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Gaming
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ensuring Responsible Gambling (RG), and flexibility. At present Gibraltar does not permit server use beyond its territory.
Consultation with the industry also involves B2B companies - they account for half of the 30 eGaming licenses – and many want to be on webservers like Google Cloud or AWS, because “they contend that the cost of bandwidth here is relatively expensive, and the cost of kit”, Lyman declared, “so we’ll probably end up licensing the B2B software and supply chain to Gibraltar’s B2C licensees, but with some flexibility on IT infrastructure”.
After the £10,000 application fee, gaming companies at present pay £100,000 for their licenses and B2B’s pay £85,000, although they don’t pay gaming tax. “We will look at how small start-ups might initially be
assisted by a reduced charge”, but as Lyman observed: “I am certain that whatever results, we are not going to make everyonehappy! Ifwearetoo liberal with our licensing regime, some who have built size and scale here – people and offices - will say it’s unfair, while others want to supply Gibraltar firms using remote servers and they must pay for the privilege.”
In the UK, where gaming companies already can use remote internet servers, there has been pressure on profits after fixed-odds betting terminals – dubbed “the crack cocaine of gambling” because of their reported addictive effect on players - maximum stake was cut from £100 to £2. The Point-of- Consumption tax for UK online bets has also been raised from 15% to 21%.
Profit pressure grows
“That has put further pressure on Gibraltar- based gaming companies, because we are paying more tax direct to the UK, reducing profitability in Gibraltar and making the local 10% corporate tax rate less beneficial as there is less to tax”, Gibraltar Betting & Gaming Association (GBGA) spokesperson, Paul Foster, explained.
“Over the past year or more, there has been lower profitability generally for gaming companies, because of compliance costs and greater regulation”, Foster declared. Most
companies had taken a profits hit of between 5 - 10% as a result, some being up to 20% down.
Hence the interest in embracing the US market - which last summer permitted sports betting in all States - to offset other pressures, and all major firms are securing alliances with US casino and other gambling operators.
GBGA’s Foster was emphatic: “Concern over Amazon and Google is not misplaced – we can never rule them out – so we should be wary as an industry. They are saying they can cover all of the US, but at present they are not involved in any eGaming. There is no such thing as ‘the Cloud’; it’s just somebody else’s server.”
Foster, who is Digital Compliance and RG Operations Director for GVC Group, Gibraltar’s largest on-line gaming company, insisted: “The
(AG) with former William Hill Operations Director Juergen Reutter as chief executive: in August 2018 AG launched MoPlay, an on-line betting and casino gaming site employing 80 people at the Gibraltar World Trade Centre. Mobile-focused Lottomart, another new B2C was licensed in January.
UK guarantees access
The UK – at present the largest eGaming market - has guaranteed continued access for Gibraltar businesses after leaving the EU (Brexit), which equally affects Gibraltar, but it also has prompted companies with EU customers to make contingency arrangements. Some EU states insist that gaming servers be within the bloc and this has led most affected companies
to seek operating licences additionally in Malta or Ireland.
In February, GVC re-located two servers and some staff to Ireland in preparation for its EU- facing online gambling business, utilising Malta eGaming licenses, but it emphasised: “Our online businesses will continue to be headquartered in Gibraltar” where it opened in 2008 and now employs over 1,000 people locally, 15% up on a year ago.
BetVictor and William Hill, with around 350 staff each, and Lottoland (some 250 staff) and 888 (230 staff), are amongst others publicly committed to
remain in the jurisdiction. But in late May, bet365, Gibraltar’s second
largest online gaming business with around 550 staff locally, confirmed it was relocating most operations to Malta, where it has a large office complex “to maintain and enhance operational efficiencies”. Foreshadowed a year ago, the move prompted on-going government negotiations over how many and which posts must stay to satisfy Gibraltar license obligations, including still having a degree of substance in the territory, such as offices, staff and some ‘mind & management’. Interpretation of those requirements will be a government decision.
Recruiting scramble
Almost all gaming companies have been scrambling to attract bet365 staff, and holding recruitment fairs. “There are a lot of vacancies,
eGaming industry wasn’t created in the US, it was born in Europe and we know how to do it they don’t. They are recruiting from Europe, but all European operators are going out there and securing their own local agreements. You will never be able to go in The Cloud throughout the US, because it’s state-by-state rather than Federal regulation.”
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Gambling Commissioner Lyman revealed: “We have a generally risk-averse license regime. At one time we would only accept established brands, now we are slightly less risk-averse and have included a couple of well-managed B2C start-up businesses. Not all start-ups necessarily will succeed, but if we didn’t accept them, we would simply drive them to other jurisdictions.”
The first to benefit from license relaxation for start-ups two years ago was Addison Global,
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12 Gibraltar International
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