As the dust begins to settle after a stormy month in British politics, Lorien Pilling, director of Global Gaming and Betting Consultants (GBGC), assesses the potential consequences of the ‘Brexit’ vote for the UK’s booming gaming industry.
[dropcap]T[/dropcap]he referendum is over but the political and economic fallout is only just beginning. So what has happened in the weeks after the vote and what is the outlook for the UK gambling sector?
THE POUND HAS BEEN TRASHED
Some will argue it is all a consequence of referendum result – but the UK has a huge current account deficit. The deficit will be partially corrected by devaluation, increasing the cost of imported goods and making exports cheaper. In fact, it’s Government policy to allow the pound to fall – that’s why the governor of the Bank of England intimated he would lower interest rates. If the governor increased the rates instead, the pound would soar. As it is, the effect on the internet gambling industry will be to enhance earnings reported in sterling, so long as income is originally derived in US dollars or Euros, or most currencies other than the pound. It will also be good for the London casinos because foreign tourists will now find a holiday in the capital that much cheaper. But the decline in the pound will not help the UK’s betting shops or provincial casinos. Inflation will kick in at some point (again, Government policy) so as to shrink the debt. It rose from 0.3 percent to 0.5 percent between May and June 2016. The bookmakers, adult gaming centres and provincial casinos will face rising costs, not compensated for by revenue increases.
GIBRALTARIANS VOTED 96 PERCENT TO STAY IN THE EU
The result went the other way and it could phentermine no prescription cause a headache for Gibraltar. Listed e-gaming companies located in Gibraltar saw their shares tumble in value after the referendum result was announced. The problem is not necessarily Brussels, it is Spain. On previous occasions Spain stated it would shut the border between Spain and Gibraltar if the UK left the EU. Spain has offered shared sovereignty to keep the border open. But because of the past, there is little trust between the parties. Gibraltarians believe Spain will eliminate their financial services industry. Spain has its own gambling laws, as does the UK. How would that square with Gibraltar? Would Spain interfere? It seems highly unlikely that Gibraltar apply for EU membership on its own account. Spain has already objected to Scotland joining in its own right, fearful that Catalonia and the Basque region would follow, leading to the break-up of Spain. But the situation actually remains much the same as it did before the referendum result. The trend for egaming in Europe is to license and pay the tax in individual EU countries. The real downside of the EU is the cost of setting up operations in multiple jurisdictions.
THE BIG WINNER WILL BE BRITISH HORSERACING
In previous discussions over the future of the Horserace Betting Levy Board, government ministers were continually blocked from doing what they wanted by the illegal state aid requirements from Brussels. Freed from the EU, ministers can offer racing a differential rate of VAT on breeding, an agreement on the continuation of the Levy, and a price for the racing product. Bookmakers will carry the cost for some of these decisions. But, until the all-important Article 50 is activated, much of this remains in the future.