Malta boosts share of gaming industry

Betfair, the world's largest betting exchange, yesterday proudly showed off its new online gaming licence in Malta, which will boost the island's share of the global gaming industry to around eight per cent.

The licence will allow Betfair to operate any person-to-person betting or gaming product from Malta, while hosting a unique game called Exchange Poker.

Malta's excellent technological infrastructure, its progressive gambling legislation and its EU membership were cited as the three key reasons for Betfair's decision to apply for a licence.

Observers in the industry believe the implications of the new licence could be far more significant as Betfair is threatening to relocate its entire operations to Malta if the British Treasury moves to alter the tax regime covering gamblers' winnings.

Betfair started a betting revolution by pioneering the concept of betting exchange, a form of betting available on the internet, and creating a multi-million pound industry of which it retains an estimated 90 per cent share.

Speaking during the launch at the Westin Dragonara, Parliamentary Secretary in the Finance Ministry Tonio Fenech said that 18 months down the line, the Lotteries and Gaming Authority had processed no less than 103 applications for a remote gaming licence.

These have created more than 300 job opportunities and injected foreign investment in Malta.

This year, Mr Fenech added, the country would have generated Lm2 million in remote gaming taxes and Lm300,000 in remote gaming licences. Bandwidth and web hosting providers on the other hand would have earned an estimated Lm750,000.

In May 2004, Malta became the first EU state to regulate remote gaming in cyberspace. It was a calculated risk of attracting the discontent of the big majority of member states who still have a monopoly on gaming activities.

However, Mr Fenech insisted that Malta's remote gaming regulations are in harmony with the fundamental principle of freedom of movement of services.

Mario Galea, CEO of the Lotteries Gaming Authority, who pioneered the Betfair move, said that gaming operators were currently using over 120 Mbits of Internet bandwidth, which is approximately 10 per cent of the aggregate bandwidth in Malta.

Betfair's top management heaped praise on Malta's regulatory regime and gave an overview of the company's overwhelming success in the five years it has been in operation.

At peak times, Betfair processes an astounding 12,000 bets per minute - circa three million bets a day. Among other awards, the company won the Queens Award for Enterprise thanks to its innovative use of technology and employs a growing number of people.

Incidentally, the Financial Times yesterday reported that the UK Treasury would not be keen to lose Betfair.

The London-based company has enjoyed booming fortunes in recent years, partly thanks to the introduction of fixed odds betting terminals - arcade-style games that allow punters to bet on virtual casino games.

With the machines boosting profits across the industry, the UK Treasury is expected to introduce VAT on them, hitting bookmakers in the pocket, the FT reported.

In what appears to be a timely announcement, the Malta Lotteries and Gaming Authority yesterday published the public consultation amendments to the 2004 remote gaming regulations to bring Maltese regulations at a par with current industry practices.

The aim of the update is to broaden further the concept of game and technology neutral licensing and to better facilitate the uptake of regulated intermediaries.

After 18 months' experience, the authority is prepared to make Malta a top-league jurisdiction for remote gaming, Mr Galea said.