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Malta's New Laws to Supercharge Gaming Industry

Logo of the Malta Gaming Authority

The European island nation of Malta has been a big force in the world of online gambling for some time now, and it's gearing up to enhance its standing even further with several pieces of legislation. A new Gaming Act, expected to become active on Aug. 1, 2018, replaces the current regulatory regime that has been in effect for 14 years. Also, Malta has enacted three blockchain-related bills that standardize the legal framework for crypto-currency in the country.

Map of MaltaMalta, Located About 50 Miles South of Italy
Despite Its Small Size, It's a Hub of the Online Gaming Industry

About the Gaming Act

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The provisions of the Gaming Act aim to make it easier for betting firms to conduct business in Malta. The previous confusing roster of licenses for varying game types and business models is being replaced with just two types of licenses. Entities that are consumer-facing would have to obtain one kind of license while those that engage in B2B operations will need to apply for the other. Importantly, small changes to a site's menu of offerings would be covered within its existing license, sparing it from having to seek the re-approval of the Malta Gaming Authority (MGA) unless it makes extensive alterations to its gambling platform.

B2B organizations will not have to pay special gaming taxes on their revenue. Robust online gambling websites in 2018 often contain separate third-party systems for cashier functions, online poker, casino gaming, customer support, and all the other elements that go into making a successful product. By reducing the amount of tax levied on companies that provide these components, Malta is taking a big step toward promoting innovative and fully featured gambling sites.

Consumer Protections Enhanced

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The new Gaming Act will require that key employees within betting companies have to be identified to the MGA. The regulator will then investigate whether or not the personnel are experienced and knowledgeable enough to discharge their job functions effectively. The legislation calls for greater transparency in sharing corporate records with the MGA and gives the oversight body new powers to enforce the gaming regulations.

The MGA will be able to compile lists of non-compliant operators. Prospective users will then be able to see before signing up if a particular site is acting in accordance with the licensing rules.

The Authority will soon be able to put troubled operations under administration. This is a type of corporate governance wherein court-appointed officials endeavor to wind down a failing enterprise while seeing to it that all stakeholders, including players, are compensated to the fullest extent possible. Niche 3D internet poker room PKR was put into administration in the United Kingdom during May 2017, and this may have been one of the reasons why its users were made whole by PokerStars rather than seeing their real money balances disappear entirely.

Malta Regulators Have a Checkered Past

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One of the failures of the MGA and its predecessor Lotteries and Gaming Authority (LGA) has been their relative laxity in policing and punishing rogue and scam operators. Indeed, the LGA won Casinomeister's coveted (NOT!) “Sitting on One's Hands” award four years running (2008 - 2011) for its failure to do anything to keep customers safe. When Purple Lounge (on the Microgaming Network) and Minted Poker (on Everleaf) stopped paying out withdrawals, the LGA busied itself with internal investigations that led nowhere and ultimately did nothing to forestall the misappropriation of player funds.

Logos of Minted Poker and Purple LoungeA Couple of the High-Profile Malta Licensees That Stole From Customers

We can thus view the new customer protection clauses of the Gaming Act as an attempt to shore up the shaky reputation of the MGA as an online gambling licensing body. This is critical if Malta wishes to be perceived as anything other than a rubber-stamp jurisdiction.

Unexpected Delays Introduced

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The Gaming Act was drafted by Malta's Junior Minister for Financial Services, Digital Economy, and Innovation, Silvio Schembri. It was passed by parliament on May 8, 2018, and it then went to the European Commission for review.

Photograph of Silvio SchembriSilvio Schembri, Malta's Minister for Financial Services, Digital Economy, and Innovation

The Act was originally slated for adoption July 1, but this date had to be pushed back a month to Aug. 1 because of issues raised by the European Commission and two unnamed EU member states. The MGA has stated that it will use the extra time for “reviewing and taking into account” the viewpoints of the EC and EU states .

The parts of the Gaming Act that deal with land-based casino gaming were set to go live Jan. 1, 2019, and it's not clear whether or not this date will be rescheduled as well.

Crypto-Currency Regulations

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Minister Schembri is also active in Malta's attempts to establish itself as “The Blockchain Island.” This is a reference to the blockchain transaction-recording processes used by popular crypto-currencies, like Bitcoin, Ethereum, and Bitcoin Cash.

On July 4, the Parliament of Malta approved three bills that together set up a regulated ecosystem for digital currency: the Malta Digital Innovation Authority Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act. The new crypto landscape involves the creation of a government agency to oversee the blockchain space, the licensing of companies operating in the industry, and rules governing initial coin offerings (ICOs).

Bitcoin poker rooms and other crypto betting sites have already deployed crypto-currencies en masse because they make online gaming payments cheap and easy. By positioning itself as a leader in both internet wagering and crypto technology, Malta will increase its appeal in the eyes of online gaming businesses.

Gaming Sector to Grow Even Larger

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Gambling already accounts for about 11 percent of Malta's gross domestic product with gross value added to the economy of €1.1 billion ($1.3 billion) in 2017. The remote gaming sector paid €26.5 million in taxes and employed 5,861 people on the island during this same period.

By working to create a more attractive taxation environment for operators, stronger protections for consumers, and a crypto-friendly legal structure, Malta can increase its success. It may steal business from Gibraltar, Panama, Kahnawake, and other popular licensing jurisdictions to become the preferred location for online gaming enterprises.