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Gibraltar should prepare for the potential collapse of negotiations over a European Union border deal considered vital to its online gambling industry, but its minister in charge of gambling issues vows the territory will adapt to any outcome.

It has been nearly four and a half years since Brexit, but the UK is still trying to negotiate a border deal with Spain and the EU that would allow about 14,000 workers in Gibraltar’s key industries of online gambling and financial services to cross the border freely each workday.

“It is right that we must also continue to prepare for a no negotiated outcome and many operators have participated in table-top exercises on this issue,” said Nigel Feetham, the territory’s minister for justice, trade and industry. “Being unprepared would weaken our negotiating position.”

Feetham was speaking at KPMG’s annual Gibraltar eGaming Summit 2024, which took place on Thursday (June 27) in the British overseas territory.

If negotiations fail, the next step would be to seek localised deals as a “fall-back position”, which the EU has encouraged in the past for borders with third-party nations, the minister said.

The border came up repeatedly during the day.

Although Gibraltar officials say the UK government has fully backed them in border negotiations, Gibraltar was dragged out of the EU against its will, as in the 2016 vote 96 percent of Gibraltar residents opposed Brexit.

Peter Caruana, a former Gibraltar chief minister, said if there was no deal, Gibraltar could take measures such as increasing the supply of affordable rental housing in Gibraltar itself.

“I think there will be a deal,” he said, but “I don’t think it will be an existential threat for this industry if there isn’t a deal”.

Feetham said online gambling makes up 20 percent of Gibraltar’s gross domestic product and Caruana said Gibraltar’s economic impact generates 20 percent of the GDP of Campo de Gibraltar, the Spanish county surrounding the British territory.

The current interim status has been painful for some crossing the border, especially those with passports from the UK or other non-EU countries.

Conference attendees reported that those crossing into Spain are frequently subject to requests from border guards to show proof of a non-cancellable hotel booking, or flight reservations from a Spanish airport.

Border crossings are maddeningly inconsistent, said Peter Yeoman of Vistage Gibraltar business counselling service.

“We could walk straight through — no one’s there,” he said. “Or someone could be checking everyone’s document.”

For example, the previous night, there was a 90-minute delay for cars at the border, at 10pm, with no apparent explanation other than guards deliberately slowing things down, Yeoman said.

“On a scale of 1 to 10, with 10 being worst, [the border] is probably 6 or 7 right now,” he said.

Update to gambling legislation

Feetham, Gibraltar's gambling minister, said that final amendments to a long-awaited update to gambling legislation have been agreed and will be published shortly.

The bill will go to Gibraltar’s parliament in autumn, and is expected to take effect in the first quarter of next year, he said.

B2C licensees will be able to carry on marketing activities from Gibraltar as part of their licence, Feetham said.

But third-party companies will not be able to carry out marketing activities for non-Gibraltar companies unless licensed, and licences will be offered at the discretion of the licensing authority, he said.

The biggest reason for tightening rules is “reputational risk” for Gibraltar, the minister said.

The key attraction for operators over the years is that Gibraltar-based marketing services are VAT-free.

The issue of imposing VAT on services in a way that would affect its gambling operators is a “red line” for Gibraltar in EU negotiations, Feetham said.