Consequences of Brexit: what will happen to the online gambling industry
On June 23, 2016 the UK held a referendum where every citizen could vote for the country’s exit from the European Union. The result was unexpected: 33.6 million (51.9%) voters supported this initiative. Now Great Britain will have to leave the EU.
What are the risks
The United Kingdom joined the European Union back in 1973 when it was known as the European Economic Community. Since then, the country has played a key role in the organization, including the legalization and regulation of gambling. The country includes as many as six jurisdictions that license gambling (including online gambling) operators:
• Britain itself and its Gaming Commission (UKGC);
• Gibraltar (Gibraltar Regulatory Authority);
• Alderney (and the gambling control commission);
• Isle of Man (and gambling Supervisory Commission);
• Guernsey (and gambling control commission);
• Jersey (Jersey Gambling Commission).
The first reaction of markets
Each of these controllers has issued dozens of licenses and supervises the work of its licensees. UKGC has always been the most authoritative of them. Its instructions and recommendations were taken as a basis for regulators across Europe. Now UKGC is likely to become much less important organ. But luckily the way out of the EU cannot be done in one day. The process will take about two years. During this period, operators can adjust to the change and find a way out.
Secondly, three of the largest UK operator had to face significant fall of their actions:
• Ladbrokes shares have fallen by 10% (GBP 117 / USD 161,59 per an action);
• Paddy Power Betfair shares fell by 25% (GBP 6,55 / USD 9,05 per an action);
• William Hill shares also fell (USD 414,33 to 327.3 an action).
David Clifton who is a gambling licensing specialist, said at a conference of the International Association of Gambling advisors in Malta that Brexit results will not affect the actions of operators. Yet, the decline in stock on the following day after the vote proved an instant market reaction to the results of the vote.