UK EU Referendum Tomorrow: How Could a Brexit Affect the iGaming Industry?

Lee R. - June 22, 2016

If Britain does indeed break away from the European Union, operators can strategically prepare themselves for the Leave contingency.

A swing in recent pools indicates that Great Britain is now firmly leaning towards exiting the EU in the referendum scheduled for tomorrow, June 23, begging the question of how a Brexit could affect the fortunes of iGaming enterprises.    

The Chances

The exit certainly appears more likely in the new Brexit poll: the London Evening Standard's Ipsos MORI survey now shows Leave in the lead 53 percent to Remain's 47 per cent cent, for a 10 per cent jump against Remain from the previous poll. 

The Climate

Economic arguments for Leave are characterized by two points in public debate and campaigning: 1) consideration of the benefits of EU operational independence; and 2) a staunch level of skepticism among the British citizenry of the Chancellor and Treasury's claims of negative fiscal impacts of Leave, to the tune of up to 83%.

Independent Operations Appealing

For instance, despite government warnings of job loss and income drops in the Leave scenario, more respondents in the representative sample still believe they will be better off in five years outside the EU than inside.

The Impact on iGaming

As for Leave affecting iGaming, the prevailing opinion is that there will be no to minimal effect if Britain votes to Leave.

Possible Outcomes

The main possible outcome of a Leave vote appears to be the doing away of the point-of-consumption tax. Current EU compliance measures have ostensibly served to increase the cost of doing business for online casino operators and betting services primarily due to the healthy point of consumption tax charged upfront in the current Stay model.  

Course of Adaptation

The Leave scenario would require some adaptation to new regulations put forth by the UK, but these regulations are bound to be equitable and friendly because of the popularity of online wagering in the UK. At any rate, it is estimated that it will take two years before any changes take effect in Leave.   

Trend Scenario

The greater implications for iGaming might be the ripple effect of the UK leaving. If that were to spur other departures, then the ideal of a unified set of regulation for all operators in every European market streamlining expansion would dissolve, rendering market adaptation a more or less organic process each time out, with unpredictable variation in each national model. 

Potential Costs

Since integration remains an ideal as opposed to realized goal, the actual loss to iGaming stakeholders of a Brexit trendset still appears minimal at best.  A change in plans and strategy would require some additional investment in adaptation to national regulation models of any and all EU departed or non-EU members.

Safe Landing?

It certainly remains within reason for departed and non EU members, unbound by EU policy, to set up their regulation models faster, leading to accelerated licensing of operators to reward any re-investment in adaptation.  So, iGamers should watch the Referendum and immediate aftermath vigilantly, albeit sans concern.  

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