‘We do not want another Las Vegas’ – Tonio Fenech

The government had already taken pains to introduce serious, responsible regulations for gaming parlours because it did not want Malta to turn into another Las Vegas, Finance Minister Tonio Fenech told Parliament on Tuesday.

Introducing the second reading of the Bill to amend the Gaming Act and the Lotteries and Other Games Act, Mr Fenech said the government was determined to keep on top of the fast-developing gaming sector because it could be somewhat volatile and hurt Malta’s reputation.

This reputation was currently so high that when other EU member states questioned how the smallest state could have the largest gaming sector, the European Commission said Malta was above criticism because it had done things well.

In spite of very stiff competition, gaming interest in Malta remained high, with more than 113 pending applications from would-be operators.

The minister said the government was also looking at a new, interesting niche that could be developed by creating a form of licensing to cover gaming oper-ations in casinos on cruise liners inside territorial waters.

Turning to the Bill itself, Mr Fenech said it was proposing a number of amendments to the principal gaming laws. The sector was contributing heavily to the national economy and had become one of the most promin-ent online gaming sectors, but one with a reputation to safeguard with serious principles and a clear strategy.

The legislator had felt the responsibility to permit gaming in a regulated ambience while deterring the abuse of gamblers.

Malta’s initial legislation in 2004 had been the first in any EU member state.

Today the sector had blossomed into a major job creator, to the tune of over 6,000 employees, and Malta was respectfully considered as a leader in gaming regulation.

Rather than a question of liberalisation of the sector, it was more one of controlling to safeguard minors and vulnerable people and minimising the risk of addiction to gambling.

Mr Fenech said the people employed directly or indirectly in the sector enjoyed good salaries for high added value, and their skills related not only to gaming itself but also to its development. To date the gaming authority had issued over 280 operators with a total of some 400 licences for internet gaming, but only after extensive screening.

The authority invariably ensured that submitted business plans really reflected sustainable proposals. An important milestone, and an EU first, had been in 2010 when it had launched the charter on players’ rights and responsibilities.

The gaming sector presented huge challenges on the European level. Some countries excluded gaming completely, while others wanted it but under monopolistic control.

The government had positively received the EC’s recent Green Paper, and certain contested aspects had been clarified by the European courts.

The minister said that besides launching its charter, the gaming authority had strengthened application procedures and audits, with new criteria to shed light on certain applications that were deemed to warrant greater attention.

New functions had also been launched to better follow developments overseas.

In 2010 Malta had received almost €50 million in taxation and revenues from the sector.

Mr Fenech said the amendments being proposed in the Bill showed the importance of closing as many loopholes as possible, updating to stand up to the huge advances on the electronic levels, and introducing new definitions in a live and dynamic sector.

The amendments would give the gaming authority the power to regulate new models that had started being noticed soon after the 2010 amendments. These made for new situations and loopholes.

Whether called gambling, amusement or entertainment, all types of games must be licensed by the gaming authority. With a view to enabling enforcement, nothing could be left to doubt or interpretation, even in an effort to give clear guidelines to the courts. In short, the amendments gave the authority an effective role of a regulator with teeth.

The minister said the need had also been felt to enable the authority to enter into collaboration agreements with foreign authorities, thus enhancing its inter-national standing and being more incisive in general developments in the sector.

The Bill was proposing to increase penalties for contraventions regarding the sector, including a new concept of from two to five years’ imprisonment. It would also enable the police to investigate through magisterial inquiries.

Gaming was one of the sensitive sectors because many people perceived certain inherent risks. Conscious that clandestine gaming was more dangerous than the regulated, it had been the government’s consistent choice to develop gaming that was transparent to players, avoiding criminality and not allowing for money laundering.

Mr Fenech said that as in financial services, the government was seeking to develop the gaming sector on an international and local reputation of clear governance. The two parts were essentially one market, and must have similarities of regulation.

Opposition spokesman on justice Josè Herrera said that it was high time to regulate the gaming sector seriously. Malta’s economy depended on niches, with online betting forming an integral part of the financial services sector.

The contribution of this sector helped to keep the deficit in check and balance accounts.

The financial legislation had been made with consultation between both sides. The financial services sector was a sensitive one. He was concerned that the Maltese economy depended too much on financial services.

Democracy was built on the certainty offered by the legal framework. This was affirmed by the Constitutional Court in the case on lap dancing where procedures had been stopped because nothing in the law had indicated with certainty that lap dancing was prohibited.

He said that this uncertain situation characterised the gambling sector also during the time that the police had raided gambling outlets and removed legally-imported gambling machines. The owners were arraigned in court and their cases were still pending.

Dr Herrera criticised the gaming authority’s CEO of the time. Owners had been promised that the law and regulations would be ratified so that their business would be legalised. These people had invested millions of euros. Instead of ratification, the police had raided their outlets.

It was a time of confusion and uncertainty according to law. These owners had been misled and many had suffered great financial losses because they had taken large loans from the banks.

The court had also given a very restrictive interpretation, classifying even billiards tables as gambling machines. However, there was a case where the civil court had pronounced that these investors had been deceived. But the situation had never been remedied.

Dr Herrera called on the government and the Attorney General to take note of these uncertain circumstances and of the civil court’s decision and show prudence in the current court cases because these investors had been deceived. This was possible because the Attorney General – who was a person of great integrity – enjoyed wide discretionary powers and could establish the amount of fines which could vary from one case to another.

Fines, he said, ought to be kept to a minimum. The sector was regulated after a long time because the government had been intransigent. Gaming had been tolerated with a lot of profit-making.

The present situation showed that the legal framework was now certain and the sector was regulated accordingly with heavy fines.

The debate continues.