Paul Foster, CEO, GBGA
Gibraltar has operated as a premier gaming jurisdiction since the movement of land-based operators to online over 20 years ago. Many of the larger multinational operators in both the B2B and B2C space have held a Gibraltar Licence over the past 20 years.
As a jurisdiction, Gibraltar has offered a lot of attractions but only offered limited licensing to companies wishing to take advantage. By limiting the licensing to a small number of operators, Gibraltar has built a very strong foundation through regulation, which is open, transparent and fair. In return, companies have invested into their Gibraltar infrastructure and operations because of the certainty that a stable fiscal and regulatory environment offered them. With Brexit announced in June 2016, this raised questions about the jurisdiction and its future role within the industry post-Brexit.
With the expectation that Gibraltar would not be able to offer services of gaming into the EU, all companies quickly assessed their continued support and investment in Gibraltar. Many expected the departure of key companies to other territories within the EU, such as Malta, and the corresponding shrinkage of Gibraltar as the home of licensed gaming. However, Gibraltar, and the uniqueness that built the industry there, proved to be more attractive than most others expected.
Within Gibraltar there are over 3,000 highly experienced and knowledgeable gaming personnel. It has probably the largest concentration of talent anywhere in the world. Gibraltar has always considered itself the Silicon Valley of gaming and innovation. This meant that while companies would face the EU challenge, it was easier to set up subsidiaries to provide services into the EU than it was to move whole companies and risk losing extensive talent, knowledge and capability.
Most companies also already had EU offices, which reduced the impact of Brexit on the Gibraltar teams. Gibraltar quickly evolved from the European Hub to the UK and non-EU hub, in which most of the emerging and fast-growing markets are in. The teams within Gibraltar switched from operational service departments to innovation and change teams. The ability of gaming and Gibraltar to adapt quickly is a key reason why Brexit has had a limited effect on the industry.
The continued and strong support of the Government and regulator also allowed an honest and open dialogue in which the industry was able to get comfort. This, together with the true global nature of most companies, dampened impacts and has set up Gibraltar as the continued base for UK and non-EU operations.
With the ease of access to the UK and non-EU markets from Gibraltar, there has been a steady stream of new applicants for licensing which has more than made up for any losses in roles, which were initially feared. The Gibraltar Government's support to review the Gambling Act and the regulator to clarify key aspects of regulatory interpretation has meant that the Gibraltar Betting and Gaming Association (GBGA) has been heavily involved in supporting the industry in these processes.
A strong industry body is always key to a successful jurisdiction and the GBGA has matched this expectation under the strategic leadership of chairman, Nigel Birrell. Having overseen key aspects of Brexit and Covid-19, he has led his experienced and highly regarded volunteer board through the many complex challenges, which has helped strengthen Gibraltar as an attractive future jurisdiction. This is evident by the continued support of multinational operators such as Entain, William Hill, Lottoland, IGT, Playtech, Gamesys, Betfred and many more key industry players.
This means that Gibraltar as a jurisdiction has evolved and is continuing to evolve at a pace most other countries cannot match. Companies are holding on to key talent, evolving into innovation hubs, and driving new market entries globally.
With a fresh new Gambling Act expected in 2021 and a responsive and respected Gambling Regulator, the challenges expected five years ago have not just been met head on, but have led to evolution, the way that Gibraltar has been constantly evolving since the days that Victor Chandler first got licensed there in 1996. While nothing is ever certain in gaming – except change – Gibraltar is continuing to survive and thrive as a gaming jurisdiction, with the added benefits of great culture, people and weather.
Paul Foster is the CEO of the GBGA and runs Crucial Compliance, the industry compliance consultancy.
Peter Montegriffo QC, Hassans International Law Firm
The post-Brexit scenario for Gibraltar will open up very significant opportunities for gaming (and other e-commerce related) companies.
The main attractions of Gibraltar remain in place: First-tier licensing and regulatory framework, robust yet with a regulator who is acknowledged to be accessible and pragmatic; competitive business environment with a highly skilled workforce familiar with the industry; strong rule of law; and a government fully supportive of innovation and entrepreneurship, while committed to maintaining Gibraltar’s international reputation, including ensuring the highest standards of responsible gambling.
