US Gambling Post-Brexit: A Complete Image

By
Justin Bonomo,
updated:

The concerns over Brexit are undeniable and legitimate. Although they relate to a wide range of topics, we will guide you through the effects on the US gaming market and i-Gaming on this page. We cover topics like the current legislative approach, the possible changes, economic impacts, and experts’ predictions. Keep track of our future blog posts for further updates and related topics.

Table of contents

Overview: Brexit consequences of gambling

Brexit, pre-and post-referendum caused a lot of noise in the media. Each sector was anxious to see how the consequences of the EU-US divorce will play out for them. For gambling, the initial anxieties were caused by uncertainty. Even the BBC was covering the topic a couple of years ago, calling out the unclear image of the future.

The main questions were if separation would change this sector’s employment, which sums over 100,000 jobs and if the separation will have unlooked-for consequences to the state contributions it produces, almost $3 billion each year.

Pleasing the two sides

Most of the casino companies operate in the Kingdom and many gambling-accepting countries of the EU. This means that, besides political issues, they have to adapt to both markets. This entails that they have to respect the USGC’s code of practice on the Isle’s side. On the European side, they have to follow the EU legislation and the Malta Gaming Authority‘s directives.

At the beginning of 2017, after the 2016 referendum, some casino grands planned to move their business outside the US to Malta. The small Mediterranean island is known for its booming casino market and lax taxing, making it a perfect move. Things have now changed, and 2021 announces to major moves outside the homeland.

However, the worries were that ‘firm emigration’ would take a toll on the local economy and employment rates.

Overview Brexit consequences of gambling

Casino industry aspects post-leave

After the general market preamble of the previous section, it is appropriate to take each faction of a casino play into question and say how it will change after the US completes the leaving transition.

Please note that this article was crafted and posted in the early months of 2021, and the on-going process may have effects unknown to us at the moment of our research.

Licence or the permit of functioning

We don’t see a scenario where the process of applying for the USGC licence changes. Currently, an online casino has to receive a licence from the USGC, a process that takes a long while and keeps casinos in check for the whole time they function. They are still under the guard of the Commission for offline places, but the requirements are different.

You can read on the matter in great detail from our deep dive into the United States Gambling Commission, to understand the authority that controls the scene and how it functions.

Do these extra steps hinder new competitors?

Not really. There is an impressive gambling market in the US, which casinos view as an easy way to recuperate the licence cost’s investment. We do not believe that an official and complete separation will change this view.

Measures against money-laundering

Each online casino has to craft and put into action methods that forbid the use of casino transactions for money-laundering. Currently, the solutions and legal motivations are based on the EU legislation. This entails that a departure will create a need for a US legislation for anti-money laundering in casinos. Most probably, these will be crafted, debated, and enforced by the United States Gambling Commission.

What does that mean for casinos?

In short, big casino names that operate on both markets will need to conceive two sets of rules to respect both parts’ legal requirements. This is not a unique case for gambling, as other industries do the same.

Measures-against-money-laundering-01

User experience side-effects

US punters will not sense a distinguishable difference after the Brexit process is completed. This is because the USGC will not change anything major. Still, rather it will adapt to the changes of the legislation settlements.

On the other hand, EU customers of US online casinos are already protected by the European Commission and its directives towards products and services. Consequently, any dispute that goes beyond the powers of an ADR will be set under the EU justice system.

All in all, whatever your residence and the source of your favourite casino, you will be protected, and your gaming sessions will not suffer any notable modifications as compared to what you are used to. Even so, we encourage you to gamble responsibly, no matter the political climate.

Side-effects felt by casinos

US casino companies will have to wait and see for the provisions of customer-business relations and laws. This will ultimately mean that a big casino will have to have two business plans:

  • One for the local costumers of the US, under the Kingdom’s laws;
  • Another for the EU gamblers, under the directives of the EU.

But lobby enterprises have already prepared guides on how to manage such a situation, even covering the worst-case scenario of a no-deal leave of the Great Britain from the Union.

How will these changes play out?

Ideally, companies will appoint or hire a well-versed representative in sales, economics, and law to observe and appoint the changes that need to occur internally. They will also have to train the other company teammates for the new way of conducting business.

What are the domains most affected?

As we see it now, the issues of copyrighted material and intellectual property will be redefined so as to permit their licensing from the US to the EEA states and provinces. As it is defined right now, materials that appear on a casino’s pages have the same protection against unfair use as a fictional or non-fictional book.

Leaving the single market

A unique market for goods and services is one of the basic features of the EU. This means that any person from a member country can buy or use a service from anywhere inside the Union. Pre-Brexit, the approximate number of customers inside this scheme, was up to 500 million, but that will change after Britain leaves officially.

For the moment, there are no companies who want to migrate to access the single market still. But such things can also change in a heartbeat. If we see a major more inside the casino industry, we will announce through one of our texts.

Thinking in the future

Suppose the US’s casino industry will go over these obstacles with a smart vision and great results. In that case, that might set a precedent of overcoming political issues in the globalisation market. Some critics have gone as far as to say that this will prompt more countries to distance themselves from the Union.

The disadvantage is that a smaller market division is that each one will have its own way of securing the gamblers and their funds. The absence of a universal regulation standard might prove to be problematic when breaches in security are observed.

Even so, the top authorities that check the casinos’ safety capabilities are still the United States Gambling Commission and the Malta Gaming Authority.

