Serious concerns are being raised among Maltese financial services operators, over a possible bid by a ‘risky’ international online gambling company to take over a substantial stake in Malta’s National Lottery operations for the next ten years.

Several Lotto Receivers, agents of Maltco Lotteries, who spoke to The Shift on condition of anonymity, said that Lottoland has been in talks with Maltco over a possible joint bid. This has sparked alarm in stakeholders in the industry: the Gibraltar-based company, involved in the organization of synthetic online lotteries, has been sanctioned in several jurisdictions for compliance breaches, and already faces a raft of fines by the respective regulatory authorities.

The Lotto Receivers expressed concerns over their future if the government decides to grant the concession to “a company with a very bad compliance track record”.

“We are very worried over the future of our business. The government can’t get this wrong and we are very surprised that Maltco is trying to join Lottoland in a new bid. This does not augur well for us,” the Lotto agents complained.

New National Lottery concession

Originally set up and run by the Government, the National Lottery, which include the popular Super 5 and Lotto games, was privatised in 2004. The ten-year concession has been twice awarded to Maltco – which is majority owned by the Greek company Intralot. The latter has, over the past fears, been struggling in various jurisdictions and has seen its share price drop significantly.

Now, as Maltco’s second term concession is coming to an end, the Maltese government has re-opened the concession asking for bids for a new licence to run to 2032.

Multiple rule breaches

Lottoland operates parallel online lotteries in various jurisdictions. It has no experience in the running and operations of national lotteries and is currently on the radar of various regulators, including the UK, over breaches of anti-money laundering and other rules.

Asked to state whether Maltco has been in talks with Lottoland over a possible joint bid, a spokesman for Maltco declined to reply.

On the other hand, a spokesman for Lottoland did not rule out a possible bid, insisting that it has no comments to make at this time.

“Lottoland does not speculate on market rumours and has no comment to make on this matter,” the spokesman said.

Sources confirmed to The Shift that Maltco – the incumbent concessionaire that has been running the Maltese National Lottery since 2004 – is currently trying to find a partner to reduce its share in the running of Malta’s lotteries.

The sources also confirmed that Lottoland is the preferred partner of Maltco in a possible joint bid over a new concession which is up for grabs for the next ten years.

Asked whether Maltco will be submitting a new bid, which is to reach the government’s privatisation unit by the beginning of next month, Maltco declined to confirm its interest.

Sources said that the possible entrance of Lottoland in the local market would signify a further negative effect on Malta’s international reputation in the financial services industry, currently already under siege due to the recent grey listing by the FATF.

Lottoland in hot water

Lottoland, which also operates a small office in Malta, is already in trouble in various jurisdictions and has lately attracted a lot of negative publicity.

Just last week, the UK’s Gambling Commission fined Lottoland £760,000 and issued a formal warning for failures in social responsibility and anti-money laundering rules.

In 2017, the same company agreed to pay £150,000 to settle UK claims that its advertising at the time was not sufficiently clear in stating that customers were betting on an outcome, rather than buying a lottery ticket.

In 2019, Lottoland was fined £59,000 by the Swedish gambling regulator over wrongdoing in relation to bets on the Swedish EuroJackpot lottery.

The company has also had problems in Malta.

Recently, the Maltese Courts endorsed the local VAT Department’s efforts to collect nearly €10 milliom in due VAT that German tax collectors say Lottoland owes in Germany. The courts ruled that evidence presented by the Maltese officials was sufficient to demonstrate the legitimacy of the German tax authorities’ claims against Lottoland’s Malta subsidiary.

According to Lottoland’s spokesperson, “the German authorities have now withdrawn the claim”.