How Brexit is Affecting Gambling and Trading in The UK

Ever wondered how the Brexit can, and probably will affect your gambling activities? I am eschewing my usual format for the purposes of this article as I genuinely feel that this is something that it is important for any of us who make money through gambling to consider. Now those who are looking or definitive answers are simply going to have to wait (although I may well revisit this topic in the future).

As we all well know, nothing has been agreed between the British government and the EU and until it is, we can only sit and wait with baited breath.

The other point that I want to make before I delve into this is that this isn’t a political post. In fact, any comments that may seem to show bias are likely (attempts) at witticisms and making sure this isn’t too dry to read.

brexit and gambling

Honestly, I don’t care who voted which way or another. We are a democratic nation and there was a mandate to leave the EU and love or loathe it, it has become a part of the future political landscape for the UK. I would respectfully ask that any comments maintain this impartiality and focus on the reasons that we are here, making money online!

Brexit and Gambling Future

Now that I’ve got all of that out of the way, I can start to get down to business. Here in Britain, it is fair to say that we like to have a bet.

Walk down any high street in the UK and you will eventually see a bookmaker, whether it is one of the few remaining independents or, more likely, one of the global chains. I will also happily bet you that in the last 24 hours, you have seen at least one advertisement for some betting firm or another.

Of course, most people are simply casual punters and what happens post Brexit is unlikely to affect them. If  your business is betting though, this is likely to be a somewhat uncertain time.

One of the things that has added to this (and I have found frustrating) is the media coverage of Brexit is that there has been a lot of coverage of personalities and broad strokes with no questions asked about some of the more niche topics or specifics.

An example of this was an article I read in a major publication authored by a farmer. He made the valid point that whilst the media has been focussing on “bent bananas” and the like, nobody has mentioned that a large part of the agricultural industry in the UK is reliant on EU grants.

As a professional gambler you don’t have to worry about grants and funding, but that doesn’t mean that the landscape of betting in the UK can’t change when we leave.

If I am honest, there are a lot of players involved in this drama of sorts. Some of these are major characters and they’re front and centre. In fact, you may even have thought idly about it at some point.

Others are seemingly small parts but actually have a massive part to play in the future of Post Brexit gambling in the UK (I’m looking at you Gibraltar). I want to focus initially on the larger and more obvious problems before getting into the proverbial nitty gritty.

The Falling Value of the Pound

Whilst Britain is one of the larger betting markets in the world, we are far from the most lucrative for businesses. In fact, 2016 estimates put the average loss per adult resident for Britain at just over $300.

This makes for total losses of around $18 billion per year. Australia meanwhile has average losses of almost $1,000 per adult resident. Meanwhile, China has overall losses of $62.4 billion with the US having the highest overall losses of $116.9 billion.

What I am trying to demonstrate here is that there are a lot of very lucrative markets out there that bookmakers can target and depending on how things end up post Brexit, they may well become a larger area of focus.

There are a number of obvious reasons that this makes economic sense however a big one is if the value of the pound drops.

To use China as an example, at its peak mid 2014, the pound was worth a little over 10.5 Chinese Yuan. It is now worth 8.7 Yuan. This represents a fall in value of almost 20%. What this creates is a situation where China is gambling (and losing) more money per person than in the UK, furthermore, their currency is increasing in value compared to the pound.

Falling Value of Pound

Depending on the conditions that are negotiated for Brexit, the value of the pound could fall even further. If it does, I would definitely expect to see some kind of shift in focus from domestic bookies to international markets.

This exodus is actually already being looked at within the betting industry however I feel without a major catalyst, it is unlikely to be particularly aggressive.

If for example you look at the current position that William Hill are in with the US, they are openly building their business for a rapid expansion should the ban on land based sports betting and the situation with online gambling change.

For example, they maintain a very strong presence in Nevada where they operate over 50% of sports books. William Hill also have a sports bar at Monmouth Park race track which could be converted to a sports book if the law permits it.

It is important to keep in mind that this is somewhat speculative. Personally, I can see no reason why bookmakers wouldn’t look to step up investment in growing and stronger economies should Brexit leave Britain worse off. Given that the regulations in the UK are so tight as well, I can see why foreign markets remain attractive.

Different Regulatory Boards, Different Rules

It is no secret that each country have their own regulations and rules when it comes to gambling within the EU. Some markets such as Poland and Hungary are actually very restricted whereas in Britain, there are plenty of regulations but it is relatively simple for companies to get a license.

The fact that the EU never managed to set up a specific gaming or gambling commission is something that bodes well for professional gamblers post Brexit. In many respects, the Gambling Commission will likely continue “as they were”.

Given the freedom that comes with the UK at present, this means that there should also continue to be decent penetration of the market from third party bookmakers.

What this means for you as a punter is that the betting market within the UK will more likely than not continue to grow. This means new bookmakers and a generally more competitive market.

This certainly isn’t a bad thing. Whilst the UK could well impose restrictions on EU gaming companies that want to offer betting services within the UK, there is precedent with the USA to show that this is likely to be the case.

The Gibraltar Problem and Online Betting

If there is one thing more than any other which is going to affect gamblers post Brexit it is what position is ultimately assigned to Gibraltar. For those who aren’t aware, this tiny little rock off the coast of Spain has become a hotbed for tech investment, more specifically, online gambling.

This has become such an important part of the economy for Gibraltar that it is estimated that 25% of the GDP is down to online betting companies.

So why exactly is Gibraltar so inviting to betting companies? Mostly, this is down to the taxation that is in place on gaming. Any fixed odds operations are taxed at just 1% of turnover, up to £42.5 million of annual turnover. This means that tax is capped at a maximum of £415 and a minimum of £85,000 per year.

