Authors: James Scicluna
Developments in several EU countries, principally the imposition of national licensing and taxation requirements, have led some to question whether obtaining or retaining licences in “.com” gaming hubs is still an option. In other words, has the changing legal landscape in the EU dealt a deathblow to these gaming-friendly jurisdictions, in favour of a more tightly-controlled member state-based form of regulation?
A proper analysis of this question must necessarily begin by acknowledging the significant impact that these developments have had on the approach to remote gaming in the EU. Had the principle of mutual recognition been upheld by the Court of Justice of the European Union (CJEU), licensed operators would have had almost entirely unfettered access to customers located in all other Member States in the EU. Its rejection, stemming from the lack of harmonisation in the field of online gambling and the different set and scale of values of different Member States, entails that an operator licensed or otherwise lawfully authorised to provide remote gaming services in one Member State cannot provide its services across the whole of the EU without the risk of violating the laws of one or more other Member States.
Ironically, despite the claims of several member states that the introduction of local licenses was necessary to protect consumers, when it comes to consumer protection these jurisdictions found themselves not only looking at, but also adopting consumer protection standards which had been in place in certain “.com” jurisdictions for a number of years.
Malta for example managed to create a strong yet flexible regulatory framework and the right economic environment for gaming operators to establish themselves locally, and did so without compromising on the protection of the more vulnerable sectors of society and on the fairness and transparency of the games themselves. Although it is outside the EU, the Isle of Man was also rather attentive to ensure that its licensees adopt safeguards which protect their customers and Gibraltar’s regulator has traditionally been keen on ensuring that its licensees act consonantly with that jurisdiction’s reputation as a serious regulator of remote gaming.
In so far as Malta is concerned, the technology and game neutrality established by the Malta Remote Gaming Regulations, the availability in Malta of good quality service providers which support this sector’s needs, and the establishment of a taxation regime which makes it possible for Malta operators to compete with offshore or unregulated entities (and drive the industry toward legality and away from the black market) led to Malta becoming a leading remote gaming jurisdiction in Europe, and certainly so in respect of number of licences issued.
That, so to say, “power of incumbency”, combined with the fact that it is a fully-fledged member of the EU served Malta well in the changing regulatory environment in Europe. Indeed, today, apart from being attractive to operators pursuing a Malta gaming licence in order to offer “.com” operations, several operators now use Malta in order to run their “.country” operations in countries (such as Italy, France, Spain and Denmark) which offer local licenses. The latter category of operators can do so because of the European law principle that licenses, including “.country” remote gaming licenses, must be available to entities established in any EU country.
The success that Malta has enjoyed in this sector has generated unprecedented employment and training opportunities. A 2012 report commissioned by the Malta Remote Gaming Council (MRGC), a local industry association, showed that Malta remote gambling licensees generated in excess of €175 million in direct expenditure in Malta and directly employed just under 4000 employees in 2010. These figures have increased significantly since then and they do not include items such as the incidental contribution to the tourism industry, number of business trips and hotel nights generated by this sector. Recent figures quoted in the media suggest, for instance, that the number of people directly employed in the remote gaming industry in Malta may now be as high as 7000.
Apart from the contribution of this sector to the economy, there is also a significant social aspect which cannot be ignored. For instance, it is a fact that about half of those employed in the sector in Malta are non-Maltese. This translates to thousands of non-Maltese persons living in Malta and working in the remote gaming sector, not counting their families.
Considering the above, whilst it is clear that the rejection of the principle of mutual recognition and the establishment of national licensing and taxation requirements by a number of Member States have affected the legal landscape in the EU, they have not crippled gaming-friendly jurisdictions and, in particular, Malta. On the contrary, Malta offers a myriad of opportunities in relation to both “.com” and “.country” remote gambling licences.
The article was published in the iGaming Business Magazine July/August Issue 81.