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Gaming
Enforcement team to be established with ‘flexing’ of license conditions
Gibraltar is planning to ease some remote gaming license conditions to take account of a general move toward Cloud-based operations and also create a new category of license, embracing start-up businesses locally servicing the established gaming companies
Much-delayed reshaping of the jurisdiction’s world-leading licensing model to future proof it and provide
greater license flexibility is under way, but this also will be accompanied by more stringent regulation - especially around Anti Money Laundering (AML) and social responsibility - focused on the effectiveness of operator’s own risk based controls and the outcomes achieved to reduce risk.
An enforcement department is to be established to help maintain the jurisdiction’s reputation and there is likely to be a move towards a range of possible sanctions for transgressions other than just license cancellation, which is considered a blunt instrument.
Industry leaders are looking to have specific areas of operations licensed separately, so that if one part of a business hits a problem the whole generic operating license is not at risk.
Crucially, Gibraltar gaming licenses stipulate that in addition to top management, just about all servers must be physically on
The Rock, but in response to industry con- cerns and greater use of new technology - The Cloud – some servers may be relocated.
Key elements of servers and functions associated with creating a gambling transaction – in payments, transactions, bets placements, trading and debts - will most likely need to remain in the jurisdiction.
The Gambling Act will be overhauled by Spring next year “when the shape, timing and nature of Brexit will be much clearer”, Albert Isola, minister for gaming, told industry “influencers” at the 8th KPMG eSummit at the Sunborn Hotel in late-April.
The revised license regime is likely to embrace the majority of gambling support functions, yet Andrew Lyman, Gibraltar’s Gambling Division (GD) new executive director, assured: “It will not be at any significant financial disadvantage to those who currently sit outside that perimeter, or who need to flex their arrangements”.
The government was spooked in May by a Tier 1 operator’s decision to relocate some (as yet undisclosed) key Gibraltar personnel and functions to Malta, in part as a hedge against losing access rights in Europe after Britain and Gibraltar exit the EU (Brexit). Bet 365’s move comes at a time when increased sector mergers & acquisition (M&A) activity locally and elsewhere is also having an unsettling effect.
Gibraltar’s 30 eGaming licenses are split almost evenly between Business-to-Business (B2B) and Business-to-Consumer (B2C) operations, after a significant growth in local games development software and services supply firms. “New and established B2B and B2C providers continue to make applications for licenses and there is a small handful in train,” Isola revealed and emphasised “still there are 3,250 staff directly employed and half as many again in industry support services.”
A KPMG eSummit gaming audience survey of issues revealed 48% thought freedom of movement across the border was most important [53% in 2017]. Up to 85% of the sector’s Gibraltar workforce lives in Spain, estimates Paul Foster, a Gibraltar Betting & Gaming Association (GBGA) director and treasurer.
Peter Montegriffo, a Hassans partner
and specialist gaming lawyer, suggested frontier fluidity was “a matter of primary interest – not concern”, but many things were changing. Some countries required servers to be within the EEA for certain types of business and if as a result of Brexit, Gibraltar is outside the EEA, Montegriffo said firms may need to have servers there.
Lyman concurred: “We are prepared to support cogent and flexible regulatory solutions and whilst we would want as many key functions as possible (people and technology) to remain in this jurisdiction, our regulatory structures are already flexible and can be flexed further by legislative change if necessary.
“The Cloud has potential to reduce technical operating costs and we recognise technical architecture, including platform support, is becoming increasingly multi- jurisdictional.”
In a market presentation Simon French, a leisure analyst at Cenkos Securities, a leading UK stockbroker, revealed the world- wide eGaming market had 10% compound annual growth since 2011 – “at present it’s split roughly a third mobile, and two thirds desktop, but by 2022 the market will be worth €50bn when mobile will account for just under 50% of revenue”.
French held: “The UK is the power house of the EU continent and given the €6bn [annual] revenue, that leaves the regulatory and political risk even more concerning.”
No services trade war
Continued access to EU markets was identi- fied by 38% of those surveyed – sharply up on the 10% recorded in 2017. John Tricker, KPMG Gibraltar managing director, assessed: “Those wanting certainty of a licence outside of Gibraltar will look to have one also in Malta or Ireland as a backstop”.
Lyman told the eSummit: “I would strongly contend that relocation of transactional technology at this stage is premature. Whilst respecting the individual concerns of operators, it is in no one’s interests for a trade war in the area of services and I do not see a ‘wait and see’ approach (or a partial realignment) as being one that lacks sense.”
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Gibraltar International
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