In 2014, the UK introduced a new tax regime for gaming duties under which all (foreign and domestic) providers of online gambling services are required to apply for a license and to pay a duty for all business placed with operators from UK customers. Under the previous regime, only service providers established in the UK were subject to gambling duties.

The Gibraltar Betting and Gaming Association (GBGA) is a trade association for gambling providers. Most of its members are Gibraltar based providers of remote gaming services and many have significant UK facing business. This new tax regime, if implemented as the UK intends could cause certain Gibraltar based operators to consider their domicile, at least for parts of their operations.

The GBGA challenged the new gambling duty regime before the UK courts, stating that it was contrary to the freedom to provide services as enshrined in article 56 of the Treaty on the Functioning of the EU (TFEU)

On 19 January 2017, Advocate General Szpunar of the Court of Justice of the European Union (ECJ) gave his Opinion in the case of Gibraltar Betting and Gaming Association Limited v. Commissioners for Her Majesty's Revenue and Customs, Her Majesty's Treasury

This is not a final ruling, just an opinion, but one that many suspect carries significant weight. The conclusions are not good for the GBGA.

A high level summary is as follows:

The AG began by noting that although it is clear that EU law applies to Gibraltar (article 355(3) of the TFEU), it is silent as to how the fundamental freedoms apply between the UK and Gibraltar.

After an overview of ECJ case law the AG considered that the TFEU uses the term "...nationals of Member States...". Article 355(3) of the TFEU does not grant Gibraltar itself the status of Member State. As such, the AG proposes, that the UK and Gibraltar can be nothing other than a single Member State for purposes of article 56 of the TFEU.

The AG proposes that whether or not the gambling duty represents a restriction on the freedom to provide services is hypothetical since they are a single Member State (and the freedom to provide services does not apply to purely internal situations). However, if the ECJ were to find that the UK and Gibraltar are not a single Member State, the AG, suggested that the regime charges tax in the same way for all providers of the defined gambling services, irrespective of where these providers are established.

The AG also rejected the GBGA's argument that the tax charged constitutes an extraterritorial tax (i.e. a tax on the profits of suppliers located outside the UK) and not a tax on consumption or consumers.

As to whether the tax constitutes a restriction on the (hypothetical) freedom to provide services, the AG proposes that it does not. In the first place, the tax is applied in exactly the same manner to both local and foreign providers of the gambling services. The argument that a tax may give rise to double taxation also fails: the ECJ has held consistently that double taxation is not prohibited by the fundamental freedoms.

The AG proposed that the ECJ answer the referred questions by deciding that: "The United Kingdom of Great Britain and Northern Ireland and Gibraltar are to be considered as a single Member State for the purposes of the application of Article 56 TFEU."

I started to reflect on Several ecosystems I have a working experience of, London, Brighton, Edinburgh, Glasgow, Cambridge, LA, Helsinki and how Jersey compares and what they might do next.

Ecosystems are by their nature are incredibly complex and difficult to get right, even the big boys get this wrong….

Small business is the backbone of our economy....President Barack Obama , August 17, 2010

New businesses are the lifeblood of a healthy economy....PM David Cameron , November 20, 2013

Both these two statements have something in common: they are both wrong or at best, misleading.  ( I pause to contemplate what Trump might say in 2017 and shiver). Small, businesses, new businesses, knowledge-based businesses are not the key to economic health. Yet despite this, stimulating growth via SMES or small business has been at the heart of economic and industrial policy throughout the world, only recently being upstaged by startups.  

In recent years, we have witnessed a significant global shift in attitudes towards entrepreneurship. This is reflected in the dramatic proliferation of start-up programs: Start-up…America, Chile, Russia, Britain, Weekend, etc.. Start-up has become the entrepreneurship buzzword.  There is hardly a country or city that is lacking a start-up program with scale up being the natural evolution of the successful start up on the journey to be the elusive unicorn.

