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Gibraltar Controversy to Have an Impact on the Gambling Industry

- April 3, 2017 By Oliver Young -

Gibraltar wanted to be exempted from the point of consumption tax on gambling.

Gibraltar’s status as a gambling mecca might be threatened by Brexit.

There has been a fierce exchange of statements between UK and Spanish public officials over the status and future of Gibraltar, following the long-awaited signing of documents that trigger the process of ‘Brexit’ by PM May on last week.

Once former Tory minister went as far as saying that May is ready to ‘go to war’ over Gibraltar, comparing the situation to the Falklands calamity of the 1980s. Other public figures have also expressed their fears that the PM would like to show that she is as tough as Margaret Thatcher.

The rhetoric, described as warmongering, encouraged the Spanish foreign minister to address the press on the matter, urging Britain ‘not to lose its cool’ over Gibraltar, claiming that there are no fears of possible escalation.

The Debate is Heated

The controversy is interesting not only for foreign relations experts and geostrategic analysts, but also for people in the gambling industry. As soon as the Brexit referendum was successful, experts warned that UK gambling operators will be among the entities who suffer the consequences of the decision.

Now, that it is clear that Brexit is going to happen and that the process is irreversible, the issue of the status of Gibraltar and its relationship with the EU is becoming a matter of an increased urgency. The fact that the residents of Gibraltar were overwhelmingly anti-Brexit only complicates matters further.

The EU has doubts over whether Spain should have a say in the future of Gibraltar, whereas the UK Foreign Secretary feels that only the UK and Gibraltar through its Government can decide the future of the small nation which is a British Overseas Territory.

Gibraltar is a known as an online gambling mecca and a lot of the leading operators and game providers are based on its territory, mostly due to the favourable taxation policy and liberal legislation.

Experts who are familiar with EU’s mechanisms and way of functioning say that Spain and the UK will have to reach a deal over Gibraltar and that will be rather difficult considering that the two have had their share of quarrels over the status of Gibraltar in the past 3 centuries.

The Fate of Gibraltar yet to Be Decided

This is not the first time that a decision made in London has an impact over Gibraltar’s future as a popular online gambling destination. Namely, the authorities of Gibraltar protested the implementation of the point of consumption tax that was introduced towards the end of 2014.

Gibraltar brought the matter to the UK High Court of Justice, asking to be exempted from paying the 15% levy that all UK casino operators are supposed to pay. The High Court responded negatively to Gibraltar’s demand and ruled that the same regulations must apply to Gibraltar-based operators.

Gibraltar wasn’t too keen on giving up and they decided to take the issue to the European Court of Justice. One of the ECJ members voiced his opinion earlier this year, indicating that the decision of the European Court might not be in Gibraltar’s favour either. It is still not certain whether the Court will have an identical opinion as its member, but it is quite likely that it will.

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