Issue link: https://maltatoday.uberflip.com/i/1468112
I t started as a whim in 2002, under the auspices of the old-style Lotto de- partment, then still faithfully turning the 90-number lotto wheel. It was a bold step taken by the PN government to ven- ture into the unknown -specifically when bandwidth was limited and was owned exclusively by MaltaCom - a state mo- nopoly. Banks were shy and scared of online gaming with bankers wanting to court it but stayed aloof not being familiar with its risks. e new kid on the block grew slowly in the early years, while yours truly was a pioneer writer about its for- tunes in business media extolling its potential. is was a taboo sector and most newspaper editors were cautious not to be closely supporting it. My ed- itor used to tell me - an article once a month on the subject was the limit. I took particular interest in the rela- tively unknown sector and in 2003 trav- elled to Australia to register in Malta, the first sport book company then a list- ed company based in Northern Territo- ry (Darwin) at a time when Australian politicians at the hustings were keen to wean off its popularity among gamblers. ey threatened to ban it completely via a moratorium hence the option for a gaming license in Malta. More gam- ing licenses followed once the Lotto of- fice was replaced by a Lotto and other Games Act - fortuitously chaired by po- litically appointed bigwigs. For a start, as the agency was still in its infancy the task of conducting due diligence on applicants was entrust- ed to MFSA - under the patronage of its chairman Joe Bannister. Problems abounded for beginners trying to test the setup when as stated earlier there was no redundancy in bandwidth and no bank would open credit facilities or extend full scale credit card processing. Most of the early credit card process- ing via Visa, Mastercard and others were handled by foreign companies. e leg- islation catered for various licenses and the gaming tax was moderate. I had participated in numerous international gaming conferences and started to gain some familiarity with the gaming com- munity in New Jersey, Dublin, London, Barcelona and Spain. My first big scale gaming conference was hosted in a five- star hotel in Barcelona in 2002. Success led me to organise a two-day international law conference (fee pay- ing) in London close to the days when the celebrated ICE conference was held annually at Earls Court. My modest part in promoting Malta during the early days of the gaming saga saw me being cautioned by managing partners of the Big Four audit firms. ese would not touch them with a barge pole seeing them as too risky to audit. Obviously, the attitude evolved as the Big Four and leading law firms now ser- vice such rich clients professing their expertise in indirect tax, gaming regu- lation, players protection, AML. ey hastily set up specialist departments advising their clients about interna- tional gaming law. ere is no looking back now that the industry has matured during the twenty-year interlude. It has grown into one of Malta's most impor- tant economic contributors. It provides ancillary services such as web hosting, security auditing, players protection, HR recruiting or legal work. Malta, in essence, serves as the Europe- an backbone of the industry, attracting the largest gaming operators and sup- pliers, as well as some of the hottest start-ups. Readers may remember the harsh legal battles that early operators had to endure? Clashes with the Euro- pean Court of Justice has landed Malta at the hot spot especially the famous case of the Zeturf - a French subsidi- ary in Malta which targeted punters on French horse racing circles. Malta lost the case yet there were oth- er legal battles along the 20 year ride. Moving forward, one appreciates the key areas of licensing with much pros- pect for growth such as in B2B, as well as the appeal of flexible B2C regulations for overseas markets. An option fre- quently chosen by such parties is that of setting up a skin, that is, a white label arrangement. is works as empower- ing operators are able to rely on and be promoters of pre-existing online gam- ing licensees. e flexibility of Malta gaming rules allows gambling operators the option to reap the benefits of setting up shop within this industry without incurring the expenses and responsibilities asso- ciated with the attainment of an online gaming license. Whilst the B2C license will still be categorised in accordance with the game type provided (game types being very similar to the current concepts of Class 1, Class 2, Class 3 games and skill games), the new law eliminates the requirement of a new li- cence per class of games. Another novelty is that the duration of the license, has been extended from a va- lidity period of 5 to 10 years, giving licen- sees more long-term stability. A number of foreigners specialised in the complex operation of sports betting, poker, table games and skill games - which grew in importance over the years. Is there a lesson to be learned by local regulators (previously - LGA now recently mor- phed into MGA)? e political class were visible to stay close to the foreign boards running the show and placed persons of trust in MGA to harness the fortunes of the expanding sector. e sudden demand for specialists was facilitated by local HR agents which undoubtedly led to a growing commu- nity of well-paid professionals. Boys and girls now afford to rent quality furnished apartments and party hard. More broadly, they have made Malta their home and not just their workplace. For the techies, these have welcomed the arrival of new bandwidth providers with ample connectivity via micro links and a number of subsea cables to main- land Europe. A welcome development took place where software developers laid anchor in Malta and started a thriving eco- system. With the introduction of new gaming laws this widened the concerti- na for new flexibility. Despite the count- less setbacks faced by businesses since March 2020 by the COVID-19 pan- demic, the iGaming business proved vigilant. It has no intention of slowing down, and unlike other industries, has shown remarkable resilience in the face of the Covid 19, downturn. In light of the pandemic, Malta Enter- prise launched a €5.3 million research and development fund, to which iGam- ing companies are encouraged to apply. What's next for the Igaming sector? Will banks become more friendly towards the industry? Should this occur, Malta can capitalize on the millions currently paid overseas to credit card processors and intermediate fees paid to foreign credit institutions. Fortune favours the brave and I hope that the next paradigm shift will sur- prise us all during the post-Covid re- covery with Metaverse blazoning the trail. IGaming in Malta is now 20 years young George Mangion George Mangion is a senior partner at PKF, an audit and consultancy firm, and has over 25 years' experience in accounting, taxation, financial and consultancy services. His efforts have made PKF instrumental in establishing many companies in Malta and established PKF as a leading professional financial service provider on the Island 8 OPINION 19.5.2022