Unfortunately, this is a very narrow view of entrepreneurship consisting primarily in the starting-up of an enterprise. Equating entrepreneurship with start-up is not wrong, it is just very incomplete. It is also problematic because it implies that the most difficult task of the entrepreneur is launching his or her venture. It also infers that this is just a numbers game and so the more start ups the greater the chances of a successful exit. Quantity over quality.

On reflection a balanced approach seems obvious and when you look at that from a jurisdiction point of view one should seek to create an environment that seeks to support and enable growth for all stages, existing, new, early, mid and late stage policy that is designed to kick start rapid growth regardless of age profile.

It is both important and interesting to reflect that high growth firms are the ones generating jobs, and these are from a small number of firms and yet they account for the majority of job creation. These firms are also on average older than you might expect, studies of show that their growth often occurs after several years of steady progress but then in sudden, largely unforeseeable spurts for reasons ranging from market shifts, buyouts, recapitalisation, new management and sometimes luck. Of course there are the exceptions such as Google but across all sectors this is simply not the case.

Jersey then has a delicate balancing act to play, we can learn a lot from the others, and despite often insisting we are different when we are not. We do not have to implement their programs in the same way, but we can and should learn from them. Scotland, for example has been particularly successful in providing a comprehensive mix of funding, support, mentoring and cross pollination of complementary business. They have combined this with universities housing super computing capability who are engaged with the commercial world and hence form a critical part of the Eco system. Coupled with with Scottish enterprise who provide an excellent service and the offer is intoxicating. Innovate Uk is equally proactive and successful, incentives for investors have been undeniably successful with SEIS and EIS being two of many, but funding is not the only ingredient. The UK's armoury includes access to talent coupled with a welcoming environment for skills based immigration, add to this an engaged business community which stimulates, mentors and provides real world interaction provides a compelling jurisdiction.

This did not happen over night and Jersey policy makers then should see themselves as nurturing, the architect of enabling platforms, these are not command and control these are much more about creating the right environment to encourage collaboration, more on that later. In small island economies it is even more important (in fact imperative) that private and public sector leaders are aligned, it is futile to go to market without, political alignment and the necessary commercial delivery mechanisms.

 If Jersey is to take a leap forward then it needs to foster, through policy and practice a complex entrepreneurship ecosystems in which high growth firms (existing or new) can take root and thrive.

This is not as easy as it sounds entrepreneurial ecosystems differ from traditional policy. Entrepreneurial ecosystems are complex, they comprise of many different stakeholders.  I  have seen people insist Jersey is treated as a product and others who refute that approach completely and recommend it is a service delivery business. This is difficult for governments, with a heterogeneous mix of the stakeholders and markets, industries and interests there is no one size fits all.

To complicate matters further there is a different order of elements and culture from traditional business norms. This is a complex, multi-level system where local interactions among individual ecosystem stakeholders on subjects that are not necessarily aligned to their paymasters but help the overall ecosystem. This type of interaction is anathema to command and control systems that government policy and traditional industries expect. An analogy with cloud computing and entrepreneurial ecosystem is that spare system-wide resources (Memory and CPU) are used to support other systems that enable a variety of projects in the hope that the effort is repaid forward at some point in time. In essence spare resources might help generate high-growth new ventures and as a result the ecosystem benefits as a whole. A rising tide lifting all boats.

How can we improve things? Instead of top-down, co ordinated bottom-up appears to work better. Engaging stakeholders and the wider world to see what would make an attractive environment and acting on that, not standing back, two way communication is vital. Instead of one big intervention, coordination of myriad local ones, undertaken by the stakeholders themselves. The biggest source of ecosystem inertia is insufficient stakeholder participation. As no one owns the ecosystem outcomes, it is too easy for all stakeholders just to wait for others to act and then reap the collective benefits. To overcome this problem, you need an ecosystem facilitation approach that builds sufficient commitment and mutual awareness among stakeholders. And even with sufficient commitment, you still need a backbone organisation to keep the momentum alive. In the eGaming environment it is common for a government or QUANGO to provide support in this way and welcome new inward investment.

