Published on The Malta Independent¸ issue 10th April 2011
Not many realise the exponential growth achieved in the online gaming industry over the past five years. I still remember when the first rules introducing a limited spectrum of sports betting licences were issued by the old Gaming Board in 2001. It was then very much a paper based approach as regulators were seasoned lottery and land-based casino specialists. The Internet had not yet invaded their privacy and no iPods graced their executive desks. In fact¸ I still remember senior members of the Gaming Board labelling the Internet as the devil incarnate when it came to regulating it. Little did they realise that within six years the nascent industry would grow to 325 active gaming licences held by 220 registered companies and that it was thanks to the foresight of legislators and the unbridled energy of a number of pioneers (mainly sole practitioners) who tirelessly lobbied politicians to speed up the change to remote gaming mode.
The figures were confirmed by the Ministry of Finance in a recent press report. Such was the fruit of their success¸ amid the trials and tribulations which saw them organise overseas conferences practically financed by sole practitioners (there was a limited budget from official sources). This placed Malta at the forefront of a global igaming hub. We were amateurs in IT infrastructure. Initially¸ not even the single submarine broadband cable was sufficient to take the load and create redundancy. In spite of this handicap¸ efforts to attract international operators went unheeded. Strangely¸ there were no banks strong enough to handle the traffic. I remember that my firm was the first to licence a top listed Australian sports betting company that relocated to Malta. Then¸ the big law and audit firms had shied away from the industry¸ branding it as too risky to handle. But money talks and swiftly changes ingrained prejudices.
Today one reads the published audited accounts of gaming operators in Malta and they invariably carry the signature of the Big 4 audit firms. The baptism was complete. I remember that in 2002 a local English language newspaper was wary about published my articles aimed to create an awareness on a budding Internet based industry that would in future provide 5¸000 highly paid jobs (exceeding the aggregate workforce of Air Malta + Shipyards + lower carbon footprint). In 2009 it helped increase GDP to 3.7 per cent when all around us countries reported negative growth.
Is it time for rejoicing? Definitely¸ but we cannot rest on our laurels and since 2004 many European countries have learned the lesson that monopolies run by the State are not the best answer to milk the highest quota of revenue for the country ‘s coffers. Now¸ almost 10 new jurisdictions are claiming to be the cat’s whiskers when it comes to player protection¸ protection of minors and all profess fair gaming. Recently¸ such market leaders include the Channel Islands¸ Ireland¸ Isle of Man¸ Gibraltar¸ UK¸ Spain¸ France¸ Belgium¸ Italy and Denmark. To a different degree¸ each have liberalised their markets and toned down the entry restrictions previously protecting inefficient state gaming monopolies. Observers decry the fact that any formal EU policy initiative on gambling remains the exclusive domain of the European Commission – although there is some degree of uncertainty as to how the Council’s deliberations in the area might affect the appetite of the new Commission to proceed with its formal infringement investigations.