Arguments exchanged in UK gambling litigation

The first shots have been exchanged in the legal battle shaping up between the UK Gambling Commission (representing the UK government) and the Gibraltar Betting and Gaming Association, which is challenging the imposition of point-of-consumption based legislation requiring operators accessing the British market to take out tough secondary licensing and pay UK tax.

The Commission’s first response to the Gibraltar filing has been to request the British High Court to dismiss the GBGA challenge, which claims that the British move contravenes Article 56 of the Treaty on the Functioning of the European Union, a provision against restrictions on the free movement of goods and services between EU member nations.

The Commission argues that, since Gibraltar is not an EU member state, the GBGA cannot invoke the protection of Article 56 of the TFEU.

The GBGA has in turn responded to this, arguing that Gibraltar has special constitutional status under EU law, and this includes business between Gibraltar-based companies and British online gamblers.

Gibraltar’s government has countered by arguing that its special constitutional status under EU law makes commercial activity between Gibraltar-based companies and UK punters a matter of inter-EU trade.

The potential consequences for Gibraltar should the GBGA challenge fail are considerable; The Rock is home to many large international companies which have for years taken advantage of Gibraltar’s tax-friendly environment in order to remain competitive.

These companies employ many local people, and if they move elsewhere due to the British reforms there could be job losses as well as a decline in government tax revenues.

Possibly setting the tone this week was an announcement by the Mansion Group, which has applied for UK licensing, that it is to relocate some of its operations to Bulgaria, resulting in 80 possible job cuts in Gibraltar.

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