In entrepreneurial ecosystems, the best role for the policy-maker is an ecosystem orchestrator and a facilitator that facilitates the build-up of ecosystem momentum through deep stakeholder engagement. Engagement means listening supporting and communicating. Perhaps this illustration describes it better.

Finally QUANGO's can attempt to pick winners, where there is overlap on the venn diagram of capability, desirability and potential customer need. But I do not subscribe to the notion they can pick winners, they should encourage all comers, whilst focusing on market sectors generically with tailored messages, and delivering a sustained external marketing effort and reviewing the results and pivoting when feedback loops signpost new directions.

The challenge for Government and their QUANGO's is defining what business model(s) to adopt for innovation and to develop a framework for identifying opportunities. Strategies can have a mix of options the most obvious three are:

Focus narrowly The main drawback for a focused business is that it must rely on a single product, service, or customer segment, and it may omit key customer needs. It could be argued this is where Jersey is today with finance.

Search for commonalities across products In the late 1990s Amazon expanded from books into music, video, and games, all of which required the same logistics capabilities that books did. This allowed the company to cover the risk of failing to acquire enough share in any one of these categories with a potentially superior share in another. Commonality is more complex at a jurisdiction level but Jersey has some opportunity with agility in law making and regulation. In fact this is probably one of our most important assets.

Create a hedged portfolio Just as financial institutions try to create portfolios of investments that will hedge one anothers risks, jurisdictions can select an assortment of markets to reduce the overall riskiness of the economic model. Clearly, the approach works mainly for product and market combinations in which demand fluctuations are negatively correlated.

There is an emerging and vibrant egaming sector in Jersey, these business are primary industries that are digital exporters, they supply world class content to house hold names globally and in the case of Twelve40 thorough our lottery business our clients support good causes in countries well away from our shores. The industry is supported by the local law firms, corporate service providers and telecommunications providers.  This then, perhaps, is the start of a hedged portfolio which has significant potential for growth as well as supporting the local finance, telco and tech sector.

The evolution of traditional scratch cards into electronic scratch cards has come a long way since their first appearance some 14 years ago. Then, a ‘match 3' was considered state of the art. Today, the prize structures and jackpot levels remain key factors in choosing which games to play, but increasingly, importance is placed on developing engaging, memorable and more personalised content. These factors combine to evolve a players experience and entertainment, thereby encouraging repeat levels of play. Electronic scratch cards are no longer seen as purely an online complement to retail scratch cards, but rather as stand-alone games in their own right.

This evolution has not happened in isolation, gaming has seen a significant shift in the past ten years. It has become a social pastime, with players collaborating in common goals and celebrating their wins collectively. Microsoft and Sony are not successful just because of the quality of their games and the skill based environment they have created, but also because of the social engagement.

The evolution of electronic scratch cards has had positive knock on effects for the industry. Traditionally these games have appealed to lottery and bingo players, but as their complexity and entertainment levels have grown, segments dominated by slots and casino games have increasingly been diversifying and adding this game content. Games no longer mimic the retail experience. The trend of developing characters, brand association and stories have widened the audience and attracted interest in the younger generations.

An average online scratch card can last between 20 and 40 seconds. The content is designed to entertain and encourage replays which extends a player’s time on an operator site providing cross promotional opportunities. Games can also feature as bonus content for other games. This shift in style has two business advantages. For the traditional markets of lottery and bingo, it appeals to a younger audience who prefer skill based games, and for the sportsbook and casino operators it provides new content and monetisation opportunities.

Previously, platform providers were reluctant to invest valuable time or resources to integrate non-core electronic scratch titles due to the untested payback models. However, specialist content aggregations, such as Twelve40, have created specific licenced delivery platforms for this content. These specialist service providers enable platform providers and operators to quickly and seamlessly gain access to content through a simple API integration, saving months of work and eliminating risk. It is also possible to reskin existing games so that they are unrecognisable from the original, providing cost effect access to bespoke content whether for a specific tournament, event or market segment.

These specialist platforms are constantly developing new player mechanics, ensuring that their developers have access to the latest environments for their games and themes. By being focused on the sector, developer innovation is encouraged, with creative inspiration often driven from the changing requirements and demands of the client base, resulting in advanced social and engagement features and flexible payments.