This regime will be significantly enhanced as a result of new proposed EU Schengen arrangements post-Brexit. At the end of last year, an in-principle agreement between the British/Gibraltar and Spanish governments was announced. This will see Gibraltar become part of the Schengen area, allowing for passport-free movement between Gibraltar and the EU. This will guarantee border fluidity and be enshrined in a treaty to be entered into between the European Union and the British Government by the end of June 2021. Setting these arrangements in a treaty will offer robust protection from any attempted derogation subsequently. It should be noted that entering into this treaty is likely to give rise to potential agreements on the movement of goods and other freedoms, either as part of or following these discussions.
The key challenge for the industry pre-Brexit had largely been to ensure continued fluidity of the Gibraltar/Spanish border. Gibraltar’s cross border workforce is estimated to be in the region of 15,000,
many in critical areas in the public sector, financial services and gaming. The post-Brexit Schengen arrangements are likely to further enhance fluidity with the consequent business (including touristic) and social benefits of mobility.
Increasing fluidity and cooperation has also been enhanced through the recent Tax Treaty entered into between UK/Gibraltar and Spain on cross border taxation (the Spain Treaty). This is soon to be
incorporated into Gibraltar’s income tax act.
Our gaming industry was in many ways Brexit-agnostic, in the sense of there being no developed EU-wide passporting regime (as is the case with financial services). There has been some restructuring by local operators of activities aimed at non-regulated European markets, where the freedom to provide services under the Treaty of Rome was an important framework. Such restructuring has had a limited impact on the size and prospects of the sector locally. Indeed, there has been reciprocal traffic of operators seeking to access the UK market (which Gibraltar remains uniquely entitled to service) from EU centres to this jurisdiction.
The positive outlook for the period ahead will also be strengthened by a series of reforms to Gibraltar’s gambling legislation. This will modernise various aspects of the licensing regime, all designed to keep Gibraltar a premier jurisdiction committed to attracting entrepreneurship and quality business.
The next step in the development of the gambling industry in Gibraltar is coinciding with simultaneous growth and innovation in other digital sectors. This includes the further strengthening of our well-established fintech and DLT sectors, and a growing interest in esports and other forms of interactive entertainment.
As a forward-thinking, nimble jurisdiction with a proven track record, Gibraltar is well-positioned to provide a home for businesses seeking to operate at the intersection of these industries.
Peter Montegriffo QC is a Partner at Hassans and team leader of the firm’s pre-eminent Gaming team. As well as being closely involved in the IPOs of various gaming companies established in Gibraltar, Peter is closely involved in drafting numerous changes to Gibraltar’s legislation in relation to gaming, as well as trusts and financial services. His unrivalled knowledge of these fields has led him to contribute to a large number of articles and books on Gibraltar’s legal system, while he is regularly invited to speak at international conferences, He now also advises regularly on cross border commercial, merger and consolidation exercises.
Ed Allison-Wright, director, World Trade Center Gibraltar
When we talk about Brexit, we should also talk about opportunities. Gibraltar has enjoyed over 30 years of around 5% annual nominal GDP growth and has great agility, making it an attractive destination for all forms of business activities, including the gaming sector.
Brexit, or at least Brexit planning, actually held a silver lining for many companies in Gibraltar when the pandemic took hold in March 2020. ‘Work from Home’ (WFH) infrastructure was devised to counter a ‘no deal’ Brexit, de-risking border fluidity for the cross-frontier workforce, only to find this exercise being rolled out through the first lockdown. This fortuitous foresight bought precious time for gaming companies to pivot to WFH consumers and to address implications of the temporary interruption to live sport.
With gaming companies on a comparatively strong footing entering 2021, the opportunities presented by Brexit in Gibraltar can be more easily captured, the biggest of which is mobility. Long has it been known that the Channel Islands, Isle of Man and Malta have, over time, been geographically constrained for business growth.
Gibraltar has benefited from growth beyond its boundaries through its land border with Spain and a commuting workforce. But with it has been an element of uncertainty over the fluidity of access.
The ‘Proposed framework for a UK-EU legal instrument setting out Gibraltar’s future relationship with the EU’ – a Non-Paper agreed on 31st December 2020 – aspires to address uncertainty. While the agreement sets aside sovereignty, it proposes a relationship through which Gibraltar could see border controls moved to the ports and airport, making way for a Schengen arrangement between Gibraltar and Spain, its closest Schengen member state.
Elimination of border fluidity concerns would present a degree of certainty never seen before, enabling longer-term growth with the confidence that cross-frontier commuting is unhindered.
