spain than to the UK has created the unique status of The Rock, which has been having gambling as a core economy sector for years. That is exactly why Brexit, which has finally been completed earlier this year, has caused some turbulence, as some gambling owners, employees and players have shared their concern about the consequences which the UK’s EU exit will have on the local gambling industry.
However, as Casino Guardian reported in December 2020, some Government officials have not been worried about any negative consequences that could be faced by the gambling sector, as they have already accepted the fact that Gibraltar’s business relationships will be different with its counterparts from the EU after Brexit. Of course, reaching a mutually favourable agreement with its Spanish counterparts has been one of the most important issues for the Government of The Rock. It is extremely important for the territory’s economy to maintain the free passage of people through its Spanish border because many gambling industry employees travel through the two countries’ border every day.
In December 2020, it became clear that Gibraltar-based gambling operators had reached contingency agreements under which they would be able to access EU Markets even without a deal.
As mentioned above, for years, Gibraltar has been home to many gambling companies, with the concentration of gambling businesses here being higher than almost anywhere else on a global scale.
Apart from the concerns that Brexit raised, the British overseas territory also encountered some other more problems as it lost part of its popularity as a gambling destination during the coronavirus pandemic and was forced to face the strong competition of online gambling platforms accepting players from the UK. Still, these difficulties were only faced by Gibraltar because of the Covid-19 situation and the social distancing, safety and lockdown measures associated with it.
As Gibraltar has been and still is a popular destination for gambling lovers originating from both the UK and the European Union, regulatory changes have been essential for the British overseas territory. According to both Spanish and British Government officials, the EU and the UK have been negotiating over a possible change in Gibraltar’s status, with the British overseas territory aimed at becoming part of the Schengen area that allows free travel. Although there have been certain difficulties over the talks, experts believe this will happen sooner or later, and residents of the European Union will be allowed to visit Gibraltar just as easy as British residents.
Gambling Operators Make Investments to Adapt to Brexit-Related Changes
When it comes to gambling, Gibraltar has its own executive body that oversees the industry – the Gibraltar Betting and Gambling Association (GBGA) – that works in collaboration with the UK Gambling Commission (UKGC) and the European Betting and Gambling Association (EGBA). Brexit and the complications in which it could result have been the top priority issue on the gambling watchdog’s agenda and is expected to soon be addressed by the regulator.
As explained by the Executive Director of the Gambling Division at the Gibraltarian Government, Andrew Lyman, the direct access that Gibraltar has been given in respect of the UK market has been a matter of critical importance for the British overseas territory’s gambling sector.
In addition, a new, updated Gambling Act is expected to be officially unveiled by the end of 2021. According to industry experts, the new piece of gambling legislation is expected to address and regulate the unique privileges of Gibraltar in terms of its gambling sector.
As mentioned above, many gambling industry giants have businesses in Gibraltar. Considering the positive expectations about the sector, many of them have already established subsidiaries and offices across the European Union as they have been getting ready for some complications that have been expected as a consequence of the UK exodus from the EU. This has been much easier for them rather than moving their entire businesses outside Gibraltar.
Logically, the establishment of new subsidiaries and offices have required considerable investments, but that was a necessary step for gambling operators to guarantee they would be able to target EU customers after Brexit. This move is expected to help gambling company owners adapt to the “new normal”, with land-based casinos definitely here to stay, despite the continued growth of online gambling services during the coronavirus pandemic. They may be forced to evolve but they are still expected to remain profitable enough to thrive.
New Corporation Tax Adopted but Gambling Business Will Be Fine
Most recently, the Gibraltar Government has approved the global tax agreement under which a minimum corporation tax rate is to be implemented. The British overseas territory has now boosted its corporation tax from 10% to 12.5%, with the rate set to be increased to 15% in the years to come.
The interim change in the corporation tax level was announced by Fabian Picardo, the Chief Minister of Gibraltar, during his 2021 budget address. Mr Picardo has shared that the introduction of the abovementioned interim tax rate would offset the tax burden on online gambling.
Overall, the agreement between the UK and Spain is expected to allow Gibraltar to keep its position as a leading gambling destination for gamblers of the UK and the EU.
For the time being, the inclusion of the British overseas territory in the Schengen area has been agreed in a temporary deal but, according to experts, there is no reason to believe that the deal will not become a permanent one after the initial agreement’s term is brought to an end. Also, analysts have shared that pretty much nothing is going to change for regular players who prefer Gibraltar as a gambling destination.
Daniel Williams has started his writing career as a freelance author at a local paper media. After working there for a couple of years and writing on various topics, he found his interest for the gambling industry.