The online gambling industry has seen incredible growth in recent years to the extent that it has now become a significant part of the economy of Gibraltar. The number of people employed directly in this sector has grown from 185 in 1996 to well over 1600 today (2007).
Gibraltar has become widely recognized as a leading, reputable and well regulated jurisprudence for online gaming activities.
Gibraltar itself is well established in terms of banking and financial services. With total assets of the Banking Sector in 2006 around £ 7 billion, and with financial supervision and regulation matching that of the UK, many banks are represented in Gibraltar and many people are setting up businesses as they see untapped market opportunities in the region. Gibraltar itself has increased its GDP this year to around £ 500 million, from £ 393 million in 1988, and is now able to offer its residents further concession in their general income tax rate. This is due to an increase in revenues bought in mainly by the gaming companies which now provides some £ 4.3 million to Government each year.
Setting up an online gaming company however can prove difficult however, as there are many requirements and restrictions in terms of the number of licenses that can be obtained to operate a gaming company.
All gaming operations in Gibraltar require licensing under the Gaming Ordinance. Licenses are issued by the Office of the Financial and Development Secretary on behalf of the government and it hands out only 1 new license each year generally. The government will only license a company with a proven track record in gaming, of reputable standing and with a realistic business plan. As of January 2007 there are 16 licensed operators including the likes of Party Gaming, 888 holdings and St Minver Ltd who offer the chance to set up a white label bingo, casino or poker site as part of an additional online revenue stream and by using their gaming license. This negates the need to apply for a license yourself.
Gaming tax on sports betting and betting exchanges is levied at 1% of turnover. Compared to 15% in the UK, Gibraltar is seen as a more economically viable option for those wishing to enter the gaming markets.
For internet casinos, tax is levied at 1% of the gambling yield. In all cases, there is a minimum tax of £ 85,000 payable and a cap on tax payable of £ 425,000 per annual, per license.
Conditions and licensing requirements cover areas such as advertising, payout of prize money, customer privacy, data protection, auditing and accounts. Gaming operators like St Minver are required to fully comply with the Criminal Justice Ordinance and anti Money Laundering Guidelines published by the Financial Services Commission.
The Gambling Ordinance 2005, legislates for all forms of gambling (including betting, bookmaking, gaming and lotteries or casinos) in Gibraltar. There are additional new provisions, particularly for remote gambling, including requirements for certification of testing of gaming equipment and software, security of computer equipment and data protection, direct link on the homepage to at least one organization dedicated to assisting problem gamblers and license holders not permitting persons to gamble without that person has registered full name and details.
Currently many gaming companies enjoy tax exempt status which provides benefits to both the gambling company and the Gibraltar government who provides this incentive for businesses to start up in the country. However, this is being phased out and existing companies will cease to have this concession by the end of December 2010. Instead, companies will be offered a Personnel tax and Property Occupation tax capped at 15% each, until the EU can decide and agree the ongoing tax regime for Gibraltar.
Gibraltar has become established as an attractive base for blue-chip remote gambling operators, primarily as a result of Gibraltar's reputation and well regulated jurisdiction, a legal framework based on UK law and well developed telecommunications. Couple that with a favorable tax regime, multilateral labor force with experience in the gaming sector and freedom of movement of labor from within the EU and it is not hard to see why the online games industry is booming in Gibraltar.