Shimon Akad, COO of Playtech, based in the World Trade Center Gibraltar, says: “In the past year we have seen Gibraltar handle the challenges and uncertainties of Covid with professionalism, tenacity and heart supporting business and the community. The World Trade Center Gibraltar has implemented the Covid precaution guidelines in a manner that allows planning with confidence and flexibility. The regulator and WTC continue to support Playtech’s needs while allowing us to implement a smart and hybrid model where the office space functions as a place of innovation and engagement. Altogether, it means Playtech has allthe infrastructure needed to continue to run its business smoothly.”
World Trade Center Gibraltar was 98% occupied one month after opening in February 2017, of which 38% of occupiers were new to Gibraltar. This is a strong show of confidence.
There are 320 WTCs across the globe, in 90 countries, covering 72 capital cities. Whether it’s North America, LATAM, EMEA or APAC, the WTC connections run deep, and in a post-Brexit trading environment, a trusted global platform is of greater importance.
While it’s not finalised quite yet, the mutual benefits being discussed and proposed are palpable. If there is one thing that Gibraltar has up its sleeve, it’s tenacity. The grit and resilience shown to changing times have provided confidence to businesses.
There’s a rare common purpose observed when challenges arise in Gibraltar, bringing both private and public sectors together to foster innovative solutions; Covid has done just that. Couple this with an agile policy base and you have a jurisdiction more than prepared to make the most of whatever a ‘new norm’ beyond Brexit looks like.
Ed Allison-Wright, Director - World Trade Center Gibraltar, is experienced in attracting inward investment, encouraging localised growth and providing platforms for start-up enterprises to thrive. He works with government to shape policy towards supporting employment generation and highlighting the socio-economic benefits of major projects. Ed is also a Chartered Surveyor with specialism in Commercial Real Estate and a Chartered Town Planner.
Andrew Lyman, Gibraltar Gambling Commissioner
The 2016 Brexit result was not something Gibraltar wanted, but as part of the UK family, has reluctantly accepted.
The Gibraltar gambling industry was initially partially built on the basis of the fundamental freedom to offer gambling services into EU jurisdictions, but with the passing of the transitional period, EU business has now been migrated to Malta. Operators have not left Gibraltar for Malta, but co-located, dependent on strategic
focus and outlook.
While Brexit can be considered a watershed, change was already taking place. Many more EU jurisdictions now have mature, liberalised and compliant gambling regulatory regimes. There has also been an incremental shift to point of consumption regulation. When the UK introduced point of consumption tax and regulation in 2014, the doomsayers suggested the demise of Gibraltar as a gambling hub. In fact, it strengthened.
With the migration of EU business, the future of the Gibraltar gambling hub is plainly a matter of interest, and understandably there is a live debate on the issue.
Now another element has been introduced into that debate by the strong possibility of an EU-UK treaty on Gibraltar, which will cement the tripartite "in principle" agreement between Spain, Gibraltar and the UK. This is not without complexity as the EU will not want to establish a precedent that has impacts on its other external relationships.
This treaty could mean Gibraltar being part of the Schengen area (free movement of people), possibly part of a localised customs union (free movement of goods) and part of an area of shared prosperity with the neighbouring Campo area of Spain. One cannot underestimate the economic interdependence of Gibraltar and the surrounding area of Spain. It will not mean (unless there is a dramatic development) that Gibraltar will be able to supply gambling services into the EU.
A treaty would leave Gibraltar as a geographically advantaged location for multi-jurisdictional gambling operators, and one which both welcomes gambling executives and provides a politically stable and welcoming environment; there's also the lifestyle benefits (including EU travel access).
This situation undoubtedly leaves Gibraltar more reliant on UK business (the Joint Ministerial Council has guaranteed UK market access) and non-EU international business.
So what needs to be done for Gibraltar to sustain itself in the sector?
First there's no rush from the Rock. Gambling employee numbers (about 3,500) have not reduced, the number of licences has not reduced and there's even a pipeline of new licence applications (at various stages).
Gibraltar has built its reputation on licensing a limited number of tier-one operators, and while there's a need to be less risk-averse, it will remain circumspect about who it licenses and the respective economic benefits that applicant will bring to the jurisdiction in terms of substance.
In short, Gibraltar could (a) become the gambling hub of choice in respect of UK business, and (b) build out as a larger hub for non-EU international business, with a reputation for maintaining effective international AML and social responsibility standards.
New gambling legislation is in the pipeline to update the Gambling Act 2005, and one of the intentions is to ensure all relevant gambling services being conducted in or from Gibraltar are licensed. This would include marketing services if they do not already fall under licensing.
