Gibraltar Moves to Tiered Licensing System Under the New Gambling Act

Gibraltar is set to implement a tiered licensing system as one of the terms of the British territory’s new Gambling Act, in a move away from a single licensing system.

The Act has updated Gibraltar’s gambling licensing system, providing legislation for gambling companies based on the specific service they provide. The Act creates licenses for remote B2C operators, remote B2B suppliers, non-remote B2C operators, non-remote B2B suppliers, and gambling operator support services.

This replaces the previous one-size-fits-all model. The Act also provides a more expansive list of the types of companies that need a license, covering CRM providers, customer support operations, marketing services, trading and risk management services, payment and fund management services, and managed service providers.

How the tiers are broken down

Supplier licenses will be split into three tiers. Tier 1 will cover large software suppliers with unrestricted direct integrations into Gibraltar-licensed operators, with the annual license fee set at £85,000.

On Tier 2, licensing will be provided to suppliers with less than £550,000 in gross sales to Gibraltar-licensed B2Cs or no more than three approved integrations; the annual fee will be £50,000.

Tier 3 meanwhile, will be for suppliers with less than £200,000 in gross sales to Gibraltar-licensed B2Cs, or no more than two approved integrations.

At that level, suppliers will pay an annual fee of £20,000. The new system is designed to appeal to smaller B2B suppliers, and replaces the previous system of a single B2B supplier license, regardless of a company’s size.

A proportionate system

Steven Caetano, senior partner at Gibraltar law firm ISOLAS, spoke about the new system on an episode of the Connected by Pragmatic Solutions podcast, stating it could appeal to both existing suppliers in Gibraltar and those from outside.

Caetano said:

“Suppliers were previously given a license under the auspices of a B2C license. Now, it’s very clearly delineated. If you’re an existing supplier, and you don’t feel like you’re big enough, you can apply for a tier three license which may only cover so many players, but it’s proportionate to the business you have.”

The new system will replace the Gambling Act 2005. Nicky Macias, Secretary General of the Gibraltar Betting and Gaming Association, also appeared on the episode, stating:

“The old Act was catered towards B2Cs, with a small provision for software suppliers, because back then, your software was integrated into the B2C platform.

“Of course, that’s changed now. Game suppliers have their own servers. They have multiple clients worldwide, and therefore, we need to modernise the gambling framework in Gibraltar.”

The new Act officially came into operation on April 1, although some sections have been deferred pending later implementation. Suppliers will have time to adapt to the new licensing regime, which is set to be introduced across a six-month transition period.

Gibraltar’s appeal

While Gibraltar has a corporate tax rate of 15%, operators and suppliers are not required to pay VAT. B2C remote gambling operators also pay betting duty at a rate of 0.15%, with an exemption on the first £100,000 of the operator’s gross gaming yield on gaming receipts in each year.

Prior to 2014, the rates were a large part of the reason for many operators and suppliers basing themselves in Gibraltar. However, in that year, the UK government introduced the point of consumption tax, meaning operators would be taxed where their services are offered, rather than where they based themselves.