Smoke billows behind residential buildings following an explosion in Gibraltar.

Smoke billows behind residential buildings following an explosion in Gibraltar. Photo: AFP

Gibraltar: An explosion and fire at a Gibraltar power station blacked out much of the British outpost and halted international online betting operations with giants including William Hill and Ladbrokes.

A power station generator exploded because of mechanical problems, said police and government officials on the Rock, a tiny British-held peninsula on the southern tip of Spain.

As thick smoke billowed over the territory, police told nearby residents to keep their windows closed to avoid breathing problems.

No one was harmed, police and a spokesman for the Gibraltar government said on Sunday.

But the blaze interrupted Gibtelecom services, bringing down worldwide betting services such as Ladbrokes, William Hill and Betfred.

Gibraltar's low taxes have lured 26 major online casinos and gaming operators. The Rock claims that 60 per cent of that lucrative online business flows through its territory.

William Hill said the blaze forced its services offline for about 2½ hours.

Some 50 staff at the William Hill offices adjacent to the fire were evacuated by police and firefighters, said spokesman Graham Sharpe.

"It is just one of those freak events nobody could have predicted," Mr Sharpe said, offering apologies to any affected customers.

"There will be those who will claim they would have backed a winner but there will be others who have been saved from backing a loser," the spokesman said.

William Hill operations were now back to full strength, he said.

Ladbrokes said it, too, was hit as the fire interrupted Gibtelecom's communications network linking the territory with the rest of the world.

AFP