At time of writing there are just over 30 parliamentary meetings until the United Kingdom of Great Britain and Northern Ireland exits the European Union on 29th March, 2019. British Prime Minister Theresa May has thus failed to gain parliamentary approval for her exit deal, meaning that in all likelihood the country will leave the European Union with no deal.
Economic experts from within and outside the country have predicted doubling food prices, medicine shortages and a recession that could last up to 30 years in the event of a no deal situation.
(No deal Brexit contingency plans are already in full swing. The British military are stockpiling food and other logistical items in fear of widespread shortages)
It is clear that a no deal Brexit will not be good for big businesses – some of Britain’s industry leading companies have already closed their UK operations and relocated overseas. One industry that could feel the repercussions of a no deal Brexit is gambling.
In this article we take a look at the Brexit related challenges facing the gambling industry and question what it all means for not just betting companies, but you the customer.
Just how big is the British gambling industry?
In simple terms, it’s very big indeed. The gambling industry generates annual revenues 15 times larger than the wholesale and retail sector. Just over £15 billion is brought in each year from gambling, with a third of that figure coming from remote betting sites.
Per capita, Britain spends more on gambling than any other country in the world. Make no mistake, the gambling industry is a behemoth in this country. As a major tax contributor and jobs creator, the gambling industry should definitely be factored into any Brexit negotiations.
Relocation, relocation, relocation
Most UK online gambling companies are based in British territories such as Gibraltar. Which are still included in the European Union but have lower tax rates. In the event of a no deal, Gibraltar will be excluded from the European Union therefore restricting the multi-national offerings of bookmakers based there.
It is expected that most of the companies based in British territories will relocate to European countries, where they will be subject to increased tariffs and taxes. These increased costs will be passed on to the average punter. Forecasts predict less frequent bonuses and much shorter odds as bookmakers seek to recoup their losses.
For example, 888 poker, the famous online poker is registered in Gibraltar, while the majority of their players reside in the UK. It is in the best interests of both the company, and the players who log on to the online poker site, for the UK to remain in the European Union – this will ensure the company itself can thrive and the players can continue to enjoy the same great offer and bonuses.
World Trade Organisation Rules
Tumbling out of the EU is not all bad according to some hard-line Brexiteers, who believe the UK will be able to fall back on WTO rules and regulations. However senior legal officials representing the WTO have claimed that the UK will have to wait 7 years to fully join the WTO.
This would leave UK businesses in a metaphorical limbo land. UK based gambling companies would be unable to tender for business outside of the country, whilst foreign based gambling companies would be able to bid for UK gambling rights.
This would inevitably lead to British gambling companies being usurped by foreign companies, with the industry’s revenues not benefitting the British economy. Once 7 years have elapsed and the UK has joined the WTO, there will be no guarantee of British sovereignty over the gambling industry.
In 2007 the WTO riled against the USA when it blocked foreign companies from offering horse racing betting and online poker in the country. The WTO claimed that the USA was unfairly discriminating against foreign companies.
(Joining the WTO has been cited as an easy alternative for Britain in the event of a no deal Brexit. However, it may be just as confusing as the EU)
The pound
On the day of the EU referendum the British pound was worth €1.30, and it is now worth €1.16. To the average person, a drop of 14 cents may not seem like a massive drop, but to big gambling companies, it represents a tremendous drop.
British based gambling companies regularly trade in both pounds and euros, meaning that they have already lost a substantial amount of cash from exchange rates. A no deal Brexit will see the pound fall further in value, costing betting companies yet more money.
How will betting companies seek to recoup that lost money? Will they sue Theresa May for a loss of earnings because of her inability to deliver a deal? No, they will pass the costs on to the consumer, making you pay for their loss in revenues.
How may the gambling industry benefit from Brexit?
To add balance to the article and avoid the doom and gloom predictions of the future, let’s take a look at some of the potential benefits to the industry from Brexit.
An increase in customers: Traditionally the gambling industry has done well during periods of economic recession. Punters are more attracted to get rich quick gambling offers when times are tough.
The extent of a post-Brexit economic downturn is hotly contended, but if there is to be a slump, the gambling industry will most likely gain customers.
Patriotic loyalty: An influx of foreign based betting companies may well be a big threat to UK betting companies. However customer loyalty in the sector is high, and British consumers will be more likely to stick with British companies even in the face of increased foreign betting involvement.
Leisure isn’t a recession loser: During economic downturns, countries and their citizens collectively tighten their belts. However according to economic studies, the leisure industry does not suffer as much as other sectors during recessions. Consumers are still relatively happy to spend money on doing enjoyable things. The gambling industry can be confident of still appealing to customers despite an economic slump.
Summary
Brexit will undoubtedly have a massive impact on many British industries, not least of all on gambling. The gambling sector is robust enough to deal with any economic issues that it may face.
Industry growth may slow and Britain will perhaps see less economic benefits from the gambling industry, but Brexit will not be the death of gambling in the UK. We are moving into a new era, but not one without a gambling sector.
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