Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Silvio Schembri, and Enrico Bradamante, Chairman of the iGaming industry’s trade association, iGEN, have both played down concerns of instability in the sector following the announcements of job losses and bank account closures in the third quarter of 2019.
Towards the end of September, the Malta-based Stars Group, part of TSG Interactive Gaming Europe Ltd, made 80 of its local staff redundant, while Multilotto made a similar decision, affecting some 15 of its employees on the island – half its workforce.
Moreover, this month, Bank of Valletta announced it would be closing the bank accounts of ‘high-risk clients’, some of which belonged to the iGaming sector, as part of their de-risking exercise. Yet, in recent comments, both Mr Schembri and Mr Bradamante were at pains to emphasise that these developments did not constitute any sort of crisis in the industry.
“Like any other industry, iGaming companies go through restructuring exercises from time to time. But with a regulated industry of 289 operators, collectively employing more than 7,000 employees, together with an additional 3,000 employees working with service providers, this is understandable,” Mr Schembri said. As proof, and in order to emphasise the current and continued health of the market, he pointed to the buoyant job vacancy numbers in the industry, underlining that, while some companies are ‘restructuring’, others are actively employing.
DOI Photo / (centre) Parliamentary Secretary for the digital economy and innovation Silvio Schembri
“According to a study carried out by the Malta Gaming Authority, there are, at the moment, around 700 vacancies in the sector. And if one takes a look at the number of redundancies – arising mainly due to the duplication of posts – one notices that the supply does not surpass the demand sought by the operators,” he continued. These redundancies, he said, were the result of mergers and acquisitions which have taken place in private enterprises geared up for change.
“Many times, this will result in the creation of new jobs and the removal of duplicated ones. But this is common in any other industry,” he stated. Moving on to BOV’s announced closures of some iGaming companies’ business accounts, Mr Schembri stressed that the bank’s decision had nothing to do with the current health of the remote gaming sector in Malta.
“BOV’s de-risking exercise involved other types of businesses, not just iGaming. From the information we have, less than 20 from the 289 MGA licensed entities were impacted with this decision,” he said, adding that he is “informed” that these companies are “already in talks with other local banks, who will be offering the services to them.”
Furthermore, he stated that the cache and reputation of the MGA licence was not affected by this decision taken by the bank, insisting that “the bank’s decision to stop offering its services is not related to the MGA licence. The two things are absolutely not related,” he said. He also stressed that this news did not impact on the mood in the industry.
Photo by Alan Carville / Enrico Bradamante,
Chairman of iGEN
“Whereas it is never an ideal situation to have a bank being forced to close banking services to any business, I am not informed that this has had any major effects on the industry, in view of the fact that a very small number of licensed operators were affected,” he underlined.
Concluding, the Parliamentary Secretary stood firm in re-asserting the authorities’ championing of the entire sector, saying that “as a Government, we will continue to support this industry”. To emphasise this, he highlighted interaction with key stakeholders.
“I regularly meet trade associations representing this sector to make sure we are always listening and taking action where there is need,” he said.
One of these key stakeholders – and another representative of the sector – is Mr Bradamante who echoed much of Mr Schembri’s thoughts on the current layoffs and the movement caused by the bank account closures.
With reference to the former, he noted that the announcements of redundancies were “a result of economic forces”, emphasising that “companies go through cycles during which they need to look at the costs.” Prioritising the bottom line, he said, has meant that some firms decided to move their operations to lower-cost jurisdictions.
Moreover, he said, “the industry is still very dynamic. Bet365 are starting to move in,” with the net influx of jobs and firms still retaining buoyancy. “It is still positive. There are plenty of vacancies in the iGaming sector and what we’re starting to see, in actual fact, is industry consolidation.” Thus, the layoffs were the result of firms merging and acquiring smaller companies, in his view.
“The industry is maturing. Growth rates are slowing down; profits are being squeezed – mainly because of all the compliance and regulations we need to adhere to – so there are changes. But, the industry, on the whole, is still increasing revenues, and boosting staff, so all this is still positive for Malta,” he underlined.
This article initially appeared in the October edition of The Malta Business Observer.