Ever since British Prime Minister David Cameron announced the British public will get to decide whether the UK remains in or leaves the EU, the referendum has hogged the media spotlight. In terms of the gambling industry within the UK, attention has begun to shift to Gibraltar, the self-governed British Overseas Territory which has established itself as an iGaming hub over the past 10-15 years.

Gibraltar has been a member of the European Union since 1973 as part of the UK’s membership by virtue of Article 355 of Treaty on the Functioning of the European Union and it may cover only 8.6 kilometres, however, it became home to about 30 licensed B2B and B2C gambling companies. A vote to leave the EU could result with a blow for the territory’s economy and its iGaming sector, which accounts for an estimated 20-25% of GDP.

“The government here has made it very clear that a Brexit has even more severe implications for Gibraltar than it does for the UK,” says Gibraltar’s gambling commissioner, Phill Brear.

“Gibraltar is a smaller, less flexible and robust economy than the UK’s, and is more dependent on EU law and arrangements than is the UK.”

Brear suggested a vote to leave seems “extremely unlikely”, however, he acknowledges that it would be prudent and good business practice to plan for the unexpected. “It is inevitable and quite proper that for the next few months this possibility will be factored into various interested parties’ thinking when considering business decisions, but it is one of many, and has been under discussion for some nine to 12 months already.”

There are approximately 3,000 people employed by gambling operators within the country, while about 1,000 jobs indirectly rely upon the industry which is a melting pot of nationalities. Many people employed in the iGaming sector reside in Spain and make the daily commute across the border. In fact, about 10,000 people commute from Spain to Gibraltar every day of the working week. Brexit raises the issue of border restrictions, or the capricious powers that it may be decided to shut the border altogether. Spain’s foreign minister raised controversy in March by saying that Spain would demand control of Gibraltar “the very next day” should Britain vote out. Whether this was a legitimate threat or not, it definitely raised the stakes.

London-listed 32Red is one of the prominent companies that made the territory its home. CEO Ed Ware is determined in his support of Gibraltar remaining a member of the EU.

“It is abundantly clear that remaining within the EU would be much the best thing for the continued prosperity of the jurisdiction, with factors involving Spain and relationships at the border front of mind,” Ware said.

“We are a distinctly British business and the arguments for Brexit have resonance with us, but, overall, I would say we would be risk averse to a change in the relationship with Europe and believe the best scenario is to stick with the reformed EU option.”

Ware’s position is shared by Peter Howitt, CEO of the Gibraltar Betting and Gaming Association, which represents the interests of the majority of operators based within the country. Howitt argues that his association would prefer both UK and Gibraltar to remain in the EU, especially because the freedom of movement of people is a big benefit for its members.

“The often difficult relationship with Spain means that loss of these rights would exacerbate border issues and controls and make life more difficult for border workers and our businesses. Having personally witnessed the misuse of border controls for political purposes, this is a concern. I think this issue also means Gibraltar has more at risk that than the UK from Brexit,” said Howitt.

“Clearly, the impact of a Brexit event on Gibraltar’s economy, people and all our workers living in Spain could be significant. We will be encouraging our members and all workers in the sector to vote in the referendum.”

UK’s leaving the EU won’t happen overnight. It’s argued that it is likely to take about two years to fully ratify, which gives operators time to adjust.

In Europe’s other major iGaming hub, Malta, online gaming regulators were observing with keen interest and kept fingers crossed that the UK voted to stay. Malta Gaming Authority Executive Chairman Joseph Cuschieri said: “I think that currently, and in the eventuality of a UK exit from the EU, the biggest concern is the uncertainty that will follow, as it is not yet clear or indeed known what will be the UK’s relationship with the EU.

“The MGA regulates a number of companies which also hold a UK Gambling Commission licence and should the freedoms of movement be severely affected, then I would expect that these operators would have to restructure in a way that best suits their business model and commercial interests.”

CEO of the Remote Gaming Association Clive Hawkswood says none of his members have raised Brexit as a concern, arguing that it isn’t “perceived as a major issue”.

Hawkswood also notes the issue has caused fewer ripples in iGaming when compared with other industries.

“The main reason for this is that there is no internal market for gambling services and to that extent there is no headline economic or regulatory benefit that British operators might lose,” said Hawkswood.

“The risk is also mitigated by the fact that most operators are now licensed in multiple jurisdictions. So at least part of the business would probably remain within the EU and, should there be any possible incentives for online gambling companies within the EU, such as pursuing challenges against regimes that may not be deemed to be EU-compliant, then they can still pursue them through those parts of the business.”

Warwick Barlett, Global Betting & Gaming Consultants Director, expressed slight bewilderment at the conspicuous lack of evidence in the public domain to back up leaving or remaining in. “On a vote that affects everyone in Europe you would think there would be a great deal of information available, but there isn’t. I find that very odd, which leads you to believe that no one knows.”

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