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The United Kingdom voted to leave the European Union back in June 2016. The referendum was held on January 31, 2020, following several years of drawn-out talks and contentious politics, and the transition period ended on December 31, 2020.
Few industries remain untouched by the regulatory changes after Brexit, so it is difficult to overestimate its impact.
The casino industry is one exception, though. Due to the large number of UK online casinos, modifying their operations might significantly affect the economy.
Background: The UK Online Casino Industry Pre-Brexit
It is the Gambling Commission’s responsibility to oversee the independent gambling industry in Great Britain. The position is comparable in other member states; for example, the Malta Gaming Commission (MGA) is located in Malta. In contrast to other sectors of the economy, gambling was never under EU legal supervision. The European Commission claims that most EU countries allow internet gambling through monopolies or licensing systems that support several gambling companies.
Years after the United Kingdom formally left the European Union, the ramifications for the country’s thriving online casino sector are coming into clearer focus. Brexit has presented both new opportunities and challenges for UK-licensed online casinos. On the upside, freeing firms from some restrictive EU regulations has allowed more flexibility in bonuses and promotions to attract players. New partnerships outside the EU have also expanded growth possibilities.
However, complications around data sharing and divergence in standards have arisen. Analysts also caution that barriers for EU customers could stem traffic and liquidity from those markets. While the UK gaming authority emphasises continued fair play and protections, uncertainty persists around long-term licensing agreements and potential regulatory complexity between separated UK and EU jurisdictions.
The Now-Seen Impact of Brexit on the Industry
Early indications pointed to Brexit having relatively little effect on the sector. In contrast to many other sectors, the EU has never centralised its gaming industry regulation. Brexit was thus unlikely to have a significant legislative impact on online casinos and sportsbooks.
However, Brexit increased market friction, such as the application of trade agreements and tariffs between the UK and the EU that impacted the UK economy and increased market volatility for GBP with significant currency changes. Macroeconomic disruptions have affected consumer purchasing patterns, which has led to the current problem in the cost of living and operator income.
Opportunities Arising from Brexit
- Regulatory Independence
The UK is no longer subject to EU laws and regulations due to its exit from the EU. This implies that they are in charge of their laws and can regulate or tailor them to suit the gambling market. For instance, the UK Gambling Commission is now in charge of establishing security guidelines and policies.
Currently, the UK Gambling Commission requires a licence for gaming companies. This meticulous organisation, unaffiliated with the EU, ensures that all operators comply and conduct their business properly and safely.
- Market Expansion
The UK has strong economic links to the Commonwealth countries as a global power. So, the UK gambling sector would likely gain by entering Canada and other markets to boost income.
The secret to a new lucrative approach is concentrating on the global minimal deposit casino industry. Most of the $10 minimum deposit casinos that accept players from Canada are based in the UK, and these establishments often score highly. If they discover a reputable gaming site—and there are several in the UK—gamers who aren’t big spenders will gladly accept those $10 incentive bundles.
- Attracting Talent
One of many factors that may make the UK a less appealing prospect for gambling operators is the reduction in talent that the UK has gained since leaving the EU. EU citizens are now third-country citizens and require visas, making it a longer and more complex process to hire outside of the UK.
The readily available talent pool has shrunk due to UK companies’ inability to employ workers from across the EU after they left quickly.
Challenges Faced by the Gambling Industry
- Market Access
The necessity of a physical presence and higher costs to continue functioning in Europe is pushing UK operators—particularly those operating new slot sites and casinos—to go elsewhere for growth prospects.
For example, because of Gibraltar’s favourable tax rate, many online casinos and gambling enterprises continue to operate there. However, much of the industry’s workforce commutes from Spain to the island. This practice could be affected if Brexit limits Gibraltar’s freedom of movement and will drastically impact the gaming business in the UK.
- Licensing and Regulation
Brexit could result in several casinos or online gaming sites not owned by UK companies needing new gambling licences to continue operating. It could also cause problems for players searching for new or existing casinos to play at. Gibraltar, a UK overseas territory, is well-known for its casinos and is a major draw for international casino companies.
- Economic Uncertainty
The economic shock brought on by Brexit has exacerbated the cost-of-living crisis, which affects consumer purchasing patterns. There is also a greater chance of disruptions when EU payment methods are offered outside the EU. For instance, there is a decrease in EU payment providers at UK online casinos because of rules governing transactions that raise friction, transaction delays, and additional costs.
The Long-Term Outlook for the UK Online Casino Industry Post-Brexit
After exiting the EU, the UK has to enact its data protection and money laundering legislation. Luckily for operators, rather than creating new regulations, the UK General Data Protection Regulation closely adheres to the EU General Data Protection Regulation. The EU has consented to permit the free transfer of data between businesses in the EU and the UK until 2025 (referred to as the “adequacy decision,” which implies that there isn’t presently a distinction between data protection and information flows before and following Brexit, but that may change).
Secondary markets, such as payment methods, also changed due to the higher trade barriers with the EU. For instance, EU payment processors that could previously handle payments from the UK easily are now subject to more regulation. This indicates that to avoid disruptions and extra expenses, UK operators have often limited payment methods to UK choices, which has decreased customer choice.
Is Brexit Affecting The European Economy?
Losing access to the EU free market has significantly impacted the UK gaming sector. Due to the resurgence of trade tariffs and third-country regulations, it is now more complicated for new slot sites and casinos to get market access to the EU. But, as a strong nation, the UK will find a way to handle any issues that may arise, including the laws governing online gambling.
David Prior
David Prior is the editor of Today News, responsible for the overall editorial strategy. He is an NCTJ-qualified journalist with over 20 years’ experience, and is also editor of the award-winning hyperlocal news title Altrincham Today. His LinkedIn profile is here.
