Ivan Camilleri, Brussels
'Blow' to online gaming industry
'No consensus in EU yet on remote gaming industry'
Photo: Matthew Mirabelli
European Union member states were not obliged to allow gaming firms to penetrate their territory just because they were licensed in another EU state, the Advocate-General of the European Court of Justice decreed in an opinion seen here as a setback to Malta's lucrative remote gaming industry.
Advocate General Paolo Mengozzi, whose opinion is usually followed by the Court, released his conclusions on seven cases referred by different German regional courts about the compatibility of German gaming rules with EU legislation.
He said the offshore and extraterritorial licences granted by Malta and Gibraltar distorted the mutual trust between member states when it came to gaming laws.
He said a member state could have a monopoly for some gambling and betting services. Furthermore, since there was no mutual recognition in gambling, member states were not obliged to allow operators on their territory on the mere grounds that they were licensed in another EU member state.
He ruled that gambling monopolies had the right to advertise their products in an adequate manner in order to present an attractive legal alternative to an illegal offering.
Over the past years, Malta has seen its remote gaming industry flourish, with hundreds of foreign companies opening offices on the island attracted by an array of favourable legislative incentives introduced by the government. The industry employs hundreds of people and pays millions of euros in taxes every year.
There is no consensus yet in the EU on how the remote gaming industry should move forward. The European Commission has not enacted any specific laws and has preferred to treat it as just another service to be regulated by the general free movement laws.
However, member states disagree in their interpretation of the EU treaties on the matter. Some, particularly those wanting to defend their monopolies, like France and Portugal, say they have the right to regulate their market and, thus, use certain laws to keep online competition at bay. Others, including Malta and the UK, insist the treaties give companies registered on their territory the right to operate in every EU member state without any barriers, according to the spirit of free movement.
The different interpretations have led to many new legal cases being filed before the ECJ, including some by offshore companies licensed in Malta, which are finding it difficult to penetrate the gaming markets of some member states.
Industry sources said the Advocate-General's opinion was therefore being seen as a blow to the burgeoning business in Malta.
On the other hand, the Association of European Lotteries, representing state monopolies, welcomed Mr Mengozzi's decision: "This is a further defeat for the many commercial operators that continue to ignore the legislation of the member states, contrary to the clear jurisprudence of the European Court of Justice."
The association's president, Fredrick Stickler, explicitly welcomed the harsh criticism of the Advocate-General towards "tax havens Malta and Gibraltar".
He referred to Mr Mengozzi's statement that "their practice (of Malta and Gibraltar) to issue offshore licences to hundreds of commercial online gambling operators distorts the trust between EU member states".
The sources said this opinion amounted to a direct accusation of Malta for using loopholes in the EU laws to give an advantage to companies wanting to introduce online gaming in markets that have been protected for a long time.
"This is what the Advocate-General means by a distortion of trust. However, the internet has changed the world and the EU has to move on," the sources said.
The Advocate-General's opinion is not binding on the Court of Justice but is only intended as a proposal to the Court as a legal solution to the cases for which it is responsible.
However, it is very rare that the ECJ decides against the opinion of the Advocate-General.
The judges have now started their deliberations and a judgment will be handed down later.
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Anthony Grech
Mar 9th 2010, 13:04
You know I was thinking about it and maybe I am wrong. After all who is being hurt with this, surely not me. In fact I benefit from the tax revenue that rolls in from the people that use these sites. I had no idea that I or infact any Maltese citizen could game at the casino, I really thought it was nto allowed, although maybe this has changed, or maybe I was just wrong. I thought about it and really who am I to push my beliefs on others, we don't live in religious state do we? If someone wants to throw their money away, well what has that got to do with me. And since these sites are regulated and are looking out for the clients best interest, really what is the harm. It is funny, but the more I actually think about it, the better this whole thing sounds. I appologize to everyone here, I was wrong and you were right.
Joe E Galea
Mar 9th 2010, 07:57
I hope the government defends its position in favour of the online gaming industry. If not it would be a big blow to the country. This industry is very important to our economy.
@Anthony Grech: You and your biblical tecahings won't help the already dwindling economy. Get a life. Moreover, online gaming companies have a social and corporate responsibility. One of them is to set limits to gamers.
Jason Bartoli
Mar 9th 2010, 02:45
@Anthony Grech
Maybe you should check your facts... Last time I went to a casino, I had no problem getting in on a Maltese id...
What century are you living in?
Maria Schembri
Mar 8th 2010, 22:30
@Anthony Grech
Unless you are under 25 years old, then you can go to the casino and place your bets.
As regards to your comment where you state that Maltese citizens cannot play with companies that are registered in Malta, you are right. But the reason is quite obvious. It is done so as to limit the possibility of fraud (especially in such a small state). Any self-respecting i-gaming company does not allow the citizens of the country it holds offices in to play on it's platform (and that is part of the reason why Malta is so lucrative - if you hold your office here, you are only blocking access to a very limited amount of individuals).