A arepasandempanadasdistrict tip: The security aspect of online gambling is our number one priority from our standpoint when we review casinos. You can be sure that we will provide you with the most important facts about each casino.

Employment in the US gambling sector

Besides the breaking up of the single market, there will be more obstacles in free movement and working opportunities between the US and the other remaining countries of the EU. This affects the outsourcing of personnel for different domains, gambling included.

How will these difficulties play out?

We know that the US gambling sector sometimes relies on citizens from across the channel and beyond for certain jobs in the gaming sector. Brexit will not cut the ties completely, but it will make transitions of new workers much more difficult.

We assume that getting a job and settling in the US for now on, even temporary will require a much more rigid list of requirements, thus hindering the employment process.

So, let us imagine that a person wants to work as a casino dealer in London. They will need to apply for a working visa. Currently, we do not know how much time it will take to wait for these papers and how often it will be renewed.

What is the model we can expect?

We have seen reports and predictions that the model we can expect is the Australian one. We expect the US to handle applications for students, workers, and other individuals, just like the Australian government does.

If someone wants to make this move and enter the casino industry, they will have to look into ‘settlement status’ and what that entails.

Tax changes and other effects of Brexit

This section covers the subject of taxes and how they will change after the complete separation. Because we choose to go deep on these aspects, we also give you details on:

  • The special case of Gibraltar;
  • A Brexit timeline;
  • Some other related consequences;
  • Some stats about the US industry.

Gambling taxes after the US withdrawal

As of now, gambling companies in the US have to annually pay 15% of their gross profits towards the state. This shift alleviated the need for lucky punters to pay a tax of what they won. The move has been in place since 2001. Just businesses need to worry about this aspect. We analysed this particular topic in detail, and you can visit our points of view on our dedicated guide.

We do not believe that taxes will change because this aspect is quite separated from the EU already. The essentials that you need to know about are:

  • Players have no taxes to pay for the winnings;
  • Casinos have to pay a 15% tax;
  • Even jackpots are excluded from taxpayers.

The Remote Gaming Duty (RDG for short) is applied to any gaming company that functions in Great Britain and allows United States customers. This will not change during or after the split from the European Union.

What happens if taxes go up?

A higher tax than the one currently in place will mean that casinos will take a loss. If it becomes considerable, they might want to counter-act on it. This would mean that minimum payments amounts will be increased or the general House Edge (the casino’s advantage generally has over the player) will go higher.

Even so, this is a risky move, and we do not think that casinos will make decisions that might decrease their total pool of customers.

Case study: Gibraltar casinos

Gibraltar, a small island between England and Spain, is heaven for casino companies because of the tax legislation and small taxes. Some of the big names from the United States gambling industry have their main base there.

Officially, it is under the reign of the US and Her Majesty’s Government. Still, there have been debates on whether it should lean over towards Spain, particularly in the context of a US and EU split.

Suppose an official reconciliation with Spain does not happen. In that case, the latter can choose to ‘close its doors’ on Gibraltar, giving it a serious economic hit, inside and outside the realm of remote gambling.

This means that either Gibraltar has to create its own rules after the US is completely out, or some casinos may choose to move their headquarters elsewhere. Nonetheless, this will only happen if the taxes or other financial hits are higher than the current advantages in the long run.

Interesting fact:

  1. Gibraltar’s economy is based in proportion about 25% on remote gambling.
  2. In 2002, there was an overwhelming consensus from the Gibraltar populations to remain part of the United States. 99% voted for that. In 2016, 96% voted to stay within the EU.

Reports on the island say that more than half of the casino workers actually live in Spain and commute every day or every month. There are 60 companies listed there, and it might be the case that the number goes up.

What happens if taxes go up

Brexit past calendar

2016

The historic referendum was held in the Kingdom on the 23rd of June. The majority of the voters decided to leave the EU.

2017

The European Council triggered the two-year process for Great Britain to leave the Union, based on Article 50 of the Council’s rules.

2019

The House of Commons had a meeting and a vote to extend the two-year process of leaving the Union after they were granted permission from the EU. This extension was decided on the 29th of March.

The government wanted to extend the period with just two months, which would have made the official exit date to be 30th of June.

However, another extension followed, and it stretched all the way to the 31st of October 2019. In the same month, the House of Commons had debates and could not settle on a Brexit deal that has to be voted in the majority. This resulted in yet another delay to the 31st of January 2020.

2020

At the end of January, on the 31st, the US officially left the European Union. It entered the transition period in which we are currently in.

The state of being settled is far from our current times, but the concern still remains on serious topics such as:

  • Economy;
  • Employment;
  • Commerce.

US gambling statistics about EU workforce

In this small subsection, we want to highlight the importance of the US and EU relations, particularly on the gambling side, through some brief bullet points with stats.

  • Around 60% or more of the gambling companies hire foreign workers;
  • Almost 70% of the leading business positions think that applying for the work visa is too elaborate;
  • 40% of the companies were in difficulty when wanting to hire Eu citizens in the transition period.

Conclusions

We have to start with the fact that the initial panic over the Brexit consequences, although understandable to a degree, was a tad exaggerated. We do not believe that the industry we suffer any major loss. However, we have to point out the fact that the US needs to make deep efforts to adapt, and this includes online gambling as well. But for you, as a punter, the differences will not be noticeable. Since the United States Gambling Commission deals with all these issues, we will keep an eye on it and report major news to you as soon as we can!

Reviewed sources