Published on The Malta Independent¸ issue 24th April 2011

It is undoubtedly due to its stringent regulations that Malta has progressed solidly to become a European hub in the online gaming sector. It is the envy of others¸ and EU members such as Italy¸ France¸ Belgium and Spain are about to ease their monopolistic restrictions and go the Malta way.

Certainly¸ competition is knocking at our door and we must continue to be vigilant in our efforts to maintain quality regulation and check for any bad apples. In general¸ and in spite of a recession since 2007¸ online gambling is a fast-developing business in Europe and¸ according to statistics provided by the European Gaming and Betting Association¸ represents 11 per cent of the total European gaming market.

At least 15¸000 websites have been identified¸ and annual revenues exceeded €6 billion in 2008 – a figure that is expected to double by 2013. It is estimated that about 10 per cent of the world’s remote gaming companies operate from Malta¸ with the industry now directly employing about 5¸100 staff. Accordingly to the Finance Ministry¸ in 2008 there were a total of 325 valid online gaming licences in Malta¸ held by 220 registered companies. As a major i-gaming hub¸ Malta has always played it safe and refused to issue licences to operators who may provide services to US players that are in contravention to the provisions of UIGEA (Unlawful Internet Gambling Enforcement Act). So in what can be described as a scorched earth tactic¸ on 15 April the US Justice Department (DOJ) began an investigation into three big online poker sites based on the UIGEA and the Illegal Gambling Act of 1955.

Commentators called this “Black Friday” which¸ in their opinion¸ triggered a witch hunt. It was reported that the founders of PokerStars¸ Full Tilt and Absolute Poker were among 11 people accused of alleged bank fraud¸ illegal gambling offences and money laundering in an indictment. The DOJ is seeking the forfeiture of at least $3 billion in a 52-page indictment. This alleges money-laundering on the part of the three companies and their defendants¸ claiming they “deceived or directed others to deceive United States banks and financial institutions into processing billions of dollars in payments”. To rub salt in the wound¸ the DOJ issued restraining orders against 76 bank accounts in 14 countries used by the poker companies and their payment processors. One of the bank principals¸ John Campos¸ of SunFirst bank in Saint George¸ Utah¸ was arrested¸ as was payment processor Chad Elie¸ accused of approaching Campos to allegedly process gambling payments for the poker companies in return for a $10m investment in the bank SunFirst. Five internet domain names used by the poker companies in the US were also seized.

It is a risky venture for gaming operators in US to offer poker forums following the introduction of the UIGEA in 2006 which bans the transfer of funds from any financial institution to an illegal internet gambling site. This act prohibits any person engaged in the business of betting or wagering from knowingly accepting payments in unlawful internet gambling. It has been pointed out that poker is never specifically mentioned in the UIGEA. Is this a loophole that resulted in a couple of daring operators throwing caution to the wind and braving the authorities by taking poker bets in the US? Their advisers are consoling themselves by pointing out that there is no legal doc