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Last Updated: Monday, 14 August 2006, 23:05 GMT 00:05 UK
Gibraltar proves a winning bet
By Simon Atkinson
Business reporter, BBC News, Gibraltar

Martin O'Neill and an Aston Villa shirt, sponsored
Gibraltar's gaming firms are building their brands offline

At the head office of PartyGaming, "Wanted" posters call on staff to recruit their "smart and intelligent" friends to join the firm.

The bounty for those who manage to lure a pal to the internet gaming company is a cool 1,500.

Competition for staff is rife in Gibraltar, which has become something of an online gambling capital.

There are now 15 such firms based here - many of whom are listed on the London stock market - and together they employ about 1,800 people, more than 12% of its workforce.

The territory's offshore gambling business began in 1989.

By the 1990s, the likes of Victor Chandler and Ladbrokes began taking sports wagers over the phone or by fax, offering lower tax on winnings than the high street bookies could offer.

But it is online gaming - driven largely by casino games and especially poker - which has taken things to a new level, turning over hundreds of millions of pounds every year.

The doors aren't shut and bolted, but nor are they wide open
Freddie Ballester
Gibraltar Betting and Gaming Association

"Gibraltar is a minute speck on the globe," says Freddie Ballester of the territory's Betting and Gaming Association.

"But when it comes to internet gaming it is probably the most important jurisdiction in the world."

Generous allowances

Gibraltar argues that its reputation as one of the more reputable and well-regulated zones for the industry has helped attract firms.

But it is no secret that low taxes levied by the Gibraltar government are the biggest incentive.

Under local laws, internet casinos and sports betting sites pay a maximum of 425,000 ($800,000) a year in tax.

Not a bad deal, when PartyGaming made a 308m profit in 2005 and its smaller rival earned 32.2m.

John Anderson of
If someone is playing badly we'll tell them. That's not because I'm Joan of Arc. It's because in the long run I'll make more money
John Anderson CEO

An estimated 75% of gaming firm workers have moved to the territory from elsewhere specifically for these jobs, exploiting the demand for experts in the field.

Many of them are found in the Europort Building 7 - seven floors of unassuming open-plan offices built on reclaimed land to the east of the imposing Rock of Gibraltar.

On the ground floor is, where only the posters featuring dice, gambling chips and playing cards distinguish it from any another workplace.

"I put this up to remind people that we're a casino," says chief executive John Anderson "and not an accountants' firm."

Brain drain

Mr Anderson bemoans that he is "sick of training staff, only to lose them to rivals".

But it is not just the gaming firms poaching one another's people. Other industries say they are being hit too.

PartyGaming, laptop and cards
Poker has been the real draw card for new online gamblers

"We are losing a lot of our best people to online gaming," a partner at a senior accountancy group told BBC News.

"The law firms are feeling the same. We can't afford to match the salary packages they are offering them."

Tales abound of employees being headhunted with offers to have their salaries doubled, or trebled.

An influx of workers has added to the strain on affordable housing in the territory, while companies squeeze into office space.

The practicalities of housing gaming firms is one reason why there are unlikely to be more setting up here in the near future.

"The doors aren't shut and bolted," said Mr Ballester, who is also in charge of Partygaming's Gibraltar operations. "But nor are they wide open."

'Come home'

From next year, when the Gambling Act 2005 is implemented in the UK, online casinos will be permitted to operate from Britain.

In June, culture minister Richard Caborn visited Gibraltar, ostensibly to see how the companies were run.

Gibraltar offices
Several gaming firms are based in this Gibraltar office building

But he was also having a quiet word with bosses, touting for firms to return to Britain.

Even if they were offered considerable tax breaks, it seems few of these offshore firms would be queuing up to base themselves in the UK.

"Although Gibraltar is being careful not to become too reliant on gaming in case it falls out of favour, I can't see it happening," Mr Ballester said.

And in his glass-walled office, complete with black and white posters of Muhammad Ali and Marlon Brando, Mr Anderson echoes those views.

"The Gibraltar government want us here and it makes it very attractive, so I can't see the industry moving from here," he said.

"They have a government that understands the needs of business and the tax situation means we can return more to our shareholders. That's my job."


Another of his jobs is to try and engender trust for his firm, and the industry as a whole.

Money and a computer keyboard
There is concern some users are betting more than they can afford

But the arrest in the US of David Carruthers, chief executive of the Antigua-based Betonsports, on racketeering charges besmirched the industry - and wiped millions off the share value of almost all listed gaming firms in the process.

And as more are tempted to play poker on their PCs - 32Red, for one, saw its new signups more than double in the past year - the industry attracts increased criticism that the ease of online gambling is hurting those who can least afford it.

Charities such as GamCare argue not enough is being done to protect the vulnerable.

But Mr Ballester and Mr Anderson disagree, and - borrowing the parlance of Tony Blair - talk of the need for their industry to be "whiter than white".

Some gambling sites do have weblinks to counsellors and there is a "kite-marking" scheme for companies to be "badged" as reputable.

There is also talk of a register, shared between firms, of players who have admitted they have a gambling addiction and do not want to be allowed to play.

Players proven to have cheated - most commonly by colluding with others in poker games - have been taken to arbitration, while the firms insist that those who struggle are not left to flounder.

"If someone is new to it and playing badly, clearly not knowing what they're doing, we'll tell them," Mr Anderson said.

"That's not because I'm Joan of Arc.

"It's because in the long run I'll make more money if they have an enjoyable entertaining experience rather than a short and violent one. We've got to have trust."

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