The issue around the location of IT infrastructure is also a live debate, and while the regime is not likely to grant the automatic right to operators and B2Bs to use hyper-cloud, there's likely to be more discretionary flexible arrangements (based around a wider test), which allow optimisation and efficiency in this area. It is also likely that an approval and licensing system will be established for the essential gambling supply chain, or platform and other suppliers. Having technology in Gibraltar will be a licensing trigger, but so will having "mind and management" in the jurisdiction. Gambling businesses and IT infrastructure providers in Gibraltar are being encouraged to have a debate about the commercial and technical arrangements that will work for the future. This requires adaptation and flexibility on both sides. One advantage that Gibraltar has as a small jurisdiction is its agility.
Overall, there are many moving parts, but as an insider, I remain very optimistic for Gibraltar as a high-quality gambling hub of choice for gambling businesses facing into the UK and non-EU international jurisdictions.
Also with its progressive stance on regulating distributed ledger technology (Blockchain), Gibraltar remains at the cutting edge of development in this area. Mainstream gambling operators (because of alternative focus) have not really been the first movers in this area, but there is both expertise and appetite in the jurisdiction for this type of business, from reputable applicants and incumbents.
Andrew Lyman is a qualified UK lawyer and has a Masters in Sports Law and a certificate of professional competence in Gibraltar law. He is currently the Gibraltar Gambling Commissioner (a statutory appointment) and the Executive Director of the Gibraltar Gambling Division (within the Ministry of Digital and Financial Services). He was part of the original Executive team at the Gambling Commission of Great Britain (2006-2008) responsible for implementing the 2005 Gambling Act, and has worked in the gambling industry for a decade.
Danny Hook, director of enterprise for Gibtelecom
Irrespective of major shifts in policy or trade that have recently happened, or have yet to happen, Gibraltar has remained and will continue to be one of the leading e-gaming jurisdictions in the world, as well as home to many of the top and most reputable businesses in the industry. The sector has significantly evolved over the years, experiencing rapid growth amid a constantly changing regulatory landscape.
Gibraltar is an attractive jurisdiction as it has built a solid reputation for its conservative and pragmatic approach to licensing. It also boasts a forward-looking business environment, a favourable tax regime, an extraordinary Mediterranean climate, a friendly multi-cultural community and it’s a safe place to live. It also has easy access into Spain and Europe, direct air links to UK and is in close proximity to Africa.
International e-commerce businesses by their sheer nature are also largely dependent on cutting-edge technology, a secure environment for their crucial IT equipment and global reach.
Gibraltar’s service providers have developed and implemented products and services, to support the requirements of operators and software providers. Companies have also invested heavily in state-of-the-art data centres providing co-location, managed services and a full range of cloud services.
Punching above its weight, Gibraltar is well connected to Europe and Asia by modern submarine cable systems and Gibtelecom is one of the founder consortium members of the Europe-India Gateway (EIG).
Designed for the 21st century to meet the needs of modern comms-rich businesses, it was also the first direct, high-bandwidth optical-fibre undersea cable system from UK to India, with a branch landing in Gibraltar.
The online gaming sector is a global industry and Gibtelecom must deliver what customers need wherever in the world they may be: global footprint of data centres, a vast portfolio of services and a highly resilient private network that allows them to be agile and move fast into new markets.
Driven by this need, we are currently expanding further abroad and we are currently putting the finishing touches to our first Asian cloud platform in Johor Bahru, Malaysia.
This new facility offers the full suite of cloud products, hosting services and connectivity solutions. It connects directly via our private network with its cloud hubs and data centres in London and Gibraltar, and it also provides European companies looking east or eastern companies looking west a secure and reliable internationally-distributed infrastructure.
Gibraltar has evolved to meet its many challenges over time, and with every challenge there have been opportunities. Today is no different. We have already been seeing new technology, such as blockchain, entering the market and Gibraltar is once again firmly positioned and leading in its regulatory approach.
As new businesses and industries develop,there is no doubt Gibraltar will be in prime position to attract and nurture such opportunities, supporting their success both locally and internationally.
Danny Hook, Director Enterprise for Gibtelecom, is responsible for overseeing strategy and development of all products and services aimed at businesses for Gibtelecom. With over two decades as a leader in technology, operations and commercial roles, Danny has a track record of building strong teams that deliver innovative technologies motivated by customer needs.