U.K. Gambling’s Gibraltar Outpost Braces for Brexit Border Woes

(Bloomberg) -- As Theresa May's Brexit deal stumbles over the thorny issue of the Irish border, another frontier farther south risks causing problems of its own.

Betting companies with operations in Gibraltar on Spain's southern flank worry Madrid will restrict land access to the tiny British territory when the U.K. leaves the European Union.

GVC Holdings Plc and William Hill Plc have more than 1,400 employees on the rocky peninsula, which has long been an international betting hub because it had a legal framework for gambling before the U.K. mainland and more favorable taxes. Competing claims over the territory have caused tension between Spain and Britain for three centuries.

About 80 percent of William Hill's 400 Gibraltar staff, who include financial managers, compliance officers and programmers, commute from Spain. The companies say the threat that Brexit will choke the border has forced them to invest in improved remote office technology and find ways for employees to fill in for colleagues who can't get to work.

“It could take a lot of time to get across if the Spanish decide to put in place detailed passport checks and other checks,” William Hill Chief Executive Officer Philip Bowcock said in an interview. “If that happens then that becomes a problem -- but we obviously have business protection plans in place.”

GVC Chief Executive Officer Kenny Alexander said the situation would have been much worse 14 or 15 years ago when remote office technology was less sophisticated.

The executives spoke after the betting companies reported full-year financial results showing continued growth in online betting.

Both have been adjusting their overseas operations to ensure they can still operate in the EU if Britain leaves its single market for services. With the U.K. government tightening regulation in response to concerns over problem gambling, the continent has become even more vital to their growth prospects.

William Hill shifted some regulatory functions from Gibraltar to EU member state Malta when it acquired Swedish bookmaker Mr. Green in October. GVC said Tuesday it would move servers hosting its online gambling platforms to Ireland and bring parts of the business with EU customers under Malta online gambling licenses. Its online gambling headquarters remain in Gibraltar.

Financial services and online gaming account for a quarter of jobs in Gibraltar and 40 percent of its economic output. Fears that Brexit could disrupt those industries underpinned almost unanimous support from the territory for continued EU membership in the 2016 referendum.

To contact the reporter on this story: Thomas Seal in London at tseal@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer

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