Malta is arguably the world’s leading jurisdiction for remote gaming, based on its rate of growth and the continued pipeline of new licence enquiries. It is a fast-moving industry, however, so as to stay on top Malta needs to keep an eye on its would-be competitors.
Malta has established itself as a jurisdiction of choice for licenced gaming operators. It boasts sensible regulation, a healthy cluster of supporting services, a resilient economy, and an attractive fiscal regime. As a result, some of the most significant operators in the industry call the island their home.
Yet the gaming industry moves quickly. This can mean rapid growth, such as we have seen here for several years, but it can also mean challenges from disruptive competitors. At the cutting edge of this tech-driven industry, it is important that regulation moves in lockstep with industry.
One good example of this happening is Malta’s regulation of fantasy sports. Fantasy sports leagues have exploded in popularity in the last couple of years and are now a multi-billion euro industry, yet a lot of this growth has been in a regulatory grey area because in many countries it is unclear whether it counts as gambling or a game of skill. Malta’s move to regulate ‘games of skill with prizes’ is a step towards eliminating this grey area and providing a clear regulatory framework for legitimate operators to thrive in, and will be a big coup for the islands.
So are there areas where other countries are edging ahead? One possible competitor to watch is the Isle of Man. This British Crown Dependency was one of the early-movers in gaming and to this day has the headquarters of several world-leading operators. Known as a regulatory innovator, the most recent move by the island nation has been to explicitly license the betting of virtual goods, such as ‘skins’ for video games.
In fact, through our Isle of Man office, our team has recently assisted with the world’s first virtual goods betting licence, for an eSports specialist operator called ESP.bet. As eSports (competitive video gaming) is fast becoming a massive international entertainment industry, and eSports betting is growing in tandem, this is a smart move that Malta would be wise to emulate in order not to lose out on this growing niche sector.
That is addressing a current trend, but I think we can go a step further and be ahead of the game. For example, our gaming team has started to see tech proposals crossing their desks for blockchain enabled gaming. While this has been a theoretical possibility for some time, developers are now able to address the speed challenges that had previously made ‘smart-contract’ driven gaming untenable.
As this goes mainstream, it will challenge existing gaming regulation and disrupt industry business models by replacing operator-led hosting with distributed ledgers. Were Malta the first to regulate in this space, we could stand to benefit substantially, but there are already rumblings from jurisdictions such as the UK that they are interested in taking the lead.
It’s an exciting industry because there is always something new on the horizon. We simply need to keep our eyes and ears open and retain the commercially-sensible regulatory agility that has gotten us this far.
Ann Baldacchino handles business development at Boston Multi Family Office.