Aiming to make Malta the Silicon Valley of gaming

Regulation for Innovation” was the punch line used by the MGA executive chairman Joseph Cuschieri. The Gaming Industry is keen to embrace technological advances and therefore the regulatory frameworks need to be flexible enough for the industry to innovate and take advantage of the full developments whilst minimizing risks to consumers… ‘there should be no impediments for technological innovation’ he reiterated.

The increasing convergence between online and offline gaming as well as the need for more efficiency in the MGA’s regulatory approach has been a catalyst for the number of projects rolled out by the Authority since he took up his position almost three years ago. The various sector specific regulations currently in force which have served the country well for all these years warrant a legislative overhaul so as to future proof the gaming regulatory framework for the next decade.

Cuschieri said the gaming sector (both landbased and online) in Malta was growing steadily , and such results prove that the communications outreach program embarked upon by the MGA is being transmitted effectively to the industry and hence leaving positive effects.

“But of course, the fast-changing regulatory landscape, the dynamics of the industry, means that the MGA has to constantly update itself and our regulatory approach,” he said.

“And in fact, we are doing many changes, most of which will be included in the new proposed legislation we will be proposing  in the coming months.”

One of the most important proposed changes to be introduced in the new legislation is the widening in regulatory scope to allow for a complete governance of the gaming sector. Fundamentally, the streamlining of any given gaming application being submitted to the MGA shall undergo the required regulatory intervention depending on the risk posed and the MGA shall strive to avoid duplication of requirements, whilst aiming to simplify its procedures without undermining the primary functions and its regulatory ethos which holds players and responsible gaming in focus. 

The licensing process being proposed will be reducing the number of licence classes within the various sectors to essentially  two licences: a B2B (business to business) licence and a B2C (business to client) licence coupled with the required approvals being issued thereunder.

Cuschieri said:  our legislation today, mirrors the legislative frameworks in other jurisdictions, whereby sector specific  regulations are in force for land-based gaming and remote gaming. In essence we are proposing a different approach which looks at the main elements warranting scrutiny underpinned by a risk based approach at the centre of all decisions. Putting this simply ‘when you’re playing a game, the channel and medium being used  are actually not the most important factors at play ; it’s the fairness of the game that is key for adequate protection of players - the other elements are secondary.”

“Our proposals will simplify the compliance and  approval processes ,” said Cuschieri. “But, most of all, it will also do away with unnecessary costs.”

The above proposals are packaged within a framework that shall increase Malta’s competitiveness and such proposed changes are not expected to result in a reduction in the direct and indirect contributions Malta receives from the gaming industry.

“As time passes by, Malta is becoming the Jurisdiction of primary establishment for most operators,” he explained.

Cuschieri is a staunch believer in the Maltese system and said that – just as Malta was a pioneer at the onset of online gaming – he still believes Malta is at the forefront of other noteworthy jurisdictions  regulating this dynamic industry.

The regulatory landscape in Europe is fast changing although monopolistic structures as well as unregulated online gaming offerings are still common. “Various interests are at stake and regulated operators are often treated as criminals in other jurisdictions potentially at the whims of  the incumbents enjoying dominance and monopolies within those territories. Governments should treat this industry for what it is – that being a service industry which provides entertainment and it is only through a well regulated framework that one can control such offerings and protect players effectively, whilst ensuring responsible play that is crime–free,” said Cushcieri.

“Cyber space is limitless and we should desist from creating frontiers and barriers… we are now seeing a patch work of divergent gaming regulations across the EU from the very prohibitive to the democratic system and this is not only highly inefficient for the internal market but also risky for players who don’t have a clear and predictable legal framework and a single best practice approach to refer to….. when the objectives and aims of every state are one and the same ” Cuschieri explained.

From a local perspective Cuschieri said the MGA was noticing a shift in land-based gambling towards regulated environments including gaming parlours  hosting various gaming devices including  sports-betting within the various localities around Malta .

Cuschieri said he is eagerly awaiting the launch of the consultation process on the new legislation in September before presenting the final bill in parliament.

He said he hopes that the new legislation will be introduced by the end of March 2017 and the MGA shall be preparing for its roll out with the necessary transitory periods in place to ensure a smooth transition.

 Within the context of the upcoming Gaming Academy Cuschieri stated “I think we need to raise awareness of the industry and the careers it can offer young students,” he said. “But, on our part, we also need to build an institution that enhances those skills, by creating courses and training environment for people to learn the different facets of the industry.” Such training would cover the IT spectrum of the industry, but also the regulatory, legal and financial aspects.

On the growing popularity of crypto-currencies like Bitcoin, Cuschieri said these currencies were gaining ground because certain financial institutions  were being risk averse and adopting a very conservative  approach in Malta as well as in other jurisdictions mainly due to lack of oversight in the gaming supply chain and effective audit trails in place.

“Crypto-currencies are an attempt to create a virtual currency, backed up by a technology block-chain that manages its transactions,” he said.

“I still see it as a risk, and the authority’s position is that we still do not accept crypto-currencies,” he said. “The authority has received very few requests to accept crypto-currencies, and we have always refused- we are looking to adopting a national approach and given it’s a financial instrument we shall be collaborating with the Central Bank, the FIAU and the MFSA.” Cuschieri insisted the MGA was being pro-active on the matter, and would work with other entities following the conclusion of the national study currently under way .

And what of the future of the gaming industry? Where does Cuschieri see the industry in ten years’ time?

“I think the industry will be much larger in ten years’ time,” he said. “And I see Malta retaining its position as the Primary Jurisdiction of choice …… We shall be fostering further responsible gaming concepts and adopting an evidence based approach, revisiting standards proving futile along the way. Industry Leaders know that the sustainability of their operations depends on doing more to promote responsible play, despite any short term impact on profitability” he said.

 “We shall be experiencing growing convergence between land based and online products and the intersection between gambling product lines such as social gaming … this together with technological advancements will create potential for treatment providers to develop different forms of intervention particularly in the light of challenges being faced by researchers due to commercially sensitive information and confidentiality issues.”

“In ten year’s time, I want to see Malta established as a hub for all the ancillary industries that complement and support the gaming industry,” he said.

“My vision is for Malta to become the Silicon Valley of the industry, and I think we are getting there. We shall be drawing upon the experience we gained these past few years and through horizon scanning with what has been adopted around us .”

Cuschieri said that to reach that goal, the country needed incentives, the right regulatory framework and above all the continued support of the industry who continuously partners with the MGA to reach its goals.