Gibraltar-based gaming company bet365 is scaling down its business in Gibraltar and relocating much of it to Malta, citing Brexit uncertainty as one of the key drivers in its decision.
The company, which employs about 500 people here including around 20 Gibraltarians, made the announcement to staff yesterday and confirmed the decision to increase its operations in Malta, where it has operated for several years.
Employee have been offered redundancy or the option of moving to Malta, with no details confirmed yet as to how many jobs the company expects to maintain here.
The announcement was widely anticipated and had been flagged in May 2018 by the company, which said at the time that it was expanding its Malta presence as part of contingency planning for Brexit.
And although the announcement was interpreted by many locally yesterday as bet365 announcing its complete departure from Gibraltar, the company insisted it planned to keep some of its operations here.
“As part of our strategic and contingency plans to ensure EU market access and to maintain and enhance operational efficiencies, we have been building our presence in Malta and operating a dual regulatory and licensing strategy between Gibraltar and Malta for a number of years,” bet365 said in a statement.
“However, from an operational and technical perspective and given our operating model, it has become increasingly challenging to efficiently run such multisite operations and this has necessarily resulted in us conducting a review of our operations.”
“We also continue to operate in a highly uncertain environment, driven primarily by the continuing Brexit landscape.”
The company said that to assist with its planning and maintain operational effectiveness, it now intends to enhance its Maltese operational hub and relocate “certain functionality” there.
“We are now consulting with staff in relation to such relocation,” bet365 said.
“It is intended to maintain a presence in Gibraltar and the final rationalisation will be determined after we have completed our staff consultation.”
bet365 said it would make no further comment at this stage while the consultation process with staff was ongoing, but added it was working closely with all stakeholders.
However the company confirmed that all its staff in Gibraltar would be given the option to relocate to Malta if they wished.
“bet365 employs over 500 people in Gibraltar,” a spokesman told the Chronicle.
“All employees are being offered the opportunity to relocate to Malta in their current roles.”
Industry experts told the Chronicle that expanding its Malta operation would ensure post-Brexit access into the EU single market for bet365’s Europe-facing business, a move that several other gaming companies have also pursued.
Continued doubts as to the shape that Brexit might ultimately take mean gaming companies are hedging their bets by setting up parallel operations in EU jurisdictions, they said.
But in that context, Gibraltar has secured guaranteed continued access into the UK market after Brexit. In the event of a ‘no deal’ Brexit, companies based in the EU would not be guaranteed access to the UK.
Likewise, the experts said Gibraltar continued to provide a solid, well-regulated platform from which companies could develop new markets around the globe, including in Asia, the US and Latin America.
Yesterday, the Government of Gibraltar said it was aware of the development and had worked “very constructively” with bet365 on the issues that had led to the decisions announced today and to mitigate the effects on Gibraltar.
“It is clear that the decisions announced by bet365 are directly related to Brexit and not to any matter otherwise related to Gibraltar,” the government said in a statement.
“The government will continue to work with bet365 through its period of staff consultation and rationalisation in order to seek to ensure that the footprint of bet365 in Gibraltar remains substantial.”
“Gibraltar remains the best jurisdiction in the world from which to do well regulated, reputable online gaming business – and is the only jurisdiction guaranteed access to the United Kingdom market in online gaming going forward.”
Opposition parties were quick to react to the news yesterday, expressing concern about the impact on employees and the community as a whole – and including a swipe at the government to boot.
Keith Azopardi, the Leader of the GSD, tweeted: “bet365 going to Malta is bad news for Gib. Must be linked to continuing Brexit uncertainty. Not helped by Govt failing to negotiate any long term/enduring EU benefits because of their one-track cheerleading approach to Mrs May. We can do better to keep these businesses.”
The party also issued a statement in which it expressed “concern and disappointment” about the impact on Gibraltar of the development.
“The announcement is a big blow for Bet365 employees and Gibraltar in general, apart from the job losses this announcement will have a knock-on effect on the local economy,” said party spokesman Orlando Yeats.
“Gaming companies generate huge wealth via corporate taxes, rents and utilities, their staff also spend much of their disposable income propping up the local retail and hospitality sectors.”
“The GSD is concerned that the Government’s aimless strategy of backing Mrs May to the hilt and its inexplicable endorsement of the one-sided Tax Treaty has contributed to the climate of uncertainty.”
“To the extent that the current uncertainty is the reason for the company moving large parts of its operations to Malta, the Government needs to share the responsibility for that loss to the economy.”
The party questioned the Gibraltar Government’s “high degree of confidence” that Brexit would not impact negatively on the gaming sector and that bet365 would maintain its workforce in Gibraltar.
“Sadly this has not been the case and year on after the tax treaty announcement the company has decided to relocate,” Mr Yeats said.
“bet365’s departure continues a worrying trend of gaming companies relocating operations to jurisdictions such as Malta.”
For its part, Together Gibraltar said it was saddened by the news of bet365’s relocation, which it described as “a real blow” to employees and Gibraltar as a whole.
“bet365 leaving will cost Gibraltar several millions of pounds in PAYE alone per annum, plus corporate tax and indirect expenditure, as well as a few million pounds at least, in Social Insurance contributions,” the party said.
“Further, the economic supply chain of small and medium local businesses who rely on this large corporate sector of the community are set to take a massive hit, in turn causing a domino effect on losses on income tax there too.”
“This is another clear sign of the damage that Brexit is causing across the UK and we will keep campaigning to make sure Gibraltar remains in the EU.”
The party called on the government to respond to the development accordingly and said it would work with Parliament to help mitigate any damage to the economy and Gibraltar’s long-term prospects.
In a statement, Together Gibraltar also challenged the Minister for Financial Services and Gaming, Albert Isola, over statement he made last year.
Mr Isola had argued that Gibraltar’s gaming sector would not be hit by Brexit and, while acknowledging that bet365 was making contingency plans in Malta, had insisted that the company was not leaving Gibraltar “by any stretch of the imagination”.
That remained the government position yesterday, but Together Gibraltar was not convinced.
“It is clear that this was not the case, given that it now transpires that talks over the relocation have been happening since a year ago,” the party said.
“Nevertheless, we hope to work closely with all Members of Parliament to ensure that gaming companies have the regulatory stability they need to succeed in Gibraltar.”
“With that being said, we also believe that what has happened is a clear indication of government’s failure to diversify Gibraltar’s economy.”
“Gibraltar deserves comprehensive economic planning that extends well beyond one party or another’s four-year term, to ensure sustainable career opportunities, supporting local enterprises and attracting international business.”
“We wish the best of luck to Bet365’s employees and will be doing everything we can to support and represent those who decide to stay in Gibraltar.”
There were reactions in Malta too, where the country’s Prime Minister, Joseph Muscat, welcomed the announcement.
“We welcome @bet365 announcement on the significant expansion of operations in #Malta, where its footprint will now be double that originally envisaged ,” Mr Muscat tweeted.
bet365’s plans to expand in Malta were first revealed in May last year by The Sunday Times of Malta, which reported that the company had signed a promise of sale agreement to acquire a large part of a new property development on the Tigné peninsula in Sliema to serve as its hub of operations.
The newspaper said the move would significantly boost Malta’s economy and dependence on the online gambling industry.
At the time the company confirmed that it was planning a major expansion in Malta, although it dismissed some of the newspaper’s claims as “speculation”.
MAIN PHOTO: REUTERS/Darrin Zammit Lupi