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How The #Brexit Fallout Could Impact On The British #Gambling Industry

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The UK was officially set to leave the European Union on Thursday 31st October 2019. However, at the time of writing, the country is in the midst of a General Election with the earliest date of exit now earmarked for Friday 31st January 2020.

This monumental once in a lifetime political event is set to affect everyone in the UK. Brexit means changes to our finances, how we shop, consumer rights and some of the biggest industries including online gambling.

Tax Implications & An Exodus Of British Based Companies

Many of the biggest names in online gambling have set up home in the UK or overseas British territories in the last two decades. Traditionally, the UK has been the ideal base for online gambling companies as it allows them to tap into the highly lucrative British market and tax system, whilst retaining the business benefits of operating within the European Union.

Brexit will impose export tariffs and regulations on all British based businesses, even those located in places like Gibraltar and the Isle of Man. It also raises the question of higher taxes, something Gibraltar experienced in 2015 when it’s taxation rates were brought in line with mainland Britain.

Higher taxes and tougher export regulations not only increase the operating costs of British based online gambling companies, but they also increase the risk of relocation. These consequences are something that should worry consumers.

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Higher operating costs are almost always passed on to the consumer as nervous company financiers look to balance the books. More infrequent bonuses, lower jackpots and shorter odds will most likely become a reality for British gamblers if higher operating costs are imposed on companies.

Relocation from major online gambling companies to more tax favourable countries will result in a less diverse British gambling market, further exacerbating the issues caused by higher operating costs.

No Deal Means New Taxes For Players

The European Union (Withdrawal) Act (No.2) 2019, or as it is more simply known The Benn Act was passed by parliament earlier this year to block a No Deal Brexit. Whilst it may have succeeded in its goal of blocking No Deal before 31st October, it may not be successful beyond the outcome of the General Election.

If the UK does indeed leave the European Union with no deal, the country would fall in line with World Trade Organisation rules. Indeed, this is not just an option restricted to no deal, falling in line with WTO rules is a key facet of many Hard Brexiteer plans.

Whilst that may or may not be a bad thing for the country in general, it would be catastrophic for the online gambling industry. The WTO has a much stricter policy on gambling than either the European Union or the UK in regards to corporate and individual taxes.

In this scenario, online gambling companies would be forced to pay higher taxes, but individuals would also face the possibility of paying taxes on their gambling winnings. In 2014, when online gambling taxes were raised from 1% to 15%, scores of companies ceased to operate in the UK.

Further increases in tax rates could potentially have a catastrophic effect on the viability of online gambling in the UK. Added to this would be the declining popularity of gambling, as more and more people would be put off gambling by the individual taxes imposed on winnings. As it stands, many established operators offer their gaming services under the laws of Gibraltar, which means online poker players don’t have to worry about paying tax on their winnings and the providers can offer players the best possible odds. Fans of online poker, and gambling in general, will be hoping this doesn’t change to dramatically in the near future.

Poker Liquidity

In the immediate aftermath following the Brexit result in 2016, the Pound fell like a stone in the international currency markets. Despite repeated attempts from the Conservative government and the Bank of England to strengthen the Pound, it has still not fully recovered from the seismic events of 23rd June 2016.

The volatility of the British currency is heavily dependent on every move of Brexit, making the country a less appealing area of investment for foreign operators. However, it could be good news for overseas poker players who are now getting more Pounds for their Euros than ever before.

Large scale poker tournaments in the UK could see a significant rise in overseas player numbers, as foreign professionals look to exploit the falling pound for their own profits. Domestic players, will, of course, suffer from this as tournaments become saturated and harder to win.

This may be shortlived, however, as tougher travelling restrictions and the possible implementation of Visa’s after Brexit could make the UK a less favourable destination for poker tournament organisers.

British poker tournaments look set to change irreversibly in the near future, how that change looks, however, is hugely dependent on the outcome of the current Brexit negotiations. Poker and the rest of the British gambling industry must now wait on tenterhooks to see how Brexit truly affects it with the knowledge that, whatever the outcome, it is not going to be positive.

 

 

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EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.

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