Gibraltar’s gaming industry influenced by the Internet Gambling Enforcement Act
March 12, 2007
As we all know the American congress is bent on prohibiting online gambling. The Internet Gambling Enforcement Act has passed and Americans can no longer transfer funds to their online casino account. Non-US gambling firms continue to prosper as this act does not apply to them.
Many international online gaming companies are located in Gibraltar. Unfortunately for these companies they too must follow the Internet Gambling Enforcement Act. Gibraltar is a UK overseas territory located near the southernmost tip of the Iberian Peninsula overlooking the Strait of Gibraltar. The territory shares a land border with Spain to the north.
In December 2006 the Internet Gambling Enforcement Act had quite a negative effect on numerous online gambling companies. Companies such as 888.com, Party Gaming, and Mansion have reported significant job losses. The future is not as bleak as you would think. Gibraltar’s gaming industry is confident this is not a major, irreparable blow and they will come back stronger and keep doing business.
The media on the other hand is not as confident. It published several very pessimistic articles. The Internet Gambling Enforcement Act came into force in November, 2006 and it has effectively wiped out a billion dollar industry overnight. Fortunately for Gibraltar the gaming industry has not been so severely influenced.
In December 2006 internet gambling company 888.com, one of Gibraltar’s biggest employers had to let go 140 of its employees. This was all because of the Internet Gambling Enforcement Act and it launched a wave of new uncertainties among staff of other companies. According to 888.com’s CEO, even if a third of the employees have been let go, 888.com can still maintain staff levels through takeovers of some smaller competitors based outside Gibraltar. According to the rumors though 888.com itself will be taken over by Ladbrokes, one of Britain’s biggest gambling firms.
We can expect further dismissals and redundancies to take place in the future. Numerous online gambling companies are currently looking to re-invest in European markets and change their strategy. More rumors of mergers and acquisitions are expected to come up in the next months.
In Gibraltar there are about 15 online gambling companies that employ about 1600 people. All the sackings and mergers should not have a significant impact on all these employees. Neither should it have a significant impact on Gibraltar’s tax revenue from all the licensed online gambling companies. The tax revenue for 2006 was an estimated $10 million.
Party Gaming has already taken measures to counter act the Internet Gambling Enforcement Act. Plans for a multi-lingual betting service and a massive promotional drive to attract bettors from all over the world have already been put into practice.
Party Gaming was Gibraltar’s biggest online gaming operator and the Internet Gambling Enforcement Act hit it the hardest. Party Gaming lost 70% of its business after the bill passed. For the first half of the year Party Gaming achieved profits of over $150 million from operations outside the US. This means its employees will probably still have a job to go to, for the time being at least.
St Minver is another large online gambling company based in Gibraltar. It operates multi-lingual bingo, poker and casino products under a white label strategy. Since all of its business was European based, the Internet Gambling Enforcement Act had absolutely no effect on St Minver. They did not have to let anyone go and neither did they lose any profits.
White labeling seems to be the best strategy to use in Europe. Getting a gambling license in Europe is not as easy as you may think. St Minver has used a white labeling strategy in Europe successfully, even with the difficulties in obtaining a gambling license and even with large brands such as Virgin in the UK, and Ramblers in Russia that can take advantage of the experience, infrastructure and player liquidity that St Minver has obtained.
It seems that the Internet Gambling Enforcement Act has had quite an influence on Gibraltar based online gambling firms. But it has not been a devastating blow and the future for these firms looks bright. Europe has now become the main market and European players can certainly take advantage of all the Gibraltar licensed firms that wish to attract European players.
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