Brexit may threaten Gi­bral­tar’s bustling on­line gam­ing sec­tor

Kuwait Times - - BUSINESS -

Deep in­side the Rock of Gi­bral­tar are vaults har­bor­ing a prized trea­sure: the servers that power the web­sites of on­line gam­ing com­pa­nies, the ter­ri­tory’s big­gest source of in­come. And their fu­ture could be un­der threat from Brexit.

Over the past 20 years, the lime­stone out­crop on Spain’s south­ern tip has be­come the un­of­fi­cial cap­i­tal of the global on­line gam­ing in­dus­try, home to ma­jor bet­ting firms such as Wil­liam Hill. Their servers are housed in three data cen­ters, one of which is known as Con­ti­nent8 which is hosted in the Ad­mi­ralty Tun­nel where Dwight Eisen­hower di­rected the Al­lied land­ings in North Africa in 1942.

The on­line gam­ing sec­tor ac­counts for around a quar­ter of Gi­bral­tar’s gross do­mes­tic prod­uct, ac­cord­ing to the ter­ri­tory’s com­merce min­is­ter, Al­bert Isola. And around 30 per­cent of the global on­line gam­ing sec­tor-worth an es­ti­mated $39.3 bil­lion (44.6 bil­lion eu­ros) in 2016 — was gen­er­ated in Gi­bral­tar, ac­cord­ing to Si­mon Hol­l­i­day, founder of con­sul­tants H2 Gam­bling Cap­i­tal.

Bor­der wor­ries

Back in the 1990s, be­fore the dawn of the in­ter­net, when bets were made by phone, gam­ing op­er­a­tors be­gan ar­riv­ing in the ter­ri­tory at­tracted by low taxes and ac­cess to the Euro­pean mar­ket. Isola said Gi­bral­tar only ac­cepted top-notch, or triple-A op­er­a­tors, who must have a phys­i­cal pres­ence in the ter­ri­tory and are bound by strict rules gov­ern­ing money laun­der­ing, un­der-age gam­bling and ad­dic­tion.

“Be­cause we were very care­ful whom we al­lowed in, we be­gan to cre­ate a brand rep­u­ta­tion,” Isola told AFP. While hun­dreds of firms are li­censed in Malta, an­other ma­jor player, only 30 com­pa­nies have an on­line gam­ing per­mit in Gi­bral­tar. The com­pa­nies em­ploy more than 3,000 peo­ple from all across Eu­rope, and most live in Spain where hous­ing is more af­ford­able and the cost of liv­ing lower.

“We prob­a­bly wouldn’t have grown the way we did if we didn’t have the hin­ter­land,” said Peter Mon­te­griffo, a lawyer who helps on­line gam­ing com­pa­nies set up shop in Gi­bral­tar. But Bri­tain’s EU de­par­ture could pose a ma­jor headache for the in­dus­try. “The ma­jor con­cern is the im­pact of how the bor­der will work for in­dus­tries like the gam­ing sec­tor,” said Mon­te­griffo.

‘Hugely sig­nif­i­cant’

Spain ceded Gi­bral­tar in per­pe­tu­ity to Bri­tain in 1713, but has long wanted it back. Madrid has re­newed its claims since the Brexit ref­er­en­dum last year, fu­elling fears it could step up bor­der checks, caus­ing lengthy de­lays to en­ter the en­clave. This has been the case in pre­vi­ous pe­ri­ods of ten­sion be­tween Madrid and Lon­don.

Span­ish dic­ta­tor Fran­cisco Franco closed the bor­der com­pletely in 1969 and free travel be­tween the two sides was only fully re­stored in 1985, just be­fore Spain joined the EU. “The Brexit chal­lenge is hugely sig­nif­i­cant for Gi­bral­tar,” said Mon­te­griffo. “We don’t think that demo­cratic Spain will use the fron­tier as a sort of weapon as it did 45 years ago (but) it is un­char­tered ter­ri­tory.” Lot­toland, one of the world’s lead­ing on­line lot­tery com­pa­nies, has taken steps to en­sure its 200 em­ploy­ees in Gi­bral­tar can work from home if needed.

“It’s a way to hedge our bets and cover all even­tu­al­i­ties. Busi­ness con­ti­nu­ity is para­mount,” said Lot­toland’s re­cruit­ment chief An­drea Lazenby, speak­ing in the com­pany’s of­fices over­look­ing Gi­bral­tar’s ma­rina. The Brexit ne­go­ti­a­tions be­tween Lon­don and Brus­sels have started and what­ever terms are even­tu­ally agreed will also have an im­pact on the sec­tor. Bri­tain is Eu­rope’s big­gest and most ma­ture gam­ing mar­ket. But “more and more firms ... have used their base in Gi­bral­tar to be li­censed on other Euro­pean coun­tries” such as Spain, France or Italy, said Isola.

‘Our home’

One of the world’s big­gest on­line casi­nos, 888, warned in its 2016 an­nual re­port that it would con­sider mov­ing from Gi­bral­tar to Malta if Brexit cuts off its ac­cess to the Euro­pean mar­ket. Bri­tain has bar­gain­ing chips should Brus­sels de­cide op­er­a­tors must have their servers in the EU in or­der to re­tain their gam­ing li­censes in mem­ber states, said Mon­te­griffo.

Lon­don could re­tal­i­ate and, for ex­am­ple, block an op­er­a­tor based in Malta from hav­ing ac­cess to Bri­tain, he said. But Lot­toland di­rec­tor Nigel Bir­rel is up­beat. “In terms of be­ing able to of­fer your ser­vices in the EU, I don’t think Brexit will have any un­to­ward im­pact, apart from mov­ing a server there or maybe a hand­ful of staff,” he said.

“We will stay in Gi­bral­tar for sure. We want to be in good com­pany with all the big guys. That’s our home.” Con­ti­nent8 also plans to stay, ac­cord­ing to its man­ager in Gi­bral­tar, Luis Gar­cia, as he sits in Eisen­hower’s for­mer com­mand post. “Con­ti­nent8 will be here as long as the cus­tomers are here. And they have said they don’t have any in­ten­tion of leav­ing Gi­bral­tar,” he added. —AFP

GI­BRAL­TAR: Em­ploy­ees of on­line lot­tery com­pany “Lot­toland” work at their head­quar­ters. —AFP

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