Rocky road: Taking stock of Gibraltar’s reputation following bet365's relocation

It’s not often a company relocation elicits statements from two governments, but that was exactly the case when bet365 announced it was moving the majority of its operations from Gibraltar to Malta.

Malta’s prime minister took to Twitter to welcome the online betting giant’s expansion on the Mediterranean island, while Gibraltar’s Gambling Minister Albert Isola rushed out a statement saying Gibraltar was confident there would be a positive outcome for Gibraltar companies as the Brexit negotiations progressed.

“They [bet365] are not leaving Gibraltar by any stretch of the imagination,” Isola said. “Neither are they having to choose between us and Malta. What remains true is that Gibraltar remains the jurisdiction of choice for the most reputable gaming companies in the world. Brexit isn’t going to change that.”

The scale of the upheaval though has caused plenty to ask questions about Gibraltar’s future at the centre of the egaming world. Despite Isola’s comments and bet365’s pledge to maintain a presence on the peninsula, multiple sources confirmed that less than 15 staff will remain in Gib following the move, which is expected to be carried out in August. One Gibraltar source noted the ripples of concern for the future of the gaming industry in Gib had spread beyond gaming circles and had become something of a ‘cause célèbre’ on the Rock.

In his June budget speech, Gibraltar Chief Minister Fabian Picardo again tried to allay fears, saying: “I am confident we will continue to enjoy a long-term relationship with that outstanding company [bet365] and the professionals that lead it”. He also highlighted the fact that gaming jobs had increased from 1,900 in 2008 to 3,800 in 2018. So just how realistic are these fears of a mass gaming exodus? Is Gibraltar’s position at the centre of the egaming world really in doubt?

One off?

It’s worth noting that bet365 said the move was designed to improve operational efficiency rather than run two major offices, while the Gibraltar government said the move was “directly related to Brexit and not to any matter otherwise related to Gibraltar”. If Brexit was indeed the cause, Nigel Birrell, CEO of Lottoland and chair of the Gibraltar Betting and Gaming Association, downplays the risk of other firms following suit.

“If it’s about access to the European single market, most firms in Gib now have licences in multiple jurisdictions anyway, including Malta, so they can just use another entity to access the EU market,” Birrell says. William Hill might be showing the way forward here, with the operator having split its operations following the acquisition of Mr Green; its international business is now run from Malta and the UK-facing business run from Gibraltar.

Rather than market access, the bigger fear for local firms has instead been the concerns about the border being closed so staff can’t commute over from Spain so easily. However, an increasingly cordial relationship between the Gibraltar and Spanish governments means even these concerns are dissipating.

“Ever since the Brexit vote in June 2016, we were concerned the day after that the Spanish might shut the border so we gave everyone laptops and told them to work from home if there was an issue. It never happened and now it’s clearer than it’s ever been,” Birrell says. “The Spanish government is left of centre and seems to be aligned with the slightly left-of-centre Gib government, unlike the right-wing parties who like to sabre rattle whenever Gibraltar is mentioned.

“The two governments are currently negotiating an accord on a number of issues like taxation and freedom of movement across the border. It’s really clarified the position of Gibraltar and everyone’s assured there will be no issues at the border. It’s the first time Spain has recognised Gibraltar in some sort of treaty so I’m really not concerned at all.”

The lack of concern about Brexit among other operators seems to suggest that bet365’s case is perhaps unique. One Gibraltar gaming executive, speaking on the condition of anonymity, suggests the Stoke-headquartered firm’s move is driven in part by a disagreement over the use of cloud-based servers, where the operator had started moving its systems despite opposition from the Gibraltar gaming regulator.

“The rest of the world is moving to the cloud on things like AWS [Amazon Web Services] but the Gib government hasn’t really allowed that,” the source says. “365 moved a lot of the servers to the cloud which annoyed the Gib government. They need to get into the 21st century when it comes to server hosting.”

Fast forward

Following bet365’s departure, the Gib government does indeed seem to be updating its regulations. In his own budget speech in mid-June, Isola noted that a modernisation programme for future regulation was “already underway”.

The gambling minister said: “With giant strides being made in technology infrastructure, such as the growth of the cloud and API use, we now need to deliver a regulatory regime that is fit for the future.” Isola also highlighted other ways the regulator was trying to make Gibraltar more attractive for licensees, suggesting it would potentially be more relaxed on allowing Gib operators to target Asian markets. Traditionally, the jurisdiction has been stricter on firms targeting the Far East, with the Isle of Man generally the favoured jurisdiction for Asia-facing firms.

Isola added: “This year, we have issued 10 new licences to six companies (split evenly between B2C and B2B). We have seen the emergence of two well invested gambling start-ups and we continue to talk to our operators and prospective licensees about future business plans centred on Gibraltar. New gambling markets are opening up and many see Gibraltar as a base for launching into new markets and from which to forge new strategic partnerships.”

The government also last year overhauled the gambling tax code, removing a cap on tax limits but lowering rates to 0.15% of GGR across the board in a move that was a net positive for all but the largest of operators.

Taken altogether, the prevailing sense among Gibraltar’s 15 licensees is one of a continued commitment to the Rock. It was no accident that a litany of firms including BetVictor and Lottoland kicked off a recruitment drive in the immediate aftermath of the bet365 announcement, doubling down on their Gibraltar roots.

As Birrell puts it: “There’s no doubt we’re staying. bet365 is a bit of a different animal. Gib was an offshoot of Stoke, it wasn’t their spiritual home. But us and others were born in Gib and don’t have major offices anywhere else. It’s our home.”

It seems reports of Gibraltar’s demise have been somewhat exaggerated.