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4 October 2013updated 11 Sep 2021 6:20pm

Gaming on the Rock

Sponsored post: More e-gaming companies want to set up on Gibraltar than are eventually licensed to do so. The Gibraltar Betting and Gaming Association sets the scene.

By New Statesman

 Gibraltar’s history makes it a unique place to live and work within the EU. Its small population and size and its geographic position on the Southern point of the Iberian peninsular makes it naturally European facing in its business and outlook.

Gibraltar has over 15 years experience in remote betting and gaming. This makes it one of the most stable, experienced and important e-gambling jurisdictions in the world. Likewise the online gaming is crucially important to Gibraltar, since it represents over 20 per cent of its GDP and employs more than 10 per cent of the local workforce. In turn, the industry hugely benefits the economy in both Gibraltar and in the surrounding areas of Southern Spain.

Gibraltar has a population of around 30,000 and there are around 10,000 workers who cross the border from Spain to work there every day. In addition, the Rock has seen a significant increase in migration by highly skilled and experienced e-commerce workers and executives from around the world. Gibraltar has minicommunities of people from the US, China, Sweden, Denmark, Germany and the UK (to name but a few).

The concentration of operators in Gibraltar, coupled with its highly respected licensing and regulatory regime, has also attracted secondary market gaming suppliers, such as software suppliers and affiliates, who do not necessarily provide gambling services themselves. It has also helped to attract a growing regulated electronic money and payments sector. Access to employees and commercial advisors who are experienced in Europeanwide transactions and activities and proximity to many leading gaming operators makes Gibraltar a great choice for other businesses in the e-commerce sector.

In terms of e-business, benefits are significantly based on Gibraltar being part of Britain and subject to English law. Those who have experience of operating in different territories know the benefits of the business-aware law and regulations and the work ethic that is evident in a British territory. The legal system is virtually the same as that in the UK including a mirroed structure of higher courts with judges from the Court of Appeal presiding in Gibraltar.

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Tax Benefits of Gibraltar

Lower taxes and sensible structuring of them are also a significant contributor to economic success. Gibraltar is not alone in the EU in having business friendly taxes. Indeed, the UK is restructuring its tax codes to try to encourage more multi-national businesses to establish their headquarters and their intellectual property portfolios in the UK. Likewise many other member states, e.g. Ireland and the Netherlands, also work hard to encourage both investment by local and multi-national businesses.

Gibraltar’s zero VAT obviously has advantages for businesses. Corporation tax is relatively low at 10 per cent. Gaming and betting duty is 1 per cent of turnover or yield and is capped at £425,000 per annum. In addition, there are no capital gains taxes. However, Gibraltar should not be viewed as a ‘tax haven’ as local gaming companies must have local offices, taxes are and licensing fees are collected and paid and are invested back into the regulatory regime and for the wider good of Gibraltar. In addition, Gibraltar is a willing participant in the increasing international efforts on exchange of information for tax purposes.

The licensing process, whilst not overly complicated and onerous, is nevertheless thorough and if an operator does not achieve the high standards expected, they will not be licenced. Gibraltar has one of the most effective, well-respected and longstanding regulatory regimes for online gaming in the world, balancing strict safeguards with a competitive offering for consumers. The reputation of the industry in Gibraltar is closely protected and defended and it is something about which the industry and community is rightly proud.

European Challenges

Online gambling services are, in fact, one of the few areas in which European operators have established themselves as world leaders in the online sector. Despite, therefore, the current economic challenges in Europe, this industry (and to a large extent Gibraltar’s economy) has continued to grow and develop with a strong European foothold. Gibraltar now rightly boasts that it has been instrumental in helping to develop a European technology hub which is, in fact, capable of being leveraged and extended to the wider ecommerce sector.

The biggest overall challenge for the online gambling operators, which also affects other e-commerce industries such as some players in the financial services sector, is the fact that their businesses naturally cross national borders. This is all very well until the national laws (and often the politics) of a particular territory mean that an operator from another EU territory is not welcome to supply local customers. The EU is a unique construction, seeking to have EU wide laws while allowing member states the necessary freedoms required of countries in such a union. However,laws need to converge so that all member states agree on a similar and sensible approach to managing online businesses that naturally cross borders.

At present, there is a minefield of different laws, regulations and interpretations within the EU and adherence to EU law is no guarantee, at present, that an operator will not fall foul of national laws or political pressure. There are concerns that in Europe, some member states are acting contrary to EU principles and this is unlawfully affecting what operators can do when dealing with customers in certain territories. This has led to a balkanization of the European online market. Germany has been one of the most high-profile states in this respect and its laws are currently under EU review and a decision is eagerly awaited.

To give some wider international perspective to these issues: the United States has overwhelmingly secured the lion’s share of the growing and broader online based technology sector (as witnessed by the success of Google, Apple, Amazon, EBay, PayPal, Kickstarter and others). After some reticence, the USA is now clearly moving towards the licensing and regulation of online gambling services. Careful note should be taken of comments earlier this year by an eminent US policy-maker (Mr. Mark Lipparelli – former Chairman of the Nevada State Gaming Control Board) who cites the regulatory approach being adopted by Europe as mistakes that the US must seek to avoid in formulating and implementing its policy in this area. Mr. Lipparelli appears to see the current European balkanisation of online gambling licensing and regulation as yet another US e-commerce opportunity.

