Two years ago, Joseph Cuschieri, the executive chairman of the Malta Gaming Authority (LGA as it was then) told Vanessa Macdonald that he was looking at ways to futureproof the gaming sector. New legislation should be in place by summer which will be a ‘game changer’, he said.

What is happening with challenges over taxation – our competitive advantage?

The tax issue has been brewing for some time and I do not personally think that Malta can reasonably expect to keep things exactly the way they are today.

It is no different to when we were going to join the EU and there were international trading companies that would not fit into the onshore tax regime. We adapted, changed and thrived. Practitioners are already collaborating to find an alternative model which can work for Malta.

I also believe that when there is a certain critical mass – as there is with financial services and gaming ­– it creates its own gravity and attraction.

Gamers are attracted here because we have a sophisticated eco-system with the quality of service gaming operators need, including specialised lawyers, technical specialists and robust data centres and other B2B service providers.

One of the strengths of the jurisdiction is the stance that was taken in 2004 when the government declared that it did not believe in prohibition but in regulation, rolling out the framework we have today. Also we are an English-speaking country – which we take for granted but which is quite a plus for us. And of course there are fiscal incentives.

The measures we take now, such as changes to the law, more efficiency in governance of the sector and so on, all raise the level in Malta and ensure we will continue to grow. Personally, the issue of fiscal incentives does not worry me that much. In fact, you yourself had an interview with an operator who said that tax may have brought the company to Malta but it is now just one of the many factors that keeps them here.

I am not saying that there would not be some casualties but it won’t mean the end of the sector.

All this notwithstanding, the Prime Minister has made it very clear that any changes in fiscal legislation should remain the remit of the Maltese Parliament – as sovereignty was established in the EU treaties. However, at some point, the pressure to adjust tax regimes could pile up. Tax changes may require unanimity in theory but if the government were ever forced to use its veto, it would have to do so in a very measured way.

The negotiations between the UK and EU could also affect us and, if it gets concessions, they would apply to all the member states…

This is not a dark cloud looming. It is a challenge which needs to be addressed in a smart and pragmatic fashion.

Two years ago, we did an interview where you referred to ‘future proofing’ the sector. One of the targets was based on a revamp of the legislation…

The new legislation is at draft stage and we started consultations with the relevant ministry. It needs to go through Cabinet and will be discussed with the Opposition. We are confident it will be presented to Parliament before the summer recess – no doubt after a lively debate on technical points in spite of the fact that both parties support it!

We are talking about a completely new Gaming Act, the first after 12 years. The law as it now stands imposes certain duplication of compliance across gaming sectors. Some things are obsolete and need to be rescinded, and in some cases, procedures are too bureaucratic.

And we cannot underestimate the technological developments that need to be catered for. Twelve years is an eternity in technology and we need to narrow the gap between technology and the law!

We will introduce new consumer protection clauses and simplify the licensing structure as at present you need a licence for each category/sweep of games. We want to propose two categories – business-to-business, or business-to-consumer – and what they call a ‘superlicence’ to cater for a group of companies. It would then be up to the operator to offer multiple platforms and a variety of games with a multitude of interfaces and we would just approve them as part of the licence.

Our aim is to eradicate bureaucracy and be more agile. We screened all the legislation in force to assess changes required both horizontally and vertically to eliminate inconsistencies. And there is also the transitory period for integration of current licensees to the new regime: we aim to do it with minimal impact.

Let me be very clear on this: the legislation is a game-changer, even at an international level. It will help to raise our jurisdictional profile over that of other jurisdictions as being an innovative and very forward-looking regime.

This will involve a lot of work internally to adopt a proper risk-based approach, flexible on some things but tighter on others. We will not ask for things just because that is the way it has also been done but only because it will address a risk or because it will help to define an outcome.

In order to maintain that agility, we will also insert a review clause so that we can change the requirements if anything is not working. We want to empower the authority to be able to make the necessary tweaks and to regulate at the same dynamic pace as the industry.

Why did the authority move to Smart City?

The implementation of the 4th Anti Money Laundering Directive will have to be in place by July 2017 and we want to be among the first countries to enact it. But it will mean a lot more work and a lot more resources. It is much more onerous on the operators – but also on the authority.

We had already outgrown our offices in Mrieħel and rightsized the MGA to regulate such a lively sector. We now have 140 staff and here we will be able to grow to 160 staff – what we anticipate that we will need.

Smart City also provides us with other resources: rooms for training, meetings and press conferences; and video conferencing facilities for example.

We also wanted to make a statement. This is a cutting edge industry and we needed an office that reflected this.

You believe that Digital Games of Skill with Prize will be a key new sector.

As soon as we issued the position paper – which will be part of the new legislation – there was considerable interest expressed, including from some of the big names in the sector who want to set up in Malta to target the European market.

We are already speaking to operators on an informal basis – including at conferences and exhibitions – until the regime is in place and we can issue them with a licence.

One of the main thrusts of the recent position paper was to clearly define the difference between games of skill and those with a prize, as this is what determines whether the consumer requires protection or not.

Every game could have elements of both chance and skill so the definition is very important. Operators do not want to be in the same category as gamblers who rely on chance – but the current legislation does not allow us to make these assessments.

Games like Candy Crush, which do not involve financial transactions, do not need much regulation so there is not much scope for setting up shop in Malta. But others will be very interested.

Out of the things you mentioned two years ago, which you actually did was to allow casino licences for cruise ships. Was that a success?

So far, two cruise lines applied for permits for all the calls of their ships. We introduced it just before summer, too late to affect the 2015 itineraries of 2015.

The licence was since then promoted at the Miami cruise convention last year and Valletta Cruise Port has included it in the prospectus for this year so we expect to see more traction this summer.

What is happening with gaming outlets? They are once again cropping up.

There are now 43 licensed gaming parlours, all complying with the restrictions on where they can be located – how close to schools and places of worship, for example. We have not capped the amount and will leave it to the market to find its level.

We have also given the first licences for sports betting outlets, and also sport betting licences in casinos.

I am a firm believer that the only way to kill illegal gambling is to offer players a regulated and protected outcome. They know that, if they are cheated in any way, they have no recourse if they go to an illegal outlet.

We are already getting feedback that the amount of illegal activity is dropping as traction gains in the legal ones.

You also spoke about trying to open new markets, such as in Asia. Has there been any progress?

Many of the large countries in Asia ban one or more forms of gambling, but that might one day change. Even India is considering opening up an online gaming regime and there are changes under way in Africa and South America. These are fundamental changes, given the size of the population involved.

My strategy is to build relationships so, if the situation ever changes, we would be a potential collaborator. This would mean that our operators would have first mover advantage offering services to people there.

When we strike a bilateral agreement or memorandum of understanding, it is about establishing contact with that state to pass on the message that we can facilitate the entry of licensees.

Also there are some grey legal areas and the importance of collaborating with the regulator then becomes of paramount importance for mutual interest.

We are making preliminary contacts; at the ICE Gaming Expo last year we met various operators who looked at Malta as a potential place for establishment, bearing also in mind the unrest that there has been in Macau.

The outlier is the US and, with regards to online gambling, there is no softening of their ban.

Gaming by numbers

9 - Percentage of Malta’s gross value added in 2014
75 - New licences issue in 2015 – 60 per cent were to existing operators
280 - Total number of operators, most of whom have multiple licences for multiple platforms