How has Brexit affected the UK gambling industry? Taking a look at changes since 2020

After 43 years of membership, the UK voted to leave the European Union on 23rd June 2016. Almost four years later, on 31st January 2020 at 11 pm UK time, midnight in central Europe, the UK formally exited the trading and political union. From the vote until now, Brexit has had a wide-ranging impact on the entire UK economy.

Now eight years since the UK voted Leave and made history as the first nation to leave the EU, it’s time to examine how Brexit has affected the UK gambling industry.

EU gambling infrastructure and regulation 

“There is no sector-specific EU legislation in the field of gambling services. EU countries are autonomous in the way they organise their gambling services, as long as they comply with the fundamental freedoms established under the Treaty on the Functioning of the European Union (TFEU).”

European Commission – Online gambling in the EU 

Unlike other industries, gambling was never subject to EU control from a legislative perspective. According to the European Commission, some form of online gambling is permitted in most EU countries, either under a monopoly or licensing regime allowing multiple operators. 

Great Britain is an autonomous gambling market governed by the Gambling Commission, while gambling activity in Northern Ireland is regulated by the Department for Communities (DfC). In other member states, the situation is similar; Malta is home to the Malta Gaming Commission (MGA), Germany has Gemeinsame Glücksspielbehörde der Länder (GGL) and so on.

The Gambling Commission is known for some of the strictest gambling regulations globally. Hence, from a legal viewpoint, the effect of Brexit on the UK’s gambling regulatory outlook has been limited. By leaving the block, the UK has ensured its continued autonomy, as it will not be subject to any future block-wide gambling legislation. 

Data protection and AML laws

On a broader level, leaving the EU has meant the UK needs to implement its own laws regarding money laundering and data protection.

Luckily for operators, rather than reinventing the wheel, the UK General Data Protection Regulation closely follows the same rules as the EU General Data Protection Regulation, to the point that the EU has agreed to allow the continued free flow of data between EU and UK businesses until 2025 (known as the “adequacy decision”, meaning there’s currently no difference between pre- and post-Brexit data protection and information flows, but this may change).

EU market access, talent acquisition and economic impacts

A fundamental change for the UK gambling industry has been the loss of free market access to the EU. 

As European gambling jurisdictions are autonomous, EU operators in the UK require Gambling Commission licensing, and vice versa for UK operators in Europe – this hasn’t changed. However, previously, operators didn’t need a physical presence in the EU as the UK was a member state, so the presence requirement was already fulfilled. 

Those operators with multiple licences trading across Europe have continued to do so but now have an additional European base to meet the physical presence requirement.

With the resurrection of trade tariffs and third-country rules, market access to the EU has become more difficult for new slot sites and casinos. Rather than looking for expansion opportunities in the EU market (which previously had been as easy as applying for a licence, as most UK sites meet EU compliance standards due to the high regulatory standards set by the Gambling Commission), more operators are now looking outside the EU. The North American market is proving particularly popular, with experts citing the US market as the new gambling gold rush. 

Additionally, since leaving the EU, UK operators have lost the ability to freely hire staff from across the block, reducing the readily available talent pool. Immigration rules and visa regulations increase the difficulties in hiring staff from the EU, making it a more expensive and lengthy process.

There has also been additional market friction created by Brexit, such as the implementation of trade agreements and tariffs between the UK and EU affecting the entire UK economy and greater market volatility for GBP with large currency fluctuations. On the macro level, these economic disturbances have impacted consumer spending behaviour, contributing to the UK’s current cost of living crisis and operator revenue.

Payments methods

The increased barriers to EU trading have meant a shift in secondary markets, like payment methods. For example, EU payment providers that previously could process UK payments seamlessly now face greater regulation. This means UK operators have generally restricted payment methods to UK options to prevent interruptions and additional costs, reducing consumer choice.

Advertising

In terms of advertising differences, Brexit hasn’t had a significant impact, as different European jurisdictions have always had different rules and regulations for gambling advertising (remember, EU members have autonomous rights over gambling laws – companies licensed to provide gambling in an EU country must keep to the local state laws and vice versa in the UK). 

The EU’s main gambling markets, Italy, Germany, Spain, Belgium and the Netherlands, all have some form of gambling ad ban (ranging from a complete ban in Italy and Belgium to a partial ban in the Netherlands and Germany). Comparatively, however, the UK doesn’t regulate sports sponsorship (resulting in gambling logos seen up to 700 times during major football matches), target ads, online ads, TV and Radio ads, social media influences, or ads during sports events (post 9 pm), which is a continuing area of compliance difference. When it comes down to gambling advertising rules, the UK is more similar to the US.

How has Brexit affected the UK gambling industry? 

Continued trading in Europe now means having a physical presence and increased costs; this is leading UK operators, especially new slot sites and casinos, to look further afield for expansion opportunities. 

Leaving the EU has also reduced the UK’s access to talent – EU citizens are now third country and require visas, making it a longer and more complex process to hire outside of the UK – which is one of many factors (like the new rules for games design and max stakes on slots) making the UK an arguably less attractive prospect for gambling operators.

EU payment methods face increased interruptions when offering their services outside the EU. Rules regarding transactions increase friction, transaction times and potential costs, meaning a reduction in EU payment methods at UK online casinos. 

On a broader level, the economic shock caused by Brexit has contributed to the current cost of living crisis, which impacts consumer spending behaviour. Currently, data protection rules for UK operators (due to equivalency recognition) and gambling ads (which differ in each jurisdiction) remain largely unaffected by Brexit.