888 Holdings Voices Concerns about Brexit Consequences
888 Holdings is the first Gibraltar-based online poker provider to voice concerns about how leaving the European Union may impact its operations.
888 Holdings is one of a large number of companies whose online poker services are based in the British Overseas Territory of Gibraltar due to its low corporation tax rates. Other companies based in Gibraltar include Bet365, GVC, Ladbrokes and William Hill.
Although negotiations have just started between the UK and European Union over the terms of the UK´s “Brexit” departure, 888 has voiced concerns about the potential future risks the company faces when the UK officially leaves the EU in 2019.
We Want to Grow Within Europe
Last month, Itai Frieberger – the CEO of 888 Holdings – commented that growth within Europe was a key part of the company´s corporate strategy. However, in the company´s 2016 Annual Report, concerns are raised that any future limited movement of services within the EU (as opposed to the current free movement of services) may cause problems for providing a service to European gaming jurisdictions.
According to the Annual Report, the company fears its Gibraltar-issued Remote Gambling License may not be accepted by regulatory bodies within Europe – and, in order for the company to grow within Europe, 888 Holdings would have to relocate to an alternative base. Malta has widely been tipped as an option for 888 Holdings due to being English-speaking and having a favourable tax regime.
Whether or not employees could be found in Malta with the same skill sets as those in Gibraltar is a different question. Many leading online poker operators employ Spanish residents who have a quick commute across the border each morning. With a much smaller, island-based market from which to select key staff members, 888 Holdings may be unable to maintain the same level of service.
888´s Concerns Contradict KPMG and GVC Optimism
888´s concerns about the consequences of Brexit contradict the more optimistic opinions of financial services firm KPMG and GVC – the owners of Bwin, Party Poker and Sporting Bet. During its recent eSummit in Gibraltar, KPMG was of the opinion the future was bright for both eGaming and Financial Services companies based in Gibraltar, while GVC issues a statement saying:
Beyond the impact of currency movements there has been no visible impact on the business from the UK’s decision to seek an exit from the EU. The Group has greater sterling costs than revenues and therefore the impact from sterling weakness is a net positive. The detail of how the UK intends to exit the EU is yet to be decided, however, management believe GVC’s global footprint gives it significant flexibility to face any challenges that may arise.
If the Spanish close their border with Gibraltar (as seems likely), and their employees are unable to come to work, the two companies may not feel so optimistic come 2019. Most companies are keeping an open mind. Ladbrokes´ Director of Media – David Williams – believes business will carry on as normal, while William Hill´s Director of Communications – Ciaran O´Brien – commented that the hyperbole between the British and the Spanish authorities had got
a bit out of hand.
Business as Usual – For the Present
With so much uncertainty about what the future may hold for online poker operators in Gibraltar, it is not surprising that one of the largest has voiced its concerns. Until there is some indication about how limited the future movement of services may be within the EU, it may be a little premature for 888 Holdings to leave its Gibraltar base and find a new home 1,775 Km to the East – although, having been to both locations, I can confirm the weather is much better in Malta.