Years of commitment and vision have led to a conducive regulatory environment that has made Malta the European capital of Gaming. We speak with the Executive Chairman of the Malta Gaming Authority, Joseph Cuschieri.
What are your expectations regarding Malta’s EU presidency and what does it mean for you?
I think Malta will be assuming the presidency at a very interesting and crucial moment because it is obviously after the Brexit vote, which, as you know, shocked most people. For us, the UK is a major trading partner, we are very good friends with the UK because Malta was part of the British Empire until 1964.
So the UK will always be a major economic and political partner because of our long history which goes back more than 200 years. So what I would say is that Malta needs to open up debates on how the European Union can be more relevant to its citizens. I think Brexit sent a message that all these bureaucrats who are issuing all these directives where the European Union is going into each and every aspect of our lives, as to the way we do business.
I mean the European Union started as a commercial, I would say, partnership, so to speak, but then it moved on to really start regulating each sector of how we plant seeds, how we grow tomatoes and how we fish in our waters. So, it went into each and every detail and I think there is a big disconnection between what the technocrats and the bureaucrats in Brussels are saying, and what the European citizen is feeling – the unemployment that there is, the high cost of living in general as well as the immigration situation.
The freedom of movement is a key pillar of the European Union, but I think it brings about challenges because it is causing stress on welfare services which brings with it higher income, taxes to obviously finance certain welfare. So I think, in general, one needs to sit back, take control of the situation and think how we can make the European Union relevant to the man in the street. Otherwise there are going to be more Brexits.
What is the situation of the gaming sector here in Malta? And how is it contributing to the economy?
The gaming sector in Malta is doing very well. We are growing around 5% year on year. This year we are expecting to grow about 5% which is quite good, it is meeting our expectations. With regards to the gaming sector, I think Malta’s philosophy, and I think this is a major difference, in other European countries the approach taken by Governments is more to regulate the national market. In Malta operators do not come here for our market because our market is very small. They come here to operate in other jurisdictions so Malta is basically their place of establishment, that is the concept They find here a very transparent, tried-and-tested regulatory regime. They find high-quality service providers here – data centres, lawyers, so on and so forth.
We have got specialists in each and every sector of the gaming service activity. We have a large expat population here. In fact, two thirds of the people who are employed in the gaming industry in Malta are expatriates, which is a good thing because ultimately expatriates bring with them certain work practices so there is the learning opportunity for young people who work in the gaming industry.
The gaming sector creates jobs; it creates a demand for apartments, for rents, for services, so it is a good thing. So economically, Malta benefits, also, on the indirect – on the property, the services, the entertainment and all that it brings with it, when you have a high expat community based here. So the gaming industry, at the end of the day, was a niche which was created back in 2003. Malta was the first jurisdiction which came out with the concept of a licence to operate online in the online gaming sector.
Can you tell us more about the regulatory regime?
Of course, before Malta came up with the regulatory regime, the industry was virtually unregulated. Before 2003, it was just a matter of opening up a website and you start accepting bets, and transact with players, paying with credit card accounts. But the consumer was not technically protected by law, so now you have Malta which introduced the concept where you can have the licence, where your systems are audited, where the consumer is protected, where we have anti-money laundering supervisory mechanisms in our regulatory system.
These are all concepts which made Malta the jurisdiction that it is and the largest jurisdiction globally now when it comes to online gaming, and we are very proud of it. But this is not enough because now we are looking at the second generation of our legislation because our legislation was created thirteen or fourteen years ago. And now we believe that it needs a revamp by taking into consideration that it is a sector driven by innovation, driven by technology, driven by player demands.
And is there a lot more competition around Malta?
We believe that it is time for Malta to come up with a new concept which builds on the success of the past but also take into account the technological innovation and also the types of games that exist today. Whereas until ten years ago, we had the online casinos, the online poker, betting, those are the traditional online gambling sectors, now you have got fantasy sports, you have got digital games of skill, you have got e-sports, you have got betting on lotteries.
These are all new types of gaming activities which are gaining momentum and Malta wants to be also a front runner, for example, in the digital games of skill. We were one of the first regulators who came up with the concept of what constitutes the digital games of skill because the digital games of skill as we see them are, for example other jurisdictions still see them as gambling but we believe that if a game is predominantly cascading where the skill of the player really determines the outcome, then it is a digital game of skill, it is not a game of chance. So Malta, I would say in its philosophy, has been an innovator, quite a thought leader.
So new regulation you have adopted is basically to stay ahead of the competition?
MGA was an innovator in the past, a role model, and we want to be an innovator now again. So our regulation is going to introduce more simplification in our licensing process. It is going to start catering for different forms of games which have developed over the last recent years, like fantasy sports for example, e-sports and games of skill. So those are all areas which we will regulate and also our legislation, whereas today our legislation looks at the licensing process in terms of where you are going to provide the game or the type of medium that you are going to use, now we are saying ‘listen, a game is a system, it is based on a system. That system, whether you are accessing that game platform from your laptop or from your mobile or from a gaming device, is the same game.
So we focus on the licensing of the game, not the medium through which it will be provided. So we are moving away from that old obsolete concept, because ultimately nowadays with the technological innovation, if you have a system or a platform which is providing a game to a player, the player can access that game from different media – from the iPad, the laptop, a gaming device in a casino or from a mobile.
So you are centralising and simplifying, and you are planning for future subsectors in the gaming sector?
Yes, so our legislation would be future proof for technological advancement, for the most sophisticated of games. Ten years ago, you wouldn’t dream of doing sports betting on a smartphone but now you can with 4G technology and with 5G eventually. When you are betting on sports, the instant aspect of it is important, so you need high speed methods. That is why you can bet on a smartphone, whereas five to ten years ago you couldn’t do that, you only did it through a broadband connection on a PC. So we have been working on this project for two years, thinking, consulting, we called the experts for help. But now we have something which is going to be very interesting.
Talking about gaming in Malta and the gaming academy, which are complimented with more events organised here and as you said, it is a whole initiative and the whole sector has been built around this.
Yes, what we did is that, I mean when I joined the authority three years ago, I felt that we needed a new vision, a new strategy and I believe that Malta’s success is based on its ecosystem, on how the system works, not just within the regulator. I mean as a regulator, we are now more proactive, more agile. We also improved in enforcement and in supervision of the sector. We are also investing a lot in technology as a regulator, and we invested a lot in the people – the technical capability and the training and development of our staff, so that we are complete, robust, and official regulators. So that is the organisational aspect, but then apart from the legislation that I just mentioned, because the legislation is important for us, the legislation is everything, a framework on which you operate, and then on that framework, then you built your processes, your procedures and your systems, your regulatory systems.