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Malta Contemplates Macolin Convention: Implications for Gaming Industry and Revenue

Updated: Feb 21

In a surprising turn of events, the Malta Gaming Authority (MGA) is reevaluating its stance on the Macolin Convention, a document it had sidestepped since 2014. If this reconsideration takes effect, it would have far-reaching consequences for the island nation's gambling landscape.

Malta Contemplates Macolin Convention: Implications for Gaming Industry and Revenue

The Macolin Convention proposes a redefinition of illegal sports betting, potentially rendering activities operating from Malta unlawful in jurisdictions deeming them as such. This shift in perspective marks a significant departure from the government's previous leniency towards these operations, where players from any country could engage in sports betting from Malta without fear of legal repercussions.

To gauge the potential impact of this decision, the MGA has sought counsel from the prominent law firm, Van Bael & Bellis. Their expertise will shed light on the ramifications of signing and ratifying the convention.

This reconsideration comes on the heels of a new gaming bill introduced in June, known as the Gaming Amendment Act. The act aims to solidify Malta's policy of fostering gaming operators within the country. Notably, it also seeks to shield Maltese gaming licensees and their officials from legal actions related to online gaming services under the MGA, along with limiting the recognition of foreign court decisions.

The European Union has raised concerns about the bill, particularly regarding potential anti-competitive elements. The European Parliament and European Commission have requested further information from the Maltese government.

In 2021, international advisors had recommended Malta adopt the convention as a gesture of good faith, which could have prevented the country from being greylisted by the Financial Action Task Force (FATF). Despite this advice, Malta chose not to sign the convention, leading to its greylisting by FATF in June 2021. Remarkably, they were removed from the increased monitoring program just a year later.

Economic Impact and Regulatory Shifts

This potential shift in policy has ignited discussions on how it might reshape Malta's gaming scene. The obligation for sports betting websites licensed in Malta to prevent players from countries where gambling is illegal could mark a pivotal change. Moreover, the impact on Malta's revenue from the gaming industry is a crucial point of consideration. The previous approach had attracted numerous operators, contributing significantly to the nation's economic prosperity.

The MGA's 2021 annual report sheds light on the industry's significant contributions. The regulator generated a total of €79.5 million in revenue, showcasing a 2.8% year-on-year increase. This revenue was sourced from various avenues, including compliance contributions, levies, license fees, and other channels. After accounting for expenses, the MGA filed an overall surplus of €69.6 million, indicating the industry's robust financial performance.

Furthermore, the number of active licenses experienced substantial growth, reaching a total of 351 by the end of 2021. This marked an increase from previous years and demonstrated the industry's vitality in Malta.

Employment Growth and Regulatory Vigilance

Malta’s gaming industry played a pivotal role in employment, providing 10,685 full-time equivalent positions by the close of 2021. This represented a remarkable surge of 28.9% compared to the previous year. The online sector accounted for the lion's share, with 9,919 jobs, while the land-based sector contributed 766 positions.

Simultaneously, the MGA took a proactive approach to ensure compliance within the industry, conducting 54 on-site compliance audits and 230 desktop reviews of gaming businesses in 2021. This accounted for approximately 65.5% of all licensees in Malta. These audits were complemented by Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) compliance examinations carried out by the Financial Intelligence Analysis Unit (FIAU) in conjunction with the MGA.

The potential adoption of the Macolin Convention and the accompanying shift in regulatory stance could have a nuanced effect on employment within Malta's gaming industry. While the industry has witnessed impressive growth in recent years, the new regulatory framework may lead to certain adjustments.

On one hand, a more stringent regulatory environment might necessitate a heightened focus on compliance and adherence to new standards. This could spur demand for professionals with expertise in regulatory compliance, legal affairs, and risk management. As a result, there may be an uptick in specialized roles within gaming companies, contributing to employment growth in these areas.

On the other hand, the potential reevaluation of licensing practices and obligations may impact certain operators, potentially leading to shifts in staffing requirements. Companies may need to reallocate resources to ensure they are in compliance with the new regulatory framework, potentially leading to adjustments in their workforce.

License Popularity and Regulatory Clout

The popularity of Maltese gaming licenses could be significantly affected. The new legislation and potential adoption of the Macolin Convention could alter the perception of Malta as a favourable jurisdiction for gaming operations. Companies may re-evaluate the advantages of obtaining a Maltese license and consider other jurisdictions that align with their operational strategies.

The regulatory landscape's transformation could also influence the standing and influence of the MGA on the global stage. As Malta adjusts its regulatory approach, it may redefine its role in the international gaming community, potentially influencing other jurisdictions' regulatory decisions.

Potential Game Changer: Macolin Convention

As the MGA contemplates signing the Macolin Convention, the compliance landscape may see a significant shift. If adopted, sports betting websites operating from Malta to jurisdictions where they are prohibited would be labelled as 'illegal' under the new definition. This potential change could impact revenue generation and alter the popularity of Maltese gaming licenses.

As the MGA weighs these critical decisions, the future of Malta's gaming industry hangs in the balance, with potential implications for the nation's economic landscape and regulatory framework.

BetConsultant.Cy is a premier leader in consulting services tailored to the online gambling industry. Our specialized solutions are meticulously crafted to empower our clients to thrive within their respective markets.

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Joseph Vrachimis CEO at BetConsultant.Cy

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