888 Mulls Possible Post-Brexit Move to Malta
The topic of whether or not the United Kingdom protectorate of Gibraltar will remain a hub for European online-gambling and sports-betting operators, once the UK completes its “Brexit” departure from the European, returns to the news today via 888 Holdings Plc. In 888’s annual financial report, released on Friday. the company offered details of how the UK’s Brexit might impact 888’s ability to provide services throughout the EU.
Among the possibilities, as we’ve suggested here at SBO in earlier reports involving Brexit and Gibraltar, is a move by many of the small protectorate’s online operators to Malta. And now, 888 has acknowledged that such a move to Malta is very much in play, or, at the very least, and attempt to create a licensing channel through Malta via an alternate “dot-com” domain family still controlled by 888.
Here’s what 888 offered on the Brexit-Gibraltar topic, amid discussions of several areas where the company perceives heightened operational risk:
Brexit-related risks → increased during 2016
The risk: The proposed status of Gibraltar in relation to the United Kingdom as a result of “Brexit” is at present unclear. If 888 were to remain registered, licenced and operating in Gibraltar in these circumstances, its ability to rely on EU freedom of services / establishment principles in supplying its services within the EU will be limited; furthermore, it may become ineligible to continue to hold regulatory licenses in certain EU jurisdictions. “Brexit” could adversely affect economic or market conditions in the United Kingdom, Europe or globally and could contribute to instability in global financial markets, in particular until there is more certainty as to the form that “Brexit” will take and its effect on Gibraltar, the United Kingdom and the EU.
Relevance to strategy: The ability to rely on EU principles underpins 888’s regulatory strategy regarding major EU markets.
How the risk is managed: 888 would not be able to control or mitigate political changes of this nature, however it would reconsider the appropriateness of remaining registered, licenced and operational in Gibraltar in these circumstances. Malta may be considered as an alternative “dot com” licensing jurisdiction.
What happened in 2016: On June 23, 2016, it was decided by UK referendum that the UK should leave the EU. However, the UK Prime Minister has not yet given written notice under Article 50 of the Treaty on European Union, which would then start an up to two-year negotiation period on the terms of exit and the relationship between the UK and the EU following exit.
Not addressed in 888’s annual report is a new level of political uncertainty regarding Gibraltar itself. Though controlled by the Brits for more than three centuries, that possession of Gibraltar has always been disputed by Spain. The populace of Gibraltar, the rocky promontory attached to Spain’s southern coast at the mouth of the Mediterranean Sea, considers itself wholly British, even though it voted by a wide margin to stay part of the EU in the UK’s Brexit referendum last year.
Spain has seized upon the unique situation of Gibraltar as a means of reasserting its claim to the protectorate, which was part of that country before being ceded to Britain back in 1713, lost during a secession war caused when Spain’s then-king died childless. In modern times, Spain has continually sought joint control over the promontory on the grounds that the land and the famed “Rock” was originally Spain’s property. The narrow isthmus connecting Gibraltar to the Spanish mainland is the only land path between Gibraltar and the rest of Europe, and Spain has frequently threatened measures such as closing the border or charging excessive fees to allow vehicles to cross, thus choking necessary trade.
Less than two weeks ago, for example, with what was likely considerable prodding by Spain, the EU issued draft guidelines regarding Gibraltar that appear to violate the UK’s claims of sovereignty over the rocky outcrop, should those guidelines be made official. “After the UK leaves the Union, no agreement between the EU and the UK may apply to the territory of Gibraltar without agreement between Spain and the UK,” reads some of the text within the UK-issued draft.
Such a pretext, a joint custody deal involving Spain and the UK, might work well for the Gibraltar companies, but the United Kingdom has zero interest in such an arrangement. Neither do most Gibraltarians, who voted nearly 50:1 to stay under Brit control back in 2002. Frankly, it’s unlikely that a similar referendum, if held today, would provide such a near-unanimous result; people do vote their wallets and bank accounts above most other concerns. Yet it’s a pickle: Compare Gibraltar’s pro-UK heritage to the 96% “Stay” vote last year by Gibraltarians on the Brexit matter, and toss in the fact that much of Gibraltar’s economy is derived from online gambling, financial, and other EU-facing virtual services.
888’s consideration of a possible move to Malta shows how difficult the situation might be. Elsewhere within the annual report, the company notes how pleased it is in general with its current location, thus admitting that any move to Malta would be only by business necessity.
In any event, we won’t know that answer soon. The earliest that the UK’s Brexit seperation from the EU could become official is the middle of 2019, and ongoing Brit confusion on trade matters make 2020 or later a likelier possibility. Only as that hard exit approaches are we likely to learn the residential fate of the dozens of online-gambling firms who currently call Gibraltar home.
- 888 Holdings
- European Union
- United Kingdom