The direct contribution of the gaming industry to the Maltese economy is estimated to amount to over €1billion, and in 2016, represented circa 12 per cent of Malta’s Gross Domestic Product, says Silvio Schembri, Parliamentary Secretary for financial services, digital economy and innovation.
In terms of direct employment, gaming is responsible for around 9,000 jobs within firms in the sector and associated businesses. “These figures are the direct effect of the industry,” he says. “When considering the induced effects, the contribution is much higher.”
Mr Schembri asserts that the gaming sector that operated in Malta 10 years ago, or even of five years ago, is significantly different to that which is in operation today, where, over the decade, it not only managed to grow to become one of the most important sectors in the country’s economy, but also managed to evolve. “Initially based on an attractive tax system, Malta now has one of the most complete eco-systems in this regard, making the country highly competitive. Firms in the gaming sector can benefit from a talented pool of people plus excellent support in terms of ancillary inputs.”
In 2017, further growth in the sector is expected. While Mr Schembri says it’s premature to predict a specific figure in terms of expected growth, the indicators are “very positive, with double digit growth in employment, and with a notable increase in the number of licences issued. This growth is also expected to continue in 2018, as we’re expecting new investment attracted by the revamped regulatory environment. Expectations with respect to land-based operators are also positive.”
The revamped regulatory framework emerges following the publication of a White Paper by the Malta Gaming Authority (MGA) last July, which proposed reforms to existing gaming legislation, with the aim of replacing current legislation with a single act called the Gaming Act. The need for such changes emerged in line with the way the industry evolved over the last decade, as Mr Schembri explains, highlighting the need to take a new look at the opportunities and threats facing the industry, and act on them by seeking a forward-looking repositioning of Malta’s licensing activities.
“The aim is straightforward: modernising the gaming framework and embracing the future through well thought-out processes, the promotion of more streamlined regulations, and narrowing the gap between technology and current legislation. Once completed, this exercise should see the development of new business areas and will be a key element to enhance the international reputation of the Maltese jurisdiction.”
More concretely, the regulatory scope of gaming services under the new legislation shall be wider and more coherent, Mr Schembri explains, meaning that all activities falling under the MGA’s governance remit will be subjected to a licensing requirement. The proposed reforms will also be underpinned by better monitoring of risk and equipped with new reporting facilities adopted to cater for this improved risk management processes.
“Concurrently with the proposed reforms, the MGA together with the Financial Intelligence Analysis Unit (FIAU) published another document, ‘Application of Anti-Money Laundering and Countering the Funding of Terrorism Obligation of the Remote Gaming Sector’. This will install a risk-based approach which recognises that the risks faced by each sector and each subject are different, and allows for resources to be invested and applied where they are required most. This system is diametrically opposed to a prescriptive tick-box approach, which can set firms back from growing and progressing.”
As for future challenges foreseen in these key industries, Mr Schembri optimistically points out that wherever there are challenges there are also opportunities, and it’s the latter that should drive the country forward. “Pragmatic regulation, creative innovation and service diversification should be constants in anything we do. Malta also needs to maintain its high-level standards of due diligence, and procedures should remain rigorous and, where necessary, enforced. The final aim should be to attract the right type of business.”
Mr Schembri concludes that the coming months should see the consolidation of efforts aimed at strengthening the regulatory authorities. “I am confident the reforms will lead to greater efficiency overall, and will make both authorities lead agents in making Malta a centre of excellence in their respective areas. Also, later this year, Government should be in a position to announce more information on how we intend to make full use of blockchain technology and its various applications, such as Fintech and cryptocurrencies.”
This article was adapted from the September edition of the Commercial Courier