As with any market, innovation is critical. Across the industry there is a definite move towards online play in this sector, mobile in particular. Whilst the main features of a game include the prize and the number of near wins that result in a positive experience, future success will depend on personalisation, rich content, social features and sharing. We are already seeing this trend drive significant revenue for our clients.

Artificial Intelligence (AI) or Machine Learning (ML) is now a hot topic and subject to intense research by the leading players IBM, Google, MIT etc. Whilst it has become a mainstream lexicon it is often only thought of in the more scientific and glamorous arenas such as driverless cars and drone deliveries. These pose all sorts of legal dilemmas, despite Google’s assertion that roads will be safer with driverless cars, how will the legal consequences unfold when there is no immediate human intervention to an accident? Agency and vicarious liability, duty of care and negligence will all have to be reinterpreted in the new area of legal person, which might not be a person but Artificial Intelligence, that is to say software. Progress is being made and I note that this week the US transport regulator has just indicated that a robot could meet the legal definition of a driver. Does that mean Google will now be responsible for insuring your car?

In other areas of AI the world is not waiting for the legal, regulatory and technology worlds to come together, businesses are deploying AI and gaining new insights. Gartner, the research company, has calculated that the world’s information is set to grow by 800 percent over the next five years. This is a problem; how will we cope with 800 times more information? Fortunately, there are companies like RAVN and Blinkist that are addressing data explosion problems like these, they automatically read, interpret and summarise key information from documents and unstructured data. This is both an asset and indeed a threat to knowledge based industries.

In other areas Big Data has quietly but completely changed the way business is conducted, market research is one of them. Analysing masses of information generated by an exponentially growing social media culture AI and ML deliver hitherto inconceivable insights and sentiment analysis. The technology relies on extremely clever algorithms crunching vast data lakes of information. They cannot replace decisions based on human instinct but they can learn from experience and the enormous scale of compute available means they can crunch and model vast data scenarios and tune the algorithms from the results creating self improving software, hence the term machine learning. One of the fastest advancing areas of AI is machine vision, and particularly facial recognition which has all sorts of potential, as of today Facebook can recognise faces better than any human.

IBM have now coined the phrase “the cognitive era” which they say the second age of machine learning. Applying these techniques to vast disparate data sets will allow scientist to look for better ways to tackle cancer or for oil and gas companies looking to improve the accuracy of exploratory drilling.

The technology is equally applied to financial services, Standard Bank have used IBM Watson to speed handling of customer queries, allowing it to identify customers quickly so they can respond faster.

Citigroup have also used Watson's analytics with the aim to improve customer relationships and interactions in the bank.

Customer service, or the lack of it, is highlighted as a major issue by in their research into customer experience with UK banks and Mutuals. and so AI could help the traditional financial services respond to the threats from the new wave of challenger banks.

There is a flip side to this advance technology, the impact, according to the Economist and researchers from the University of Oxford suggest that 47% of jobs in the western world could be automated within the next two decades. The FT recently reported that scientists have warned that rapid strides in the development of artificial intelligence and robotics could lead to the prospect of mass unemployment.

Conversely businesses like GoDaddy, which mostly service small businesses, argue that this will enable jobs, their vision is based upon AI making non-automatable work more accessible to a significantly greater number of people. For example, a small business owner has to juggle a plethora of tasks, finance, HR, marketing, IT etc. Automation should make the process of running a business less daunting thereby enabling a new and increasing generation of entrepreneurs.

Whilst IBM use the term cognitive era others use the phrase “The Second Machine Age” drawing parallels between how the industrial revolution spread form one industry to the next creating huge disruption, the same is happening now driven by smart learning machines rather than mechanising labour.

AI is then very relevant to the offshore financial services market, as the sector looks to increase efficiency and levels of customer service whilst diligently watching for fraudulent or unusual activity. Intelligence driven from from machines is almost certainly going to play an increasing role, whether we take a driverless Uber to our next appointment or not.


