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The recent General Election handed the Conservative Party the majority they needed to finally take the United Kingdom out of the European Union.
Debates over the move have been rumbling on since June 2016, when 51.9% of voters in a referendum decided that they wanted to leave the EU.
Prime Minister Boris Johnson vowed to ‘get Brexit done’ during the run-up to the Election and the country has given him a mandate to do just that.
Exiting the EU will undoubtedly have far-reaching implications for British businesses, radically changing the way companies will do business in the future.
One of the sectors most likely to be affected is the gambling industry, with Brexit expected to affect the way UK betting sites operate.
Regulatory issues abound due to Brexit
Licensing and regulation are a key part of the UK gambling industry and Brexit undoubtedly gives operators some decisions to make.
Gambling is a multi-billion-pound industry in the UK, making it a hugely important sector in the country’s economy as a whole.
The betting companies based in Gibraltar are unlikely to be affected, but it will be a different story for those who have established operations in EU countries like Malta.
Revised trading agreements could lead to higher taxes and this has the potential to be a major headache for bookmakers and punters alike.
On the plus side, any firms wishing to operate in the UK after Brexit will be required to have an up-to-date license from the Gambling Commission.
This will help to tighten up the industry and give punters additional piece of mind that the companies they wager with are reputable.
Operator profits could be hit hard
Trading within a single market like the EU is seen to have many benefits and is a system that the gambling industry has used to its advantage.
Companies have been able to base portions of their operations in countries that have different tax rules and which provide cheaper labour costs.
This has helped betting firms maximise their earning potential in ways that may not be open to them once Brexit is finalised.
Similarly, EU-based companies have been able to use UK jurisdictions like Gibraltar to build up their business by offering their services to punters in the UK.
The revised landscape may see tariffs applied to these types of deals, making them financially unattractive for the respective companies.
While this may appeal to established UK operators, it also has the potential to narrow choice for punters and make the industry much less competitive.
The exchange rate conundrum
The strength of the pound against other currencies is the key to determining the current state of the country’s economy.
When the results of the Brexit referendum were confirmed back in 2016 the pound was worth more than 1.31 Euros. Fast forward to 2020 and the exchange rate has been as low as 1.17.
While that might see like a drop in the ocean if you’re buying holiday currency, it is a major issue for betting companies.
For those that trade across borders it could cost them huge chunks off their profits, potentially putting jobs at risk.
That may cause some operators to fall by the wayside, once again reducing choice for consumers and making the marketplace less competitive.
However, the pound did rally after the result of the General Election, suggesting that investors believe that Brexit could actually be good news for the UK.
Brexit already impacting the UK betting landscape
The announcement that LeoVegas will withdraw its Royal Panda brand from the UK market at the end of January is the first major example of the impact Brexit could have on the industry.
Royal Panda is no longer accepting new customers from the UK, while existing customers have been advised to withdraw their balances before the end of the month.
“We’d like to thank you for playing with Royal Panda, remind you that you should withdraw your cash as soon as possible, and wish you every success in the future,” the company said via a statement on its website.
Royal Panda had been actively growing its business in the UK over the past few years and had emerged as a major rival to some of the more established brands.
The firm agreed a three-year sponsorship deal with Queens Park Rangers during 2017, further highlighting their commitment to the UK market.
However, Brexit has clearly caused a rethink by LeoVegas and they are unlikely to be the last firm to consider their future in the UK.
Brexit and the future for UK betting
Brexit has certainly created plenty of uncertainty in the UK and the gambling industry is no different in that respect.
The full impact is unlikely to be known for quite a while, but will clearly revolve around the specific terms of the trade deal the UK negotiates with the EU.
Profits and jobs could be at risk, although the industry will be hoping that those worries turn out to be completely unfounded.
Royal Panda’s withdrawal from the UK market is an indicator that punters may be the ones who suffer most as a result of Brexit.
Decreased competition could lead to operators offering poorer odds and providing less bonuses and promotions for consumers.
Punters will hope that scenario doesn’t come to fruition and that the UK betting industry remains a vibrant sector with plenty of choice.
