Regulations covering online gaming vary wildly from country to country and some countries are perceived as being much more friendly to the companies running the web sites. But as Malta has found out in 2015, there’s a fine line between offering a friendly business climate and under-regulating an industry where fraud and mismanagement can sometimes be an issue.
The Internet gambling industry in Malta has grown quickly in the past several years, with the number of companies licensed by the Malta Gaming Authority (MGA) doubling each of the past three years. At the end of 2014, there were 469 licensees in Malta and there were big questions about whether that number was reasonable and whether the MGA had the resources to properly regulate the industry.
That question was answered in 2015 when six online gaming licensees were shut down and their assets seized by Maltese officials. The move came as the result of an investigation by Italian authorities that revealed the companies were operating as front companies for several big organized crime families.
Changes in Malta’s online gambling regulations had been in the planning stages for nearly two years. The original timetable was for a study to be released in late 2015, with new proposed regulations to be released for discussion in 2016. But those plans have accelerated following this year’s problems. There is a sense in the Maltese government that they only have a small window of opportunity to make changes before the problems become unmanageable.
Maltese Parliamentary Secretary for Competitive and Economic Growth Jose Herrera said in June that new regulations would now be presented to the Maltese Parliament in November and the hope was to have them discussed and passed by early 2016. All of the affected parties have publicly said that new regulations are needed, but there is a lot of disagreement about what form the regulations should take and who should enforce them.
While the new regulations haven’t been publicly revealed, there are concerns that the MGA won’t adequately tackle the problems that threaten to sideline the success of Malta’s online gaming industry. Anytime that a lot of money is at stake, changing and updating laws can be difficult even in the best of circumstances. And there are fears that changing current regulations too much could lead to a mass exodus of online gaming companies from Malta.
The first big issue concerns transparency about the state of health for Malta’s individual gaming licensees and whether the MGA is agressive enough to protect the interests of the gamers. Critics point to the problems at Everleaf Network.
Once one of Malta’s biggest gaming licensees, Everleaf began withholding player’s money and delaying payouts. Players complained for nearly a year before the Maltese Lotteries and Gaming Authority acted and stripped Everleaf of its license. But that still left many players out in the cold, as they lost the money owed to them by Everleaf. Similar complaints have been lodged about nearly a dozen other companies who are still operating with sanctions in Malta. That lack of action is a big concern of operators looking to improve the reputation of the industry.
The bigger issue is the influence of organized crime families in the Maltese online gaming industry. Italian Federal police have been investigating the Italian Mafia’s ties to a number of Maltese online gaming companies and that investigation led to this year’s closing of six licensees.
But there is still a fear that those reported problems are just the tip of a much larger problem. David Gonzi was one of the prominent people arrested during the shutdowns and given the fact that he is the son of the former Maltese Prime Minister, many people suspect the corruption might reach into the Maltese Government. Italian prosecutors have promised to continue the investigations, but those will only matter if they lead to a safer and more transparent Maltese online gaming industry.
All of these charges have been devastating to the reputation of the industry and that directly affects the bottom line of all the country’s online gaming licensees. Trust is important in an industry which is built around customers giving their hard-earned money to companies which exist mostly on the Internet. Several other countries have seen their online gaming industries decimated by scandals and some Maltese officials are concerned that Malta might be the next country to experience an online gaming industry meltdown.
For its part, the MGA continues to insist publicly that the new regulations will tighten the control Malta has on its online gaming licensees and make it easier for sanctions to be meted out in a quick fashion. But with few details of the new regulations having been revealed yet, both online gamblers and the public are worried that this is all too little too late. There’s a sense that the MGA wants to make changes, but it won’t risk alienating powerful online gaming site owners.
Whether those concerns are valid will become clear in November, when the proposed changes in the law are introduced and the battles between customers, online casinos and the government will begin in earnest.