The Malta Gambling Rush will not last forever

The iGaming industry, or more precisely the online gambling industry, is often hailed as the jet fuel which has propelled the Maltese economy to unprecedented heights. According to industry experts, Malta has established itself as the ‘iGaming capital of the world.’

The hype surrounding the industry often reminds me of the mid-19th century California Gold Rush. The sudden influx of immigrants from South America, Europe and Asia and the gold panned from streams and riverbeds in the Golden State reinvigorated the American economy.

Sounds familiar? In just a few years, the gambling industry makes up 12% of the Maltese economy, generating €700 million and employing 9,000 people.

But the success doesn’t end there. Many people have indirectly benefited from the Malta gambling rush, from lawyers and accountants to property speculators, from catering establishments to gentlemen’s clubs, from taxi service providers to the media.

But there is another side to the ‘success story.” The darker and shadier aspects of the industry are often overlooked while we’re all drunk on the hype and spinoffs of being the gambling capital of the world.

The Maltese might not be wiped out like indigenous Californians were in the latter years of the Gold Rush but the effects the gambling industry in Malta has on the rest of society are evident; soaring rental prices, gentrification and infrastructure stretched to the limit.

There is also another aspect which is conveniently downplayed by the net beneficiaries of the gambling industry. Mafia and organised crime. First they targeted casinos, which are banned in Sicily, and now they have turned their eye on the gambling industry.

At the end of last year,  The Times reported that the chief anti-Mafia procurator in Palermo Salvatore de Luca discovered that Mafia bosses were planning to shift their illegal activities to Malta’s online gambling industry.

“Malta has recently become the capital of online gambling and the Mafia bosses thought that this would be a good financial vehicle for them and less risky than making their money from extortion,” de Luca said.

This warning is not based on speculation. In 2015, Betuniq and Betsolution4U had their licences suspended by the Malta Gaming Authority after an investigation by Italian police linked the Malta-based companies to an organised crime network that used online gaming for money-laundering.

Six Italian nationals, including ‘ndrangheta’s point-man Mario Gennaro – connected to the Betuniq brand and living in Malta, were arrested and extradited.

Moreover, reports in the Italian media said that the police inquiry dubbed ‘Gambling’ showed that the Texas Holdem Poker tournaments in Malta were being used for the recycling of money deriving from criminal activities.

Worryingly, these Malta-registered online gambling companies with alleged links to the Italian mafia went through multiple due diligence checks by different entities, which found nothing irregular.

More recently, Malta’s gaming regulator suspended the license of another online gambling operator linked to organised crime in Italy. Last month, raids on dozens of internet cafés by Italian police, led to the arrest of B2875 owner Benedetto Bacchi, the so-called ‘betting king’ who reportedly controlled a network of 700 betting shops across Italy.

Despite slamming reports on de Luca’s warnings as “speculative and senseless,” the Malta Gaming Authority must shoulder responsibility for issuing the licenses for these companies just a few months before it suspended them.

Malta Gaming Authority Chairman Joseph Cuschieri’s boasts of Malta being “the jurisdiction of primary establishment for most operators within the industry” only add to the hype but there seems little or no will to make the screening processes more rigorous.

Partit Demokratiku MP Godfrey Farrugia recently told The Shift News that the monitoring processes in place are not stringent enough.

In spite of all the reassurances by the regulator and Prime Minister Joseph Muscat that Malta has very strict and transparent rules, there is something terribly wrong when a Bulgarian whistleblower has no other option but to take his case to the USA’s leading NGO for whistleblowers.

Valery Atanasov has alleged severe shortcomings at the Malta Gaming Authority but has so far been denied whistleblower status by Malta’s authorities. Lovin Malta reported that this has now led to Stephen Kohn – one of the most eminent whistleblower lawyers in the US, to personally urge Muscat and the Council of Europe’s anti-corruption body GRECO to protect Atanasov.

“Without strong oversight from GRECO, whistleblower laws in Europe will never be effective,” Kohn, executive director of the USA’s National Whistleblower Centre, said. “GRECO must act to ensure that whistleblowers such as Valery Atanasov are not subjected to any retaliation, and that the Civil Law on Corruption is not toothless.”

Once again we are faced with a situation where the Labour government that does not miss an opportunity to remind us that it had introduced the whistleblowers act is reluctant to grant whistleblower status to somebody who could present damning evidence against the current administration.

Surprisingly, this case has not been given much prominence by the opposition, presumably because Atanasov’s allegations go back to when the PN was in government. The blue-red political establishment have too much to lose if the gambling industry crashes back to earth. But the Malta Gambling Rush will not last forever and its negative effects could outlive all of us.


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