Casino gaming is also subject to a very similar structure.

What all of this means in real terms is that given its proximity to Spain, Gibraltar is reliant on free movement within the EU in order to ensure that the 3000 plus jobs in the online betting industry are filled.

If there is the oft touted “hard Brexit” then this freedom of movement may not be applicable. Obviously Gibraltar will likely push back on this as the island voted overwhelmingly (more than 95%) to remain in the EU.

So, if Gibraltar hypothetically begins to lose these betting companies, where will betting companies look? The next best place appears to be Malta who are well positioned to take up the mantle of centre of online betting.

They have already established themselves as a centre for betting within the EU and have a considerable number of companies established there (for many of the same reasons that companies have traditionally used Gibraltar).

Whilst all of this may seem rather boring, it is actually very important to consider the broader picture here.

If the 30 something betting companies that call Gibraltar home have to relocate to Malta then there are going to be significant costs involved and as gamblers, we all know that somewhere down the line these are going to be passed on to us. After all, the bookies never like to lose.

I could speculate on what form this could take all day, but my best bet would simply be a tightening up of operations, particularly for online betting. What this could well mean closure of multiple accounts, tighter restrictions and generally a much more intense version of the abuse that any winning punters are already familiar with.

If this is a strategy that was employed, I could see it being a massive blow to the matched betting industry as well as those who are simply successful gamblers.

What Else Might and Might Not Change?

One of the best parts of winning any bet in the UK is that what you make is tax free. This is because the bookmakers are charged a 15% levy on their gross profits. It is a generally more profitable way for the Government of the day to operate.

As a gambler, this does however massively benefit you. This set up has been in place since January 1st 2002 and there is absolutely no reason to suggest that this is going to change.

There is one potential change that may come about as a result of Brexit that will affect sports gamblers in particular and once again, this comes back to freedom of movement. I am talking more specifically about football, however I can perceive that this may well have an impact elsewhere in the sporting world.

At present it is very easy for players to be transferred around member states of the EU because of laws surrounding freedom of movement. If Brexit takes a hard line approach, this may well stop this happening.

Now, it is very easy to dismiss this as simply being hard luck for those who like to watch overpaid men kick a ball about for 90 minutes, but this has much wider implications.

It is easy to think that this wouldn’t affect betting but truthfully, I feel that the loss of status of British football (particularly the English Premier League) would have a huge impact on bookies interests in the market. Now this is a much longer term concern and it would take time for this to filter through, but it is something that I certainly hadn’t considered until I saw a throwaway comment on a forum relating to the matter.

No Crystal Ball

I don’t have a crystal ball and as such, I don’t know truly know how much, if at all, Britain leaving the EU will affect gambling in this country. I don’t believe that this is a cop out however.

The fact is that even within the information that is available, there is very little mention of gambling, mostly because we continue to have our own gambling commission. Even in terms of the information that is available mostly pertains to bookies with very little thought given to gamblers.

This doesn’t mean that we have to be entirely blind however. Companies tend to act in predictable ways and we can also look at how companies respond to things no in order to guess how they will act in the future. For me, there are a few main factors that will more likely than not impact punters in the future.

crystal ball on brexit

I have touched upon them already, but these are mostly based around how attractive the UK remains as a market for gambling. The first thing that I think will be important is whether or not companies have to move from Gibraltar to Malta. There will be significant cost involved here which will inevitably end up being passed onto gamblers.

Whilst it seems likely to me that Britain and Spain will come to terms separately on a freedom of movement therefore eradicating this problem, it is worth keeping the possibility in mind.

The other factor is based on wider economic values, not just within the UK, but elsewhere in the world. At the moment it is clear that Britain remains a big part of global gambling’s future.

It is a lucrative and free market with a large userbase, however as touched upon, there are a lot of emerging markets. If the value of the pound drops even further in a post Brexit world (and if headlines are to be believed at the time of writing this and we do pay a “divorce settlement”, then it likely will) then other markets will become more profitable.

As markets become more profitable it seems reasonable to expect that companies will switch their focus away from the UK. Quite what shape this would take is very much up for debate although I do have some theories.

One of the main ones is that the focus of UK based bookmakers would be to move away from online betting and instead focus on fixed odds machines in their bricks and mortar business. This has already proved successful for bookies and is an area that they continue to push.

If online betting does end up becoming more expensive, I would expect this drive to be upped.

And Finally…

For various reasons I have been pulled away from this article for a few days and coming back and reflecting on it all, there is one statement that can sum things up for me.

Gambling in the UK, particularly online gambling, is a multi billion pound industry that  is simply receiving no coverage in the media in terms of how Brexit will affect it. I mostly chalk this up to the fact that people in Britain are generally apathetic about gambling and simply believe that bookies “print money” and anybody who bets is a mug.

Whilst there is possibly some truth to this (in the main), there is no denying that thousands of people are reliant on the betting industry for jobs and income. With no coverage, this is something that I feel may well end up dangerously overlooked.

A big part of this is down to the fact that we already have our own gambling commission in the UK and as such, there is no direct relationship with the EU to cover.

I cannot promise to keep this page updated every day with developments but this is a topic that I would very much like to return to in the future. Hopefully, over the next few years I can continue to keep on top of developments and keep this article updated.

Truthfully, some of the “legalese” is rather difficult to sift through (there have literally been weeks of research into this) and there remain a lot of grey areas. But where there is understanding to be had, I will aim to put it into as plain English as I can and keep people in the loop about how Brexit may affect gambling in the UK.

 

 

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