The Gibraltar problem: Brexit and the economics of iGaming
By Daniel James
The gambling industry doesn’t exist in a silo – it contributes to the UK economy much like any other field of business. However, as a multi-headed creature made up of bingo halls, lotteries, betting shops, and casinos, it’s not easy to paint a convincing picture of the sector as a whole. One statistic crops up a lot though: accounting for 33% of the £13.6bn gambling sector, online ventures now comprise the largest and most profitable part of the industry.
A Nation of Gamers
According to figures from the UK Gambling Commission, £2.6bn was wagered on casino games between April 2015 and March 2016, with £1.8bn or 69% of that sum coming from slot machines. Overall, the iGaming niche is worth £4.5bn to the UK economy. We’re rapidly becoming a nation of regular players too – Statista indicates that the number of people playing once a week climbed 3% between 2016 and 2017.
Perhaps the more important statistic, taken from a recent article on the future of online gambling, is that more young people are embracing casino as a hobby, a trend that owes a great deal to the uptake of smartphones and improved access to gaming sites. 888casino, which enjoyed one of its best years to date in 2016, notes that around 40% of gambling activities could be undertaken on mobile devices by the end of 2017.
There’s a storm cloud on the horizon though, in Britain’s departure from the EU or “Brexit”. Casino companies serving the British market tend to cluster in Malta and Gibraltar so, in the event that the latter remains attached to the Crown, businesses headquartered on The Rock may simply have to up sticks and move to the former. There are currently 31 iGaming companies on Gibraltar, 888 included.
The problem with Brexit is that, with an election in the way, it’s incredibly difficult to gauge what will happen when or if Britain leaves the EU; the only usable simulation the country has at present comes courtesy of a video game called Football Manager. The outlook could be bleak: David Schollenberger of Healys Law Firm in Brighton claims that Brexit will “negatively affect Britain as a place to invest […] for iGaming businesses.”
Returning to the UK, a possible increase in the cost of video games like Fallout 4 in the wake of Brexit could push consumers towards the iGaming industry, especially given that casinos have been dabbling with more skill-based experiences to lure in the millennials. Casino gaming has a lower cost of entry than PlayStation and Xbox gaming, requiring only a smartphone and an initial deposit usually in the region of a tenner.
So, to conclude, casino brands will have to cope with new tax and inflation rates post-Brexit, along with restrictions on free movement and changes to legislation. There might be a silver lining though – Schollenberger adds that new laws might be passed to protect iGaming businesses from Brexit strife. It’s just unfortunate and a little alarming that nearly every question it’s possible to ask about Brexit ends with a resounding “don’t know”.