The Brexit Impact on the UK Online Casinos

David Cameron set the wheels in motion and even though he didn’t expect this outcome, many blame him for his decision to hold a referendum. Britain is dealing with the aftermath and European nations are equally concerned about what will happen in the wake of the Brexit. Few if any industries will be unaffected by its consequences and the gaming industry is expected to take a serious blow.

European players were already divided by bureaucracy and conflicting regulations. Gambling operators had to cope with rising taxes and sometimes found ways to offset these losses by reducing payouts and bonuses. The last thing that both the players and the casinos need is uncertainty, but that’s exactly what plagues the industry after the “Leave” vote.

An Entire Industry in Turmoil

There are still plenty of casinos with headquarters in one of the six UK jurisdictions, but the number is obviously shrinking. Many chose relocation over higher taxes and those that still abide by the UKGC, Gibraltar and the Isle of Man rules contemplate a similar move. The certain advantages of owning a license issued by the United Kingdom Gambling Commission can be offset by higher taxes and restricted access to EU markets.

brexit - EU exit vote

The online gaming industry is facing a lot of uncertainty with the latest poll decision.

UK casinos are obviously catering for local players, but they also act as a magnet for millions of gamblers from Europe. The European Union with its population of nearly 500,000,000 people is simply too important for UK-based casinos to lose. Bet365 was on the verge of moving its headquarters to Europe last year, when taxes went up in the United Kingdom. They chose to stay, but they might think otherwise if EU online gambling regulations will deny them access to the common market.

These regulations state that any online casino, bookmaker or poker room that serves European customers needs to be located in the European Union or the European Economic Area. At the time of writing, Britain is still a part of both of them, but it is only a matter of time until this will change. PokerStars has its headquarters in the Isle of Man and they face the same predicament, which makes Malta a very tempting destination. It will take a while until they will be able to serve US players and they simply can’t afford to lose European poker players.

The Unpredictable Side Effects of the Brexit

Online casinos who wish to obtain a UKGC license are required by UK laws to pay a 15% point of consumption tax on all the revenues generated from local clients. This is a steep price to pay despite the obvious appetite of UK gamblers for online casinos. One of the few certainties in the wake of the Brexit is that these taxes will not change, as they represent an important contribution to the budget.

The certain advantages of owning a license issued by the United Kingdom Gambling Commission can be offset by higher taxes and restricted access to EU markets.

UK casinos were not happy when the authorities told them about their plans to increase taxation. The silver lining was that it looked most unlikely for these taxes to go higher in the foreseeable future. If the casinos will get cut off completely from the European market, they will have a hard time maintaining the profit margins needed to stay afloat. Even if the gambling operators choose not to relocate outside the United Kingdom, their clients might choose to play elsewhere.

Players will notice that the jackpots shrink, access to tournaments will deteriorates and they will no longer be a part of the international liquidity pool. These factors will have a deterring effect on prospective clients and might even sway existing members to choose other casinos. Even if the UKGC will try to limit the access of foreign operators, those who are hell-bent on playing undercover will find a way. Online gambling is forbidden in United States, but this doesn’t prevent Americans from playing over the Internet.

Long Term Consequences for UK Online Casinos

The prospect of losing customers, which translates into losing money is most frightening for UK casinos. Very few are concerned about the impact of the Brexit on the UK regulations and even more important, the EU gambling legislation. The UKGC took advantage of the important position of the UK in the EU Commission to make common sense recommendations. It is also an important member in the EU Expert Group and uses its influence to create a more transparent and fair gambling environment.

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Many UK based casinos like bet365 may move their headquarters due to the changes,

Compared to the European philosophy of regulation, the UK version is more straightforward, therefore benefits both casinos and players. Gambling operators get to launch their products faster and as long as they comply with existing regulations, they can continue their activity unabated. Now that Britain has left the European Union, the UKGC will no longer have any influence in shaping gambling regulations.

A Potentially Deadly Concoction

The Golden Age of online poker is behind us, contrary to what most online gambling operators want players to believe. Winning online is more difficult today than it was one decade ago, with more regulars than beginners and plenty of players using advanced software. An insufficient flux of new players is hurting the industry and the Brexit could bring it to its knees, at least in the United Kingdom.

Even if the UKGC will try to limit the access of foreign operators, those who are hell-bent on playing undercover will find a way.

Already, some European jurisdictions are beyond the reach of UK players, simply because poker operators don’t want to pay taxes twice. This frustrating situation could become the norm, with even more players from the United Kingdom being denied access. Early estimations suggest that only a small proportion will be affected immediately, but things are expected to turn from bad to worse in the long run.

The poker community is already stagnating, with fewer punters and online casino players trying their luck at the tables. They used to be the cannon fodder for professional and savvy players, which were in turn the backbone of the community. As grinders play among themselves, the winning margins decrease and many of them lose interest. EU countries are going to protect their gambling operators and the free market will be restricted to EU borders, which will only amplify the pressure on struggling poker rooms.

The Impact on UK Gaming Stocks

Money talks and it’s more bad news that good news that it brings. Casinos and players are surely going to be impacted by the outcome of the vote, but the same goes for stockholders. While it’s not certain what will happen with the UK gaming stocks, there are plenty of reasons to expect their value to drop. Even before the vote, there were plenty who suggested that the best course of action is to liquidate positions.

A “Remain” vote would have resulted in slight winnings for those who took advantage of the rally. Now there is widespread fear that the European Union will go after some UK companies, particularly gambling groups. Politicians love going after casinos, bookmakers and bingo rooms which are frequently blamed for all the ills of society. In any case, more regulatory laws could come into play and they will definitely be enforced much more strictly.

About The Author

As a member of the VegasMaster writing staff, I pride myself on delivering quality information about my favorite topic: the online gaming industry. In addition to playing a wide-variety of online casino games, I keep up on the latest iGaming news and trends. My passion for the industry has made me both an experienced player and researcher.

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