Brexit Causes Shakeup as GVC Moves Servers to Ireland

Hand drawing a red line between British Isles and Europe
Because of concerns about Brexit, GVC is going to move its servers from Gibraltar to Ireland.

30-second summary

  • Major operator  makes the decision to move servers due to high chance of no-deal
  • Gambling companies preempting potential issues caused by Brexit
  • Gibraltar still a complication with 30 operators based there
  • Question is will companies need a gambling license to operate in the UK?

The precarious future of the gambling industry come Brexit has been well documented, but GVC Holdings may have upended the apple cart.

It all comes down to the problem of Gibraltar, where around 30 gambling companies currently have their head offices. Of these, 60% of staff face having to commute from Spain daily. Because Spain is part of the EU, border control is a headache, which is why GVC has decided to relocate some key servers in case the rock finds itself in a territorial battle.

There is also the risk that a no-deal may include a reversion to the World Trade Organization rules on gambling, which will hugely impact the UK and possibly exclude them from the single market.

Why does Brexit cause such problems?

On June 23, 2016, the UK officially voted in favor of leaving the European Union.

On March 29, 2017, Theresa May triggered Article 50, officially beginning the process of leaving the EU, with two years allocated for negotiations.

Now, with less than a month until Brexit is implemented, the big question for the gambling industry is whether the UK is leaving the EU with no deal. If so, or if all trade talks completely collapse, gambling operators will have to revert to the World Trade Organization rules.

According to Brussels gambling and trade lawyer Philippe Vlaemminck, gambling is excluded from any market-access commitments for services in the EU. That means, hypothetically, any British gambling companies may be excluded from taking part in a bidding process inside the European Union.

With the single market currently making the industry accessible to 500 million people, it is possible that the UK gambling operators will be entirely cut off from these potential customers.

Gibraltar post-Brexit

Over 98% of Gibraltarians voted to remain part of the UK over Spain. However, with Brexit on the doorstep, what will follow is a concern. There are 34 gambling companies based in Gibraltar, with the main appeal being its low taxes. Online gambling is one of the four mainstays of British overseas territory’s economy, worth 25% of its GDP.

The dispute between Spain and the UK makes things difficult because 60% of those who work in the gambling industry in Gibraltar are commuting every day from Spain. With Gibraltar being part of the UK and having to leave the EU soon, there may be major border crossing issues that individuals will have to face twice daily.

It is completely up to the Spanish government to decide on the laws governing its borders with Gibraltar, which means they have the power to make it extremely difficult for important workers.

Preempting Brexit complications

GVC Holding Plc has stated that plans are in place for its servers hosting online gambling platforms to be relocated to Ireland due to the impending deadline of Brexit. The company’s headquarters are currently in Gibraltar, and although they have outlined plans to remain in the hope that their employees will not suffer significantly, the servers are a different matter.

GVC owns multiple games brands, including PartCasino, Casino Club, Gioco Digitale, and Foxy Bingo. With gambling addiction being such a huge issue in the UK, fixed-odds betting terminals (FOBTs) have been singled out by many as causing the loss of huge amounts of money in a short period of time.

The maximum stake on FOBTs will be cut from £100 ($132) to £2 ($2.63) on April 1, 2019.

This action will hugely affect the profit from FOBTs. The cut will result in many shops having to close and the impact will be as much £135m ($176m) in 2019 alone.

GVC’s stock has gone from strength to strength after its acquisition of Ladbrokes Profits before tax for 2018 was £610.1m ($802.6m), an increase from £514.1m ($673.3m) the previous year.

It is not known how many staff members will be disrupted by the server move, but the company has pledged to support its employees if there are any issues with border crossings following Brexit.

Companies do not need a license from the UK Gambling Commission in order to operate in the country. While a working agreement has been made in principle, the MOU confirms that Gibraltar-based gambling operators will have ongoing access to the UK market after Brexit, but the border aspect could exacerbate any previous tensions. License or not, if workers can’t get to their jobs, it will obviously become a problem for operators. The question is: Will others follow GVC’s lead?