By creating a highly regulated environment and enticing fiscal incentives, Malta has been on the winning side of the sphere and many operators have set up or relocated to the island.
Malta
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In the early days of the European Union, Member States held a
firm opinion, based on the principle of subsidiarity, that the
regulation of gambling was a matter to be dealt with internally by
each Member State, as they argued that it fell within the remit of
public policy. By the lapse of time an opportunity loomed and
regulated jurisdictions emerged. By creating a highly regulated
environment and enticing fiscal incentives, Malta has been on the
winning side of the sphere and many operators have set up or
relocated to the island. Maltese licences have allowed operators to
obtain licences in one Member State and enabled them to offer their
games to customers resident in other Member States, by virtue of
provisions on the freedom of establishment and the freedom to
provide services within the single market. However, not all has
been rainbows and butterflies for Maltese licencees. Despite the
strict Responsible Gaming policies in place in Malta, countries
such as Germany and Norway swiftly reacted and imposed blanket bans
on online gambling, while other jurisdictions have sought to
protect state-sponsored monopolies and kept overseas gaming
operators at bay; all in the name of public policy. ECJ judgements
have done little in the way of clarity!
This jurisdictional mayhem within the European Union has
spearheaded debate in Brussels on the need for an EU-wide licence,
aiming at a harmonised regulatory regime bringing down the barriers
between different Member States; comparable to the financial
services harmonisation of laws. Having many European governments
facing mounting debts, Member States have seemingly forgotten their
hard-fought struggle for the curtailment of online gaming, under
the guise of public policy and morality, to justify falling foul of
the basic EU freedoms. The truth of the matter is that governments
are set to fill their coffers through regulated gaming regimes and
they have no choice but to accept regulated gaming to raise taxes
which will help save their already frail or ailing economies. As a
result, the recent consensus to regulate gaming in Europe is likely
to speed up the harmonisation process.
The regulatory regime in place in Malta offers a comprehensive
legal framework placing great emphasis on due diligence processes,
technologies implemented, intellectual property rights, player and
consumer protection mechanisms, security of data, payment
mechanisms and anti-money laundering procedures. It leaves other
jurisdictions behind with much to be desired! Malta’s
successful model has in fact been replicated in other jurisdictions
outside Europe.
Being at the forefront of the industry, Malta has called on the
European Commission to remove the obstacles being placed on
operators and to enable licencees registered in any Member State to
be able to operate in another with a degree of comfort and
certainty as regards to the future. Malta is eager for the European
Union to adopt its regulatory model, so as to put a stop to the
arbitrary discrimination being placed on licencees.
Although having other jurisdictions issuing licences would mean
that Malta will face direct competition, one can anticipate that
the operators which have already set up in Malta will stay and
appreciate the value of the knowledge and expertise developed on
the island, which, through the Lotteries and Gaming Authority, has
achieved an orchestrated balance between the stringency of licence
conditions, operatability and player protection. Moreover, after
harmonisation, the Maltese licence will gain considerable strength
since licencees will not be required to apply for domestic licences
everywhere they operate and this pay double taxes for the same
gaming operation. Nevertheless, after harmonisation, it will be
interesting to see how tax revenue will be shared between Member
States.
It is still yet to be found out what harmonisation will be
delivered by the European Union. A total regulation or a maximum
harmonisation directive are unlikely to be negotiated between
Member States, and it is envisaged that a minimum harmonisation
directive will be implemented, in order to afford Member States a
margin of appreciation and allow them to ensure that adequate
systems are in place to curb illegal gambling operators, money
laundering, as well as to avoid problem gambling. This will be
implemented in a manner which fits the best interests of the
respective Member States. Malta hopes that the directive would lay
down a standard Responsible Gaming Policy detailing the minimum
conditions required to be satisfied by every licencee. Should such
conditions be fulfilled, Member States would be disabled from
blocking licencees operations on the basis of public policy.
What is certain is that in the years preceding harmonisation,
jurisdictional chaos will continue. As is currently being
witnessed, many Member States have opened their markets and are
issuing domestic licences. Although a Maltese licence would still
have strength, it is envisaged that foreign regulators will favour
domestic licencees and will create further barriers, in a bid to
re-domicile these licencees to their regulatory regime, in order to
get a bigger bite of the tax cake!
All licencees, wherever domiciled, stand to lose greatly if the
EU harmonisation process stalls. We hope that all stakeholders
unite and make their voice heard in Europe in order to end this
discrimination!
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