Gambling is not illegal in Malta (as long as it's regulated), otherwise we would not have the LGA and the casinos.
kevin saliba
Mar 8th 2010, 20:40
This is indeed a blow against the grounding principles of the EU. Locally, one must also consider the overspill onto other industries such as renting, transport, entertainment, restaurants and so on. Moreover, the online gaming industry has allowed maltese to work in a young, international, innovative and fast moving industry which is comparable to few industries, particularly those servicing the local economy. One must bear in mind that this is also a highly regulated industry, with Malta as one of the most respected and transparent jurisdictions. The regulations and laws which such companies HAVE to abide to, remain and are in the interest of fairness and responsibility towards the consumer.
marthese mussett
Mar 8th 2010, 20:00
The most annoying form of gambling is the vote via sms competitions they do on tv.These online gaming offices,and casinos are creating lots of jobs.As with everything else,willpower plays a part,you should know when to stop.The most disappointing form of gambling is the maltco lotto...you play the same ambo for about ten years...when you finally win...they give you less money than they should.
Anthony Grech
Mar 8th 2010, 20:00
Since gaming is such a great thing for Malta, I suggest that we all go down to the cassino and place some bets. Opps, we can't can we. Well can we then go on line and gamble at the sites that are located in Malta? As for the church having pizza and wine night I agree that this is not such a great idea. In addition the idea that the church can get people to play games of chance, lose money and then profit from it is quite shocking to me. The idea that it is only a small ammount of money is really besides the point, since when is it OK to fleece people if the cause is considered good.
Anthony Grech
Mar 8th 2010, 19:50
Maria Schembri as I have said I really don't care if people want to gamble. What I am pointing out is the total double standard here. Look at the gaming industry here. Do we allow Maltese to "game " here? As a Maltese citizen I can not gamble here, yet taking the money from non Maltese is just fine. If this really was so harmless then how come I can not go down to the Cassino and place a bet. Also, if I am not wrong Gambling is illegal in Malta. If it is really such a great thing then why not have it legal here.
Maria Schembri
Mar 8th 2010, 19:01
@ Anthony Grech ...and yet again your argument doesn't hold water. Let's forget religion for a moment here and use our common sense (if any). Let's start from the basic premise that any addiction is bad. Now, instead of gambling, let's consider alcohol. There is nothing wrong with the consumption of alcohol if this is within moderation, right? (And if you want to include religion in here as well, then why does the kapillan organise Wine and Pizza night as yet another fund raising event?) But once alcohol becomes an addiction, THEN, it is not good for the person who is suffering from this addiction. Addiction has been there for ages, and yet we have not closed down our bars and no one in his right mind would consider closing down Farsons (for example). Then why on earth can't you understand that the same principles apply for gaming (and any other thing in the world)? Just because someone abuses something, it doesn't mean that it should be banned for all! Heck, if you believe that, then we should ban knives because they can be used to murder someone!
Anthony Grech
Mar 8th 2010, 18:40
To all who think that Gaming is fine.... and before you say that this makes it ok any idiot knows that the odds of winning are so small as to be almost impossible to win. From the Catechism "Games of chance (card games, etc.) or wagers are not in themselves contrary to justice. They become morally unacceptable when they deprive someone of what is necessary to provide for his needs and those of others. The passion for gambling risks becoming an enslavement. Unfair wagers and cheating at games constitute grave matter, unless the damage inflicted is so slight that the one who suffers it cannot reasonably consider it significant. "
David Caruana
Mar 8th 2010, 18:01
@ Anthony Grech :
Doesn't the Vatican have enough prositution and paedophiles scandals to deal with before trying to preach to us what is good or bad?!
I hope you realise that remote gaming, i-gaming, or online gambling (call it as you wish), makes up to 10% of Malta's GDP... whether you like it or not, if something goes wrong to this industry, be sure that you will feel the repercussions too.
Maria Schembri
Mar 8th 2010, 17:37
@ Anthony Grech
If gambling is a sin then why does the kapillan organise tombla as a fund raising event?
Apart from that, as S Keyes has quite rightly pointed out, online gaming is one of the biggest industries in Malta, meaning that it considerably contributes to the country's revenues, and it also employs a good deal of Maltese, the figures escape me at the moment, but I know that it runs in the thousands.
So let's look at the big picture and stop posting stupid comments
S Keyes
Mar 8th 2010, 16:10
@ Anthony Grech,
The term 'gaming' is used as it encompasses all aspects of the sites. Most people see these sites as a form of entertainment. Many offer free games to enjoy.
Nobody is forcing you to use the sites and you benefit from the huge amount of tax being generated.
ASpiteri
Mar 8th 2010, 14:55
@Anthony Grech...Sorry Mr...time of the inquisition is over!
Anthony Grech
Mar 8th 2010, 13:24
Will you please stop calling it Gaming, it is gambling. What is wrong with you people, this is evil, doesn't teh bible tell us not to gamble? Isn't it a sin? Isn't that what the Vatican has said on numerious occasions? What about Gluttony, of course if that where still a sin our whole island would be in for a really bad time.
ASpiteri
Mar 8th 2010, 10:45
This is the perfect demonstration of how Government intervention and over regulation in any market disrupt the whole industry and yet another prove that the standardization of laws and policies among European states threatens the very essence of Free Market Economies.
Sovereign nations such as Malta and the UK should have all the right to guarantee the best possible conditions for an industry such as igaming to operate in a Free Market economy.
The real culprits in this whole saga are countries like France and Portugal who control their markets through monopolies and state protectionism.
mike turner
Mar 8th 2010, 10:31
This could be a big blow to Malta, but also is an unacceptable illustration of the way that institutions in large countries can bully initiatives in smaller countries. It is to be hoped that the ECJ will see this and ignore the opinion by the Advocate General from a large country with state monopolies. His opinion is a blow for heavy handed State control against entrepreneurial initiative. Stand up for initiative .