The EU referendum has come and gone, and while there's a lot of details to sort out in the near future, Gibraltar is already feeling the hit of the decision. Gibraltar, a UK territory which became the host of one of the largest online gambling industries in the world due to its low corporation tax, is set to lose its EU membership.
As a side effect, Gibraltar will also be losing their EU gambling licences, making it much more complicated for casinos situated there to have gambling agreements with large gambling markets such as Germany. Because of this, operators are becoming nervous and turning to alternative EU states like Malta, to continue operating within the Euro zone.
Gibraltar vs Malta: The Fight For Casino Dominance
With no solid evidence and only predictions in the face of the recent upheaval, critics, operators and national gambling associations are all trying decide what the next two years hold for the European gambling industry.
The major contenders in this fight are Gibraltar and Malta, two small EU states, both of which are famed for their low corporation taxes, which have been attracting online businesses for many years. With Gibraltar about to lose their EU membership, Malta is looking more and more attractive to those who want to have a wider spread when it comes to online gambling markets within Europe.
Gibraltar Takes A Stand
The Gibraltar Betting and Gaming Association (GBGA) has made attempts to calm any drastic action taken by its stakeholders in the face of the referendum's leave result. The association, made up of 20 Gibraltar based online betting operators, has confirmed they will remain “strongly committed” in retaining their operations and current framework.
The GBGA has pointed out to operators that the leave result won't be causing any issues in the short term, due to the complicated nature of leaving the EU. They've also been swift to clarify that the current regulations of many European states means that the transition won't be as drastic as critics are predicting. “We also note that European countries already have widely different regulatory regimes and many require our operators to have local licences – the impact on our members is therefore likely to be minimal“.
Many industry critics haven't been sold on the GBGA's confidence, with many saying that the leave will inevitably affect Gibraltar. This leaves its market vulnerable to other tax havens like Malta, which would retain their EU licences.
This would be a major hit for Gibraltar not only for their gambling industry, but their economy as a whole. Gibraltar has 4,000 of its 32,000 population currently employed by the gambling industry. It's no surprise that 94% of Gibraltar's vote was to remain within the EU.
Malta Makes Their Casino
Even before the Brexit results, annual figures already showed that the Malta gambling market was already on the rise. The annual financial reports, released by the Malta Gaming Authority (MGA), show that there's healthy growth within both the land based and online gambling sectors for the year ending December 31st 2015.
The total revenue for the year reached €60.9 Million (£51,967,221), with an increase of 4.3% compared to the previous year. The total gross gaming revenue from land-based casinos reached €78.1 Million (£66,644,335), which was a 3% increase from the year before.
The Malta Gambling Authority has been carrying out an active strategy to establish Malta as a strong gambling market since 2014. The recent figures not only show strong financial growth, but also that the 3 year strategy, known as the GamingMalta Foundation, is actually working.
The Fight Continues
Gibraltar is in an especially tricky position. With their EU licences disappearing, gambling operators becoming nervous and Malta actively trying to grow their gambling sector; things can only seem to be looking down for Gibraltar.
In the next 2 years before article 50 is enacted and Brexit finally comes to a close, it'll be interesting to see how convincing Gibraltar can be in pushing the argument that they're still the global stronghold for gambling operators. One things for certain, the face of the gambling industry is going to look very different over the course of the next few years.