Judgment 'not so bad' for Malta

The judgment by Europe's top court last Tuesday giving member states the right to ban online gaming websites does not impact Malta's lucrative industry as much as it seems at first glance, the former CEO of the Lotteries and Gaming Authority believes.

Over the past few years, Malta has seen a surge in the number of online gaming companies setting up base here because of favourable legislation and operational conditions, including taxation. In fact, it is estimated that about 10 per cent of the world's remote gaming companies operate from Malta, with the industry directly employing about 2,100 workers.

The former CEO, Mario Galea, who is now an industry consultant, said that although the judgment needed to be studied properly, the bottom line of the European Court's decision was that member states had the obligation to protect consumers from the adverse effects of online gaming. In Malta, the authorities had foreseen this aspect and had drawn up safeguards to protect players and even invited authorities in other jurisdictions to follow suit. In this respect, Malta is at an advantage because it had already foreseen what the ECJ complained about, he said.

He said the ECJ ruling did not uphold monopolies in gambling but rather that EU citizens needed to be protected by their respective member states through the competent authorities and an effective gaming policy.

The ruling given by the Luxembourg-based court was over a dispute between Bwin, an Austrian-based betting company and the Portuguese soccer league on one hand and the Portuguese state betting monopoly, Santa Casa, on the other. Santa Casa had tried to break up a sponsorship deal involving the Portuguese soccer league that allowed Bwin to advertise its website to fans.

The ECJ ruled: "The prohibition imposed on operators such as Bwin of offering games of chance via the internet may be regarded as justified by the objective of combating fraud and crime".

But Mr Galea pointed out that Santa Casa in Portugal happened to be the regulator and an operator at the same time. This raised the question about whether the ruling was issued in its favour as a regulator or as an operator.

The ECJ's judgment in this sense highlights "a bad gaming policy in that country because you cannot possibly have a regulator that should be overseeing responsible consumption of gaming and, at the same time, justify economic benefits from gambling by acting as an operator".

When contacted, Unibet CEO Petter Nylander said the ECJ's statement that only a state-controlled monopoly could protect the customer "shows a surprising lack of knowledge on how licensed internet gaming companies operate.

"A competitive market has a regulatory and controlling effect between market operations and competition, regulation and control. Trust and security are key differentiators in e-commerce and high-end consumer protection is a top priority for all listed, transparent, private gaming operators," he said.

Commenting on the ECJ ruling, lawyer Silvana Zammit, head of the i-Gaming Unit of Chetcuti Cauchi Advocates, said that the general European principle of freedom to provide services anywhere within the EU could only be compromised when it was balanced against the benefits of the public interest.

Dr Zammit, however, said the term "public interest" was being used or misused widely and no parameters were set.

"The ECJ ruling definitely comes as bad news to the online gaming industry. EU-regulated online gaming operators are extremely capable of preventing fraud due to strict anti-fraud regulations applicable to them, which ensure a high level of transparency, integrity and traceability," she said.

Dr Zammit said that attention must be drawn to the vast number of European states in the process of reviewing their gaming legislation, with none of them choosing a monopoly-like setup to regulate their online-gambling market. "A monopoly is not the answer to prevent fraud; prevention can be amply achieved by proper regulation and supervision," she insisted.