As a consequence the GBGA are engaging in an open and constructive dialogue with the EU institutions and with the member states across Europe, with the ob- jective of ensuring that the delicate balance that currently exists between strict safeguards and a competitive offering for consumers is not damaged.

The GBGA believes that any potential regulatory or public policy changes to ecommerce activity must be justified, proportionate and based upon a sound evidential and legal footing. For example, the recent inclusion of online gaming in the draft 4th Money Laundering Directive is welcome but the ‘special treatment’ that is being suggested for the sector (without an apparent evidential underpinning) shows that more needs to happen to ensure that online gaming operators are granted the same rights as operators in other sensitive forms of e-commerce such as financial services. Otherwise, the danger is that only EU-wide obligations will be imposed on this sector.

UK Challenge to Gibraltar

The proposed legislation in the UK relating to point of consumption licensing and taxation are causing particular concern at present (‘POC measures’). Given the importance of gaming to the local economy and the lack of consumer detriment under the current UK regime, it is hard to avoid the conclusion that the UK has paid little enough attention to the law of unintended consequences for itself and no attention to any impact on Gibraltar when constructing these proposals.

The industry view is that the proposed POC measures will not be recognised by an ever growing number of unlicensed operators and marketing affiliates in poorly regulated jurisdictions that are keen to exploit the UK market whilst sitting beyond the UK authorities’ reach.

The UK Government is strongly opposed to the proposed Financial Transactions Tax (FTT). The UK can not sensibly on the one hand advocate going it alone for a POCT for gaming but then claim it will bring a legal challenge for any financial services tax brought in by other Member States if they are not agreed at EU level. EU tax law makes no such distinction between the two sectors and there is a real danger that with a POCT the UK is opening up the imposition of extra-territorial taxes by other European countries against the hugely important UK e-commerce and financial services businesses (and potentially undermining its position in any political or legal challenge against FTT).

Gibraltar operators lawfully supplying the UK market may also face substantial dual or additional regulation, compliance and licensing costs. The unnecessary additional costs, aggressive tax structure and rate and the absence of effective measures to control unlicensed operators and marketing affiliate will be hugely damaging to the regulated sector and UK consumers.

In addition, the proposals appear to allow UK licence holders to base their operations anywhere in the world with no distinction even made between EU operators and those based outside of the EU. We note the real dangers of misuse of UK licensed status by unscrupulous operators that do not share a common EU legal framework (including e.g. for money laundering purposes). The industry would suggest that, for example, extension and modification of the EU passporting model in financial services would be a better, safer and more lawful approach to dealing with any valid UK regulatory concerns.

Ultimately, the proposals are a poor deal for UK consumers as they increase prices whilst diminishing the quality and safety of the UK market. If the legislation is brought in as it is currently drafted, many UK consumers will move to unlicensed or poorly regulated operators outside of the EU. The GBGA is actively seeking direct discussions with the UK authorities regarding more careful structuring of the proposed POC measures to ensure that Gibraltar can continue to be a competitive online jurisdiction and that the UK does not undermine its own interests or introduce unlawful measures that make matters worse for UK consumers. The UK and Gibraltar are natural allies and should act accordingly.

What about the relationship with Spain?

Gibraltar’s relationship with Spain has always been interesting and has been even more tense as a result of the fishing dispute that sparked issues with the border in the summer of 2013. Given the significant levels of Spanish unemployment, the Spanish population close to Gibraltar does not share the same sentiment as central Government in Madrid – which some say has used the dispute to divert attention away from its many more significant domestic problems.

Despite the significant pressures imposed on people’s right to enjoy living and working freely within the EU, without fear of harassment and intimidation, people in Gibraltar continue to remain positive and buoyant. People living and working in Gibraltar are also heartened by the strong support shown by the UK and the fact that senior members of the UK Government are clearly supporters of the Rock:

‘We will continue to respect the wishes of the people of Gibraltar and we will adopt any action that is necessary to protect Gibraltar, it people and its economy’. (William Hague.)

Gibraltar recognises the Spanish market e-gambling licence requirements and many Spanish licence-holders (inc. Gibraltar based ones) currently have servers in Spain.


Subject to more careful consideration of any proposed changes to the UK gambling laws, there is no reason why the online industry cannot continue to grow and prosper in Gibraltar.

The country is a natural launch pad for investment in Europe. Gibraltar benefits from a significant level of world leading ecommerce expertise to help ensure that Gibraltar remains ahead of the curve in an increasingly fast moving world economy. Efforts are being made at all levels to ensure that more e-commerce related companies see the benefit of being located in Gibraltar. Gibraltar is a well-run and well-regulated place and it is rightly proud of its community values. Its small size allows for agility and means it is easy to work with Government and regulatory bodies in relation to economic concerns, and those concerns are then addressed within the context of respect for the rule of British and EU law. Gibraltar remains a great place to live and invest in.

The Gibraltar Betting and Gaming Association comprises over 20 operators based in Gibraltar, many of whom are the leading names in world online gambling. The GBGA is an active industry association that is also an affiliate member of the EGBA (European Gaming and Betting Association).

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