Little more than a year go, the UK decided to leave the EU. Even back then, it was evident that businesses in UK will have a hard time dealing with the Brexit outcome. The gaming industry is no exception. After the vote to leave, many businesses decided to relocate in order to avoid potential losses that might arise with Brexit.
We saw some of the short-term effects of Brexit on most businesses in the UK, and they were not as bad as experts had predicted. Nevertheless, concerns that the long-term effects might be devastating still linger. Below, we will discuss the potential effect Brexit will leave on a particularly profitable industry – the gaming industry.
The UK gaming industry hit £13.8bln in revenues between April 2016 and March 2017, and continued to rise, hitting £14bln in the dusk of August the same year. Naturally, best UK casinos will aim to keep the upward trend in the development of their flourishing gaming industry. But is Brexit going to allow it?
The answer: probably yes. According to some estimations, legislators in Brussels just leave the UK gambling industry be. Clive Hawkswood, CEO of the Remote Gambling Association (RGA), shares the same opinion. He also shared his opinion that the EU has never really dealt with the UK gambling industry, nor has tried to interfere with the state’s approaches to the laws that regulate it. He commented that EU does not interfere with tax issues unless something really fishy is happening, adding that the state has always been free to impose whatever taxes it liked.
It is common knowledge that the EU’s legal framework on part of gambling is quite loose, i.e., states are free to act in whatever way they find suitable. The UK, for example, has e license-based framework, which allows for flexibility and freedom of action. As there is no EU-wide regulation on part of gambling, Brexit is unlikely to change the face of the gambling business in the UK dramatically.
The trade association will continue its partnership with Brussels and remain a member of the trade body despite Brexit, said Tracy Damestani, CEO of the National Casino Forum. According to Damestani, however, it is not the gambling industry that will have to weather the effects of Brexit, but the tourism industry. She maintained that the tourism and entertainment industries must make sure the UK remains open for tourists, as they depend largely on foreign guests.
In this respect, according to estimations the UK tourism industry could become almost entirely dependent on Chinese nationals, 120 million of which travelled across the globe in 2015. Further, if Donald Trump succeeds in improving the economic relationship between US and China, the UK tourism industry will certainly benefit as well.
The immediate impact of Brexit proved to be positive for the tourism industry as the weak pound boosted Chinese tourism. The long-term effect, however, is not so optimistic. Statistics show that the UK has issued substantially less tourists visas than the 26 Schengen countries, which has resulted in billions of pounds in lost revenues. This trend is likely to continue with Brexit becoming a fact.
NCF has expressed concerns that the vote to leave may affect EU citizens working in the UK gambling industry. Hawkswood, however, says that in spite of Brexit, most foreign citizens working in the gaming industry have no trouble travelling abroad.
The only real thread for the UK gaming business, experts say, is the unavoidable major economic shock the country will have to weather, but this, too, can work out well in the end.
Gambling operators in Gibraltar, however, may have a different fate after Brexit. According to some experts, operators who have outsourced their businesses may have to pay 10 percent of the gross profits in addition to other taxes.
Currently, the UK votes on membership of European Economic Area (EEA). The EEA is an internal market between EU members and Norway, Iceland, and Liechtenstein. It was created to allow participation of non-EU states in a single market, but excludes some industries. Should the UK vote not to join, it will become much harder for UK gambling operators to assert their position on the global market. Moreover, vote against EEA could impact taxation rights as well as workers’ rights. While some believe that the EEA will turn the UK into a vassal state, the case is not such, as the EEA is not in any way related to EU laws. In fact, it simply is a single market organisation created to promote trade between European states.
Whatever the outcome of the EEA membership vote and however disastrous (or advantageous) Brexit turns out to be, it is unlikely that the gambling industry will be particularly affected. Nevertheless, it is up to operators to keep up pace with politics decisions and shape the UK gambling industry accordingly.