Brexit and Its Influence on the UK Online Gambling Industry

Edna Boykin
December 30, 2024

Brexit is an event that has dramatically altered the economic, political, and legal conditions of history.

However, this shift is especially valid for international business sectors, including online gambling. As part of the EU-integrated framework, the UK gambling industry now has to grapple with regulatory and market changes that might change the direction of its future.

In this blog, we take a look at how Brexit has affected the UK online gambling market in terms of regulation, possible prospects, and the possible impact of Brexit on UK gambling operators.

Brexit's Impact On UK Gambling Industry

The UK gambling industry has been impacted by Brexit in several areas, such as regulation, licensing, and market.

These changes are discussed in detail in the following sections with reference to the features of this transformation.

Shifts in Regulatory Framework After Brexit

Earlier, the UK gambling industry used to follow EU directives to make cross-border transactions easy. The EU accepted licenses from most online operators with locations such as Malta and Gibraltar located in other EU-regulated jurisdictions. The GDPR led to an average improvement of the compliance process for operators.

Post-Brexit Changes in UK Gambling Regulations

Brexit is a historical event when it comes to the UK, as it left the European Union and, as such, was allowed to determine its regulation frameworks.

Compliance standards have been increased, and the licensing standards have been changed, which means that the UK Gambling Commission (UKGC) is more involved than ever.

Exemption from EU Directives

EU mandates are replaced by procedural ones, allowing the British government to impose more fitting domestic market regulations.

This independence is beneficial but does introduce additional regulatory distortion for operators active in both the UK and EU regions.

Impact on Licensing for Online Operators

Now, there are difficulties for the operators who were based in EU jurisdictions such as Malta or Gibraltar to retain their UK licenses.

The abolishment of a mutual recognition agreement means that such operators must meet the UKGC standards on their terms, which increases costs and poses challenges.

Tax Policies and Compliance

Following Brexit, there have been some changes to the taxation policies for gambling operators in the UK, which may have an impact on the company’s profit.

Other companies view it as an additional expense and a reason for the operators to be based in the UK to receive preferential treatment.

Cross-Border Data Protection

Since Brexit, the UK is no longer covered by the EU GDPR. After all, the UK also has similar data protection laws, and establishing dual compliance systems means that operators have more bureaucracy that they need to deal with.

Opportunities for the UK Gambling Industry Post-Brexit

The UK gambling industry is having a tough time as a result of Brexit, but it has also opened up new opportunities.

Greater Regulatory Autonomy

The government can make UK gambling laws after Brexit more competitive for the home market or more operator-friendly.

The UK is also able to fulfill specific market needs and conform to the changes in the worldwide market because of this flexibility.

New Trade Agreements and Markets

With Brexit, the UK has the opportunity to bargain trade with countries not in the European Union. UK-based operators will have scope for huge growth in the Euro-Asian and African markets.

Foreign participants may be interested in cooperation with UK operators in conditions of less complicated rules and policies and tax privileges.

Tax Incentives for Domestic Carriers

Some of the potential changes in the tax policies may be made after Brexit to retain operators based in the UK.

This could positively affect the domestic economy and enhance the position of the UK as a primary gambling destination.

UK’s Appeal to the Global Players

Brexit could mean some post-exit changes to the tax policies to retain the best online casinos in UK. This could have positive repercussions for the domestic economy and improve the status of the UK as a leading gambling destination.

Challenges Faced by the UK Gambling Industry After Brexit

Like any UK-based industry, the gambling industry faces challenges in conducting business in this new Brexit Era.

Increased Operational Costs

Free access to the EU market is no longer possible, and the operator must acquire individual licenses for each jurisdiction, resulting in skyrocketing operational costs.

Licensing Hurdles

Operators from the UK who wish to operate in the EU have encountered huge challenges, including licensing requirements and additional compliance costs.

It may discourage the development of new markets by the smaller operators inside the EU member countries.

Effect on Talent and Workforce

Recruiting skilled workers from the European Union has become a challenge because it involves a lack of mobility.

This could mean a reduction in the number of qualified applicants, particularly for tech-based and compliance roles, due to fewer recruiting opportunities and harder-to-work visa policies.

International Money Transfer

Cross-border payment systems have been affected because operators have struggled with exchange rate changes and international payment acclimation. They may even put some of them off using UK platforms.

Regulatory Divergence

Now, the operators were subject to two, sometimes diverging, supervisory systems: both the UK and the EU ones, increasing costs for the operators and leading to legal contradictions.

Consumer Trust and Market Perception

After Brexit, regulatory risk may severely damage customer trust in cross-border gambling services.

Operators must put in more effort to convince players of the safety and legality of their platforms.

What Does the Future Hold for the UK Online Gambling Industry?

The long-term Brexit impact on UK gambling industry remains uncertain, but several trends and possibilities are emerging:

Regulatory Outlook

The UK has the opportunity to raise legal gambling standards to combat problem gambling issues or reduce legal requirements to attract foreign operators.

New International Partnerships

The UK will look to develop other markets outside the EU, and key opportunities exist in the USA, Canada, and emerging markets. This may give rise to new opportunities for the Internet operators.

Technological Advancements

The innovations that are expected to disrupt the market and keep the operators relevant in a highly fragmented environment are AI, blockchain, and crypto payments.

Shifting Consumer Trends

The economic effects of Brexit may change players’ choices and allow operators to expand the availability of cheap gambling.

Market Consolidation

M&A deals to increase the level of the industry’s consolidation in the context of operating in a post-Brexit environment may pose new challenges.

Conclusion

Brexit has affected the evolution of online casinos in the UK as both a threat and a driving force. The cost increase and complicated rules and regulations are the thorns that operators face, but changes to the market, new international affiliations, and new regulatory freedom could position Britain as an international gambling giant.

The gambling industry in the UK faces challenges like regulation of gamblers, customer loyalty being reduced because of globalization, and how Brexit is likely to have an effect on the industry. The trust factor can turn this into opportunities by increasing innovation to achieve a sustainable future.