New Gaming Act fast-tracked as fresh online gaming licenses drop 75%

The Malta Gaming Authority issued 75% fewer new gaming licenses in 2022 when compared to 2018, the peak year for the authority.

An analysis by The Shift shows how in 2021, the year Malta was greylisted, new license registrations halved when compared to the previous year.

Seemingly in response to the trend the Malta Gaming Authority, through Economy Minister Silvio Schembri, is seeking to introduce a new law that will make prosecuting Maltese gaming companies internationally more difficult.

The MGA is additionally employing a softer approach to misbehaving licensees, issuing fewer cancellations ostensibly in the hopes that prospective registrants will view the authority as more tolerant and easy to work with.

The number of new licenses issued by the MGA is an indicator of Malta’s popularity as a licensing jurisdiction for casinos, whose registrants contribute significantly to the Maltese economy.

By 2022, the iGaming industry accounted for more than 12% of Malta’s gross domestic product.

An analysis carried out by The Shift, based on data from the MGA’s licensee hub for 343 licensees, shows that there has been a sharp decrease in new licenses issued by the Authority since 2018, which was a peak year for the industry in Malta with over 50 gaming licenses issued.

Since then, new gaming licenses issued have steadily decreased each year, with a particularly sharp decrease noticeable in 2021, the year Malta was greylisted by the FATF.

In the same year, seemingly in response to the greylisting the MGA chose to issue fewer license cancellations to misbehaving licensees, cancelling just seven licenses, compared to 12 and 14 in 2020 and 2019 respectively.

Last month, it was reported how Austrian and German lawyers, representing clients against Malta-licensed online gaming companies that allegedly illegally offered their services in Austria and Germany, sent a letter to the European Commission condemning amendments to Malta’s Gambling Act.

Bill No. 55, known as The Gaming Amendment Act, which passed its third reading in Parliament on Monday 12 June, will introduce a number of changes to the current Gaming Act meant to “codify in law the longstanding public policy of Malta encouraging the establishment of gaming operators in Malta.”

The bill states that no legal action may be brought against a Maltese licensee company, or officials working for a licensee company in relation to the provision of online gaming services as licensed by the MGA. The bill states that the Maltese court should refuse recognition or enforcement of any sentence or decision taken by a foreign court in this regard.

In their letter addressed to Justice Commissioner Didier Reynders and Economy Commissioner Paolo Gentiloni, Karim Weber and Benedikt Quarch argued that Schembri’s bill would “undermine European Rule of Law by blocking the fundamental rights of EU Citizens and Residents”.

They argued that online casinos licensed in Malta violated German and Austrian gambling laws by offering their services online to players in regions where they were not licensed to operate. The issue of offshore online casinos being available to play in countries where they are not strictly licensed has been a legal grey area within the online gambling industry since its inception.

In a technical briefing on the new gaming bill, the MGA claimed that Austrian and German law firms were “aggressively advertising” the possibility for players to sue Maltese gaming companies to claim back losses they may have incurred.

The Authority characterised the move as “particularly damaging”, claiming it gave players the impression they could play with no risk, a far-fetched conclusion given that plaintiffs would be seeking to recuperate the losses from services they may have been offered illegally.

The iGaming industry has been subject to multiple controversies. On Monday, The Shift reported how a Maltese iGaming certification company was part of a group of companies that own Blaze, a gambling website that made making national headlines in Brazil after being accused of money laundering, scamming its customers and funnelling funds to influencers promoting the online casino.

The Maltese online gambling industry has also been consistently used as a tool by the Italian mafia for money laundering and the movement of funds, with the Organized Crime and Corruption Reporting Project (OCCRP) describing the industry as an “ATM for the Italian Mafia”.