At the end of 2015 I took a couple of weeks off and made the conscious decision to disconnect from all forms of social media, technology, email and news. It was surprisingly harder than I thought, made slightly worse by having my reading material (fiction) on an ipad. The solution was to delete or move all the apps from the opening screen, there is, now I think about it, a need for a secure folder for apps (and data) on tablets, so for any entrepreneurs out there, the idea is yours for 1%. It took me about three days to stop automatically wanting to check social media and email, much longer than I thought. When I did log back in the valueless content became very apparent and resulted in my unsubscribing from many feeds, 2016 then already feels less cluttered.

During our holiday I was lucky enough to dive with several whale sharks (that is me in the picture above), beautiful graceful creatures that also sound amazing underwater. Having photographed them the dive master asked me to email the pictures to the local marine biologist, forcing me, temporarily, back on to email. This then resulted in me downloading their app, The Maldives Whale Shark Research Program, and struggling with my conscience as to whether that was allowed or not.

The distraction of mobile devices does infringe on family life and I noticed things that I probably would not have noticed as quickly, if at all, had my phone been buzzing. That’s another thing I’ve done, turned off all the none essential alerts, vibrations and pop-up indicators so temptation and distractions are removed. When you think about it, society as a whole has become guilty of this, looking at phones in meetings, mums, dads, kids all intermittently dipping into email, Facebook, Snapchat, Instagram etc, often without thinking about and getting lost there instead of with those around them. There are side effects to this multi tasking, the Institute of Psychiatry at the University of London say that when multi tasking our IQ drops 10 points the equivalent of missing a night sleep. Conversely they say smoking marijuana only reduces it by 4 points, probably best not using that argument with teenagers! This drop is apparently temporary but it underlines the fact humans (men and shock horror women too) are not designed to multitask. Information then should be a tool of empowerment rather than distraction or diversion.

The other thing that caught my attention was that all the staff on this remote island had smart phones, being away from family for months at a time, these devices are essential rather than a luxury. One of the staff told me it was the first and second thing he bought with his pay (the second for his family of course) and that through Skype and Facetime he could see his children grow up. It was obvious that he was missing the tactile nurturing and I wondered if virtual reality might ever get to the point where he could spend time with his family in a virtual environment.
The possibility of consumerisation of virtual reality led me to think about what might happen in

My predictions for 2016

• Sadly I still don’t see virtual reality delivering in 2016.

• I think security will continue to be the biggest issue, driven by the adoption of hybrid cloud, mobile growth and the commercialisation of the Internet of Things across all sectors.

• The talent war shows no sign of abating and will inflate salaries and drive companies to source HR more geographically which will bring with it cultural challenges.

• Big Data will gain even more focus, sensors are being embedded into everything and every sector, telecoms companies have a significance opportunity if they partner strategically.

• Cognitive computing and machine learning platforms will emerge and see traction, this is something I think particularly relevant for the Channel Islands.

• Several well funded Unicorns will not meet their expectations and stumble, sadly repeating the employee trauma seen at Good Technology last year, this could spark a rethink of the start-up culture.

• The result will be it becomes harder for seed backed companies to raise Series A.

• Blockchain will become more widely understood and deployed in mainstream applications without the hype.

• As for driverless cars I think this sums it up very well.



Unfortunately, there are many people who see the word ‘cryptocurrency’ and will immediately dismiss it as a whacky geek idea that will never gain credibility in a well regulated and sophisticated financial world. The people who think this way are likely to regret their refusal to look more closely. Behind cryptocurrencies is the principle of Blockchain, a powerful invention that is not just going to disrupt, but will revolutionise our relationship with the digital world. This means everything from banking, health, insurance, government – you name it, it’s going to change.

The good news for Jersey is that our government has recognised this fast approaching revolution and has already come to a policy position for the regulation of virtual currencies. Ultimately, the aim of this policy is to further enhance Jersey’s proposition as a world leading fintech jurisdiction at the forefront of this digital transformation.

