GIBRALTAR, for many people, conjures up idyllic images of a Mediterranean Britain, marrying northern European efficiency and standards to southern European charm and creativity. However, to a growing degree, it is Gibraltar's position as the burgeoning global centre for the massive growth industry of e-Gaming that is making a name for the Rock.

Yet e-Gaming is nothing without the Internet. And the Internet is nothing without a competitive, reliable and state-of-the-art telecommunications infrastructure, something which is as dependable as the Rock upon which the territory is built. Gibraltar benefits from an advanced fibre optics network, something that, according to Tim Bristow, CEO of Gibtelecom, the half government-owned telco provider, was "perhaps over-engineered" to begin with. Yet as demand has grown, this network has itself come to be "the bedrock for the Rock."

Things, Bristow notes, have changed a lot in the last decade. "A few years ago, all our routes effectively went through Spain and there were single points of failure," he recalls. "Now, we are a more sophisticated network and as we have these big e-Gaming companies that need to be connected every second, they have been very influential in us building it."

It wasn't always thus. In 2002, half of Gibtelecom's business was traditional voice telephony, something which now makes up less than 25%. A third of business is now mobile, plus there's the increasing importance of the Internet, and packages provided in partnership with Telefonica and Ericsson. "Uniquely in the telecoms world," Bristow says, "we provide one bill for everything, so customers get their mobile, landline and Internet all in one bill."

The development of telecommunications in Gibraltar has been driven by e-Gaming, and Gibtelecom isn't the only player. In 2005, Lawrence Isola set up Sapphire, an ISP that has its own entire infrastructure separate from Gibtelecom and connects Gibraltar to Madrid using fibres from Telefonica and Ono.

Sapphire has gone from being a secondary provider to a primary one. As Isola notes proudly, "One of the biggest gaming companies in Gibraltar uses us and Gibtelecom has become a backup just in case." Gibraltar, like all places, "needs to have more than one credible provider, otherwise we'd come across as a banana republic."

According to Bristow, the trends in the sector, and which Gibtelecom will pursue, are towards data centres and providing a whole range of value-added services. And the vision comes from an abiding confidence. "We wouldn't be investing this sort of money (£50m in the last decade alone) if we didn't believe in Gibraltar."

But there's another thing Gibtelecom believes in too, and that's e-Gaming.

Gibraltar is today home to roughly 20 gaming groups, with more than 2,000 staff making it the territory's largest employer. Jim Ryan, CEO of PartyGaming, is clear: "Gibraltar is now the centre for online gaming in the world."

Initially attracted by the low taxes, cost and duties (just 1% of yield), online casinos are benefiting from the fast and stable broadband offered by Gibraltar's providers (who understand the potential of the gaming sector very well), a sympathetic regulator, and plenty of ancillary professionals, such as lawyers and accountants. As an environment for e-Gaming, it's a royal flush.

If so, the ace in the hand is probably PartyGaming. A FTSE250 company, it's in the process of merging with BWIN to create, in Ryan's vision, "the world's largest listed online gaming business". With over €680m in 2009 revenue, it will dwarf the next biggest publicly traded competitor and employ 450 people in the territory. Exciting times ahead.

The past few years have been a rollercoaster for the industry. In 2006, the US government passed a law banning millions of Americans from gambling over the Internet – by prohibiting credit card payments to gaming companies. The law was catastrophic and PartyGaming among others lost half its value overnight. But it's clawed back.

For Peter Montegriffo (see below), Gibraltar's success as an e-Gaming centre has many causes, but competition is central. "Gibraltar has 20 operators but has had hundreds of applicants - most turned away," he says. "Gibraltar has no obsession with jobs, but we do have an obsession with proper control and management and regulatory accountability."

There are, however, challenges associated with allowing online gaming to become so dominant: reputational risk is foremost, as gambling has often been associated with organised crime and carries the stigma of addiction. But also important, according to Montegriffo, is controlling growth and ensuring diversification, a lesson learned well after the 2006 catastrophe. The vision, he says, is for the government to take the number of players to 25 or 30 over a 3 to 5 year time cycle, to maintain diversification.

Yet much will continue to be owed, as Ryan and his competitors readily concede, to the Gibraltarian telco providers. "From a technical support perspective in particular," Ryan says. "What we have available to us here is top tier, it has met our existing requirements, and it will meet our growth ones too."

The future looks good. The gaming market worldwide is worth US$350 bn, and it will, according to Ryan, continue to evolve from land to the virtual space. The next five years "will see convergence, regulation and consolidation". And with the trust built up in the industry and a reputation for data privacy, the sector will surely continue to grow apace in Gibraltar.

Gibtelecom invests in world's longest fibre optic cable

The biggest development may be the Europe India Gateway cable, which will run 18,000km from the UK to India through the Bay of Gibraltar. Tim Bristow sees it as crucial for the territory. "It means the beginnings of an international business because of the capacity we will own on the cable. Even if Gibraltar multiplies several fold, it's much bigger than we will ever need here." But he hasn't been leading it just from a company perspective, he says, "It's the first time in nearly 100 years that Gibraltar has had a commercial submarine cable. So we can marry it to data centres where people are looking for tax-efficient places to host their computers." Connectivity, he believes, is "the new oil".

World's best online gaming lawyer?

Peter Montegriffo is as authoritative as you can get when it comes to e-Gaming. Gibraltar's Minister for Trade and Industry, with responsibility for economic development and financial services between May 1996 and February 2000, he is now a senior partner at Hassans, the biggest and most reputable law firm in the territory. He has been closely involved in the IPOs of several of the gaming companies established in Gibraltar, and within Hassans, Peter has been the partner liaising with the government on drafting e-Gaming legislation, in consultation with key players like 888 holdings and PartyGaming.