Brexit: Betting and Gaming

The UK left the EU on 31 January 2020. A transition period, during which EU laws continue to apply in the UK, is due to end on 31 December 2020. The UK/EU Withdrawal Agreement sets out transitional arrangements and negotiations for the future UK/EU relationship are ongoing.

Online gambling businesses have historically located their operations and employees across the EU, with London, Gibraltar and Malta being key business hubs. Brexit will therefore impact the gambling industry in a number of ways.

Many gambling businesses have already undertaken significant amounts of restructuring work in preparation. Much of this has been driven by gambling regulatory considerations.  First, certain gambling licences (such as those issued by the gambling regulators in Spain and Malta, including Maltese recognition notices) must be held by an entity established in the EEA, leading to transfers of licences held by British or Gibraltarian companies to companies within the EEA. Secondly, there are significant regulatory advantages in dealing with consumers in unregulated EU territories via an operating company located in the EU. A number of gambling companies have expanded their operations in Malta, and moved their EU-facing servers to Ireland.

Much will, of course, depend upon whether there is a trade deal, and the scope of any deal.

In relation to data protection, if the EU does not accept that the UK's data protection regime is adequate, contracts which involve the transfer of personal data from the EU to the UK should be amended to include suitable provisions to adhere to EU standards. Gambling businesses should assess how many of their intra-group and external contracts are likely to need such amendments, and plan accordingly. Businesses should also consider the extent to which they will continue to transfer personal data across EU borders. If processing operations in relation to a customer take place in both the EU and the UK/Gibraltar, there is a risk that any data protection breach could result in overlapping investigations, and two sets of fines.

Gambling businesses should also prepare for the fact that employees may not be able to relocate across the EU border without encountering some degree of friction. EU nationals working in the UK will need to apply to the EU Settlement Scheme, to ensure that they will be able to continue living or working in the UK as they do now.  Similarly, UK nationals working in the EU will require a local work permit, unless agreement is reached.

In relation to tax, cross-border supplies of goods and services may be treated differently following the end of the transition period, with the UK becoming a third country for VAT purposes.  Businesses should assess whether this is likely to affect any contracts they have with service providers, and consider whether those contracts need revising. Businesses should also prepare for possible changes in the application of tax residency rules, with EU tax authorities more likely to argue (for example) that a business with a majority of directors in a particular EU state is tax resident in that state.

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