Jersey has made the decision to regulate at the interface between fiat and virtual currency in order to prevent money laundering and to counter the financing of terrorism. The policy also highlights the fact that our Financial Services regulator is open to and interested in nurturing this emerging industry by introducing the concept of a regulatory sandbox for cryptocurrency businesses. This will allow small businesses to get started and then, once turnover reaches defined thresholds, they will see the appropriate regulations introduced. This pragmatic approach is a clear message to the fintech sector that while Jersey’s highly respected finance industry needs to be protected, the regulator and our government are also open to helping small, innovative businesses to establish themselves and flourish here.

Jersey is a highly innovative jurisdiction for this sector and I predict that licensing and regulating cryptocurrency exchanges will eventually lead to a stabilisation of the currency’s value, which will result in an increase in retail adopting Bitcoin.

Cryptocurrencies are early adopters of blockchain protocols and The World Economic Forum (WEF) expects that by 2027, 10% of global domestic product (GDP) will be stored in blockchain technology. This is extremely significant for Jersey, as we are already establishing ourselves as open to this up-and-coming sector.

This said, there still seems to be a continued reluctance to take cryptocurrencies and blockchain seriously. This is because many are still unsure about what they are and there’s a tendency to assume that they are one and the same. The short answer is, they’re not the same! A cryptocurrency is a digital currency, whereas blockchain is a verifiable distributed ledger of digital events that can be updated only by a consensus of participants in the system, and once information is entered and verified, it cannot be erased.

Essentially, blockchain is used alongside cryptocurrency to make a record of every transaction, however, its usage is actually universal. This is because blockchain ensures certainty in what is often seen as an ‘invisible’ digital world where internet security is forever an issue. I recently saw Dave Birch, Director of Innovation at Hyperion describe various types of blockchain as part of his presentation at Fintech Jersey 2015 , the island’s first ever fintech conference. His presentation can be found here, I’d highly recommend taking a look at Slide 5, which provides the best explanation of blockchain that I’ve seen!

Blockchain is being identified across the globe. The UK’s Financial Conduct Authority is also looking into its potential benefits, launching an Innovation Hub and releasing the WEF’s Technology Tipping Points and Societal Impact report, which forecasts that tax will be collected by Government via Blockchain for the first time by 2025.

The blockchain phenomenon is not just happening at Government level; recently, a member of a small team working for a Swiss bank at London’s Canary Wharf, tapped a screen and a bond was sold by a company called ABC to an investor called XYZ. This type of transaction is executed millions of times a day by banks globally, but this dummy transfer was different. It was completed via an internal blockchain. Banks are becoming increasingly open to the power of blockchain technology, with many believing that the technology could reduce costs by $20bn (source and transform the way the industry works.

Blockchain shouldn’t be viewed as a threat to the banking system, but as an opportunity, which will provide:

• Increased transparency. Blockchain is essentially a global ledger, which can have the effect of allowing free flow of money, taking the risk out of compliance
• Better property records in emerging markets, making everything traceable
• Increasing tradable assets, as all kinds of value exchange can be hosted
• A reduction in the overall cost

The impact of blockchain could be far reaching, with the WEF predicting an explosion in tradable assets as all kinds of value exchange can be hosted. Blockchain is already being proposed for use within the music streaming industry to ensure the transparent distribution of royalties.

Recognising trends in the emerging world is highly important for Jersey’s future economic success. Former Group CEO of Barclays, Antony Jenkins, recently stated that the world’s top banks are likely to cut jobs by half within the next 10 years, as they fight to stay relevant and profitable against ‘unstoppable force’ of technology. Finance is the major employer in Jersey, it accounts for over a fifth of the island’s workforce, however, if you look at the sub-sector of banking in the latest government statistics, employment there has fallen below levels seen before the crash in 2007 and 2008. Banking is not going to return to the status quo of a pre-recession world, Antony Jenkins’ predictions are not years off, they are already happening. The world has moved on and we need to ensure that as an island, we are moving with it.
One day we may look back at the Jersey cryptocurrency policy as a landmark in our island’s history.