Gibraltar has been offering gambling licences since 1998, a process which is now managed by the Gibraltar Regulatory Authority (GRA), which was appointed by the Gambling Commissioner in 2005. The territory soon garnered a strong reputation for hosting online gaming companies, with the perfect combination of low tax, no VAT charges, and an abundance of workers.
The GRA only offer one licence that covers all activities for one year. This annual licence runs at a cost of £2000, with a gaming tax rate of 1% capped at £425,000 up to £42.5m. With these appealing financial figures, Gibraltar has been able to maintain very strict requirements for handing out licences, bolstering its already impressive standing in the online gaming community by making sure that players are protected, holding companies to a high standard of excellence.
The 2008 financial crisis crippled many European nations and led them to the age of austerity, but Gibraltar managed to buck the trend in spectacular style, with one of the fastest growing economies in Europe. The British Overseas Territory, located at the entrance to the Mediterranean and to the south of the Spanish province of Andalucia, has been described as a "virtual Las Vegas". Its low tax arrangements have seen many online gaming companies moving all or part of their online assets to the Rock, with 12% of Gibraltar’s 30,000 residents now employed in the industry, from server managers to live casino dealers.
Gibraltar has found itself tangling with the UK about details and legalities of the point of consumption tax. In December 2014, the UK government introduced changes to gaming law by taxing companies based on the country their customers are in, not the country where the company or its servers are located in. The point of consumption tax aims to help the UK government repatriate £300m per year.
The Gibraltar Betting and Gaming Association (GBGA), an organisation defending the rights of online gaming companies based on the Rock, is challenging the changes. Not only is it unwilling to pay the 15% tax, but also challenging that, under the new rules, operators have to apply for a separate licence from the UK Gambling Commission.
The main concern is that many online gaming sites and bookmakers will de-camp back to Britain, but the organisation also expressed concerns about how the government intends to regulate companies based all around the globe. They claim that it would result in less player protection and the emergence of a potential black-market online gaming industry within the UK. In July 2015, legal firm Olswang, acting on behalf of the GBGA, confirmed that the case had been referred to the EU Court of Justice.
All eyes in Gibraltar’s online gaming industry are fixed on the EU Court of Justice as it deliberates the challenge to the UK’s point of consumption tax. At least 55% of online gambling in the UK takes place on Gibraltar-based servers, meaning a mass exodus of companies back to the UK would certainly put a dent in the Gibraltarian economy. Yet, even with the UK Finance Act, Gibraltar’s tax incentives still remain appealing. The territory has almost two decades of expertise to fall back on, and would likely find newer ways to keep businesses on the Rock for a long time to come.
The Gibraltar Regulatory Authority has long been setting the standards for safety and player protection in online gaming, and went so far as challenging the UK government in European Court because it believed the new rules would damage player safety, as well as its own economy. Through the ongoing debate with regards to EU online gaming rules, the GRA has suggested a number of implementations to not only protect players, but also underage users who may be trying to access online gaming illegally or without consent.
Gibraltar hosts many well-known brands of game developers, online casinos, and bookmakers, and also has four land-based casinos – the Casino Admiral, Sunborn Super Yacht, Rock Hotel and Casino, and the Stakis Casino. The casinos are brimming with slot machines, with a small number of table games on offer as well, including Roulette, Blackjack, and local variants of poker.
Many of Gibraltar’s online gaming companies host poker tournaments hosted on their Gibraltar-based servers, while the handful of casinos are also home to local tournaments and events, with the Sunborn able to transform its luxury ballroom into a 20-table gaming hall. Accountancy firm KPMG has also held its annual eGaming Summit on the 5-star floating hotel, visited by over 230 guests from the global gaming industry.