Online Gaming Booming in Tiny Territory of Gibraltar

Online gambling sites, like Party Poker, are offering bonuses of  fifteen hundred pounds – more than $2,000--  to staff members who recruit promising new employees.
 
The territory boasts a total of 15 online casinos - many of which are listed on the London stock market – and which employ about 1,800 people.

"Gibraltar is a minute speck on the globe," said Fred Ballester, a spokesman for the Betting and Gaming Association of Gibraltar. "But when it comes to Internet gaming it is probably the most important jurisdiction in the world."
 
Offshore gambling began there in the late 1980s and shortly thereafter leading gaming names, like Ladbrokes and Victor Chandler, began taking sports bets over the phone and by fax. One of the attractions was the lower tax on wager winnings than in the U.K.

Today, the low taxes from the government are a major motivator. Internet casinos and related sites pay a maximum of  $800,000 a year in tax.
 
This is immensely helpful to firms there, as PartyGaming made a nearly $500 million profit last year, and another firm, 888.com netted nearly $50 million in sales.

Mobile Workers

Research shows that 75 percent of gaming workers have moved to Gibraltar from overseas for a job in the online industry.
 
According to 888.com’s CEO John Anderson, his firm sees intense competition for the new employees that it trains – which other employers there covet.
 
Poker has been the primary draw for new online gamblers in Gibraltar, with a lot of highly skilled personnel, including accountants and lawyers, choosing to live and work on the island.

There is likely to be more growth to come.  Next year, the Gambling Act 2005 will be in effect in the U.K., allowing online casinos from Gibraltar to operate in Britain. Culture Minister Richard Caborn this summer made a trip to Gibraltar, telling firms that they should come to Britain and set up shop.
 
According to Ballester, considerable tax breaks may induce firms to relocate to England, but the industry will have to wait and see how companies react to the new law next year.

Inspired by the success of Gibraltar, one American politician is taking the lessons learned by online entrepreneurs there as a case study for what American states could do to boost economic growth. Representative Jim Kasper, a Republican, sponsored legislation that would legalize online poker rooms in his state, and allow the licensing and regulation of online poker sites.  The legislation passed in the House of Representatives, but failed in the state Senate due to the influence of the U.S. Department of Justice.  

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