Lee Richardson – Gaming Economics – Brexit…who wins, who loses?

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Lee Richardson

Returning from the Malta iGaming Summit (MiGs), Lee Richardson, CEO of Gaming Economics assesses the impact of Brexit on gambling’s international stakeholders. Facing an uncertain future who stands to gain the most from Brexit and its wider impacts…

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Late last month Collins, the dictionary publishers, named ‘Brexit’ the word of the year…and in light of the UK’s historic referendum vote to withdraw from the European Union (EU), well they might. The ballot generated the highest voter turnout in a generation, with the topic – and fallout – continuing to dominate headlines at home, and abroad.

Considering that a timetable for implementing what will be a remarkably complicated divorce had only just been outlined – and then immediately challenged in the High Court – it’s fair to say an atmosphere of uncertainty remains strong. For e-gaming operators, legislators, regulators and the all-important consumer, Brexit brings a distinct set of risks and opportunities.

So, last week, in Malta for MiGS 2016, e-gaming industry delegates gathered to discuss the critical implications for those who might lose, and who might gain, from the UK’s decision taken on June 23rd.

Considering all the participants were still digesting the overnight news of US President-Elect Donald Trump’s victory (that ‘other’ political bombshell of 2016), the debate was certainly lively.

One key topic was the post-Brexit future of fellow e-gaming jurisdiction, Gibraltar, who, as a self-governing British Overseas Territory, effectively joined the EU alongside the UK in 1973. And although Gibraltarians voted overwhelmingly for ‘Remain’ in the referendum itself, they too will leave the EU when the UK does.

In the last fifteen years or so, Gibraltar has established itself as a leading e-gaming jurisdiction with 30+ licensees helping create and support an industry now worth some 20-25% of the national GDP there. One major attraction has always been the highly-competitive taxation rates, which has helped its largely Tier 1 licensees create 3,000+ jobs; many of these high-value roles rely on people being able to commute daily across the border with Spain, benefiting from their rights of freedom of movement as EU citizens. At the very least, a major ‘re-invention’ looks essential for one of the very smallest EU territories.

Amidst such potential turmoil, other e-gaming jurisdictions will surely seek to exploit whatever they can from Brexit. Last week, Maltese delegates pointed out that, having solid EU member-status, an equally robust e-gaming industry with a similarly-important share of local GDP, Malta must position itself to take full commercial and logistical advantage.

That potential opportunity remains to be realised, of course, especially as we await the exact nature of the UK’s exit from the EU, and the all-important timetable. That would appear to now depend on the Supreme Court appeal hearing due early next month, and the possibility of a Parliamentary vote, most likely soon in 2017.

Until then, the risks and rewards remain, from a variety of perspectives; let’s remember, not only is the UK the largest single e-gaming domestic market in Europe, many of the industry’s largest international operators are also licensed or listed there. Gaming Economics believes that key investment decisions, mergers and acquisitions, market developments and strategic alliances are now being affected.

We’ve already witnessed the collapse of one gambling-industry deal, with this month’s failure of Sportech’s proposed disposal of their football-pools business to Burlywood Capital. This was attributed to post-Brexit jitters, and a sudden lack of investment appetite for the sector on AIM, London’s junior exchange.  That might be a temporary condition – or it might not.

More broadly, the Centre for Economics and Business Research recently reported that that a third of British businesses have abandoned investments worth £65.5bn amid uncertainty following the referendum vote; sterling’s weakness and related inflationary pressure were the most-commonly cited concerns.

But one major strength of our e-gaming sector, throughout its entire life-cycle, has been the track-record of handling, successfully, almost constant change. Whether the arrival of new taxes or duties, updated domestic and international laws, consumer booms and busts, alternative interpretations of existing rules and regulations, market openings and market closures, it’s coped.

Being able to adapt, adopt, alter and, ultimately, to thrive has been one of the industry’s core assets, and which will surely be tested hard in the months, and years, to come.

Brexit? Some might say, bring it on…

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Lee Richardson – CEO – Gaming Economics 

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