Ten years into EU membership, the remote gaming industry in Malta is still going strong. The sector has stabilised from its earlier days of significant exponential growth but the industry has remained solid, though it is facing constant challenges, especially on the EU front.
Firstly, the novelty of Malta having been the first EU member state to regulate remote gaming in 2004 has now completely worn off. A multitude of other jurisdictions have done the same and at times with better or more updated regulations.
However, Europe remains the main market for companies based in Malta so we cannot ignore the changes and the challenges that the country is facing as a gaming jurisdiction on an EU level.
Also, our domestic market, that is, Maltese players, is insignificant. Unless gaming operators have access to bigger markets from here, we will not only be questioning the attractiveness and competitivenss of Malta but also the viability of the industry.
The main challenge, therefore, is the closure of EU markets to the Maltese industry, as more member states in which the Maltese operators offer their services become subject to a national licence requirement and tax obligations.
The most significant for Malta this year was the introduction of this principle in the UK on December 1.
Although the number of licensees may be on the rise, the licence’s validity for access to the EU internal market (as it was in 2004 and thereafter) has been severely diminished.
This trend is set to continue, while the political will for harmonisation is very vague.
As things stand, the European institutions are passive at best and against Malta’s policy for this industry at worst – meaning that the island’s policy needs adjustment and redefinition.
While the regulation of remote gaming at EU level is on a state-by-state basis, member states have long been calling for co-ordinated enforcement of national systems, which are not all compliant with EU law.
The European institutions are passive at best and against Malta’s policy for this industry at worst – meaning that the island’s policy needs adjustment and redefinition
However, they are still getting their way, as is the case for the definition of ‘illegal betting’ in the Council of Europe Convention on the manipulation of sports competitions and its criminal provisions.
The adoption of this convention at EU level would deal Malta a big blow in terms of the sector’s competitiveness. Last July Malta asked the European Court of Justice for clarification – an action that is highly commendable.
The direction the ECJ has taken in gambling-related cases over the last five years is not usually in our favour, to say the least. Regrettably, Malta may be merely buying time and it may not be enough to prompt a change of heart in this EU policy area.
It is high time Malta put in place a redefined strategy that deals with these challenges, in order to sustain and save this important economic sector.
The strategy would need to maintain the same fiscal incentives, and even add new ones, until the EU laws change.
We have all heard of Starbucks in the UK and the attacks against Luxembourg and Ireland for the favourable tax treatment they gave to multinational companies. The government would not welcome such challenges to tax benefits, but this is worth highlighting to emphasise that the pillars of success so far may be challenged and even eroded in the future – and Malta must be ready with innovative ways to target specific sectors and foreign direct investment and to maintain this for the long term.
The government may intend to start strategic alliances with other EU jurisdictions to mitigate this risk, however, this should be in parallel with the efforts being made on an EU level rather than in spite of them. The Opposition acknowledges that this is no easy feat, hence the need for further adjustment and redefinition of the product that Malta offers.
This, together with further diversification of the sector, including digital gaming and skill games, will ensure the success of the industry and guarantee Malta’s position as Europe’s leader in the gaming industry for the next decade, the same as it was under the Nationalist government for their last decade in office.
I wish all the very best during this festive season to the editorial team, the staff and the readers of The Sunday Times of Malta and Times of Malta.
Kristy Debono is the Nationalist Party’s spokeswoman for competitiveness and economic growth