In what is nothing short of a painful body blow to Brexiteers, one of the world’s largest online gambling companies, Bet365, has announced plans to relocate from Gibraltar to Malta as soon as the UK’s departure from the European Union is finalised. The firm, which has more than 23 million customers worldwide, has already signed an agreement to purchase a €70 million property on Malta’s Tigné peninsula to serve as its new hub of operations, partly drawn by Malta’s attractive taxation regime and determination to remain in the European bloc.
Other than leaving Brexiteers red faced, the move is a game changer for the EU’s smallest state, which is poised to become one of the main destinations for British firms seeking access to the internal market post 2019. Though the precise details of the betting giant’s presence in the island nation have yet to be ironed out, Bet365 may be leading a gambling industry exodus as Britain struggles to stay in the game.
Commentators have been quick to note that Bet365 is unlikely to be the last major British gaming firm to make the move to Malta, as the political uncertainty in the UK forces the sector to hedge its bets in more predictable legislative pastures. British betting giant 888, also headquartered in Gibraltar, has already engaged its back-up plan of obtaining a Maltese gambling license, and a more definitive relocation might yet be on the cards.
“If 888 were to remain registered, licensed and operating in Gibraltar,” the company has said, “its ability to rely on EU freedom of services and establishment principles in supplying its services within the EU will be limited.” Firms across the industry are likely to share 888’s concerns and pick up Maltese licenses as they attempt to keep a foot in the door of the still lucrative EU market.
Under this light, 888 and Bet365’s relocation to an EU home base makes good business sense, especially given the uncertainty over Gibraltar’s status—the Rock voted 96% to remain in the EU— post-Brexit. The question remains, however: why Malta rather than another EU country?
The government of the EU’s smallest member state—including its gambling regulator, the Malta Gaming Authority (MGA)—has consistently endeavoured to stay on the cutting edge of gambling regulation, finding a middle ground that both protects consumers and works to attract new business. Malta’s efforts have not gone unnoticed: the International Monetary Fund (IMF) recently lauded the Maltese gaming framework as “exceptional”.
The IMF particularly praised the new gaming provisions, passed earlier this month by the Maltese Parliament, that seek to boost the MGA’s regulatory oversight, ushering in a new era of streamlined and modernized gaming legislation. The new Gaming Act is designed to strengthen compliance with concurrent initiatives targeting money laundering and the funding of terrorism.
The recently-passed legislation is also intended to empower the MGA to be “more agile in its decision-making, decreasing unnecessary regulatory burdens whilst strengthening supervision and focusing the regulator’s efforts on the areas which present a higher risk profile.” Under the new legal framework, the MGA’s Player Support Unit will formally become the primary mediator between players and operators. The current, overly complex licensing system will also be scrapped. Instead, two new categories of license will be introduced, Business-to-Consumer (B2C) and Business-to-Business (B2B) licenses.
In addition to passing this streamlined gaming legislation, Malta has taken on another ambitious project: extending its unified self-exclusion system to remote gaming operators. Remote gaming licensees registered with the MGA are already required to offer self-exclusion tools to players, though there is yet to be a universal system in place such as that which Malta has put in place for land-based operators. Conscious of this gap, MGA is now committed to giving players the ability to self-exclude across all licensed gaming channels, on Maltese soil or beyond.
Such a carefully-designed self-exclusion system gives Malta a particular advantage over Gibraltar. The UK has been testing its own online self-exclusion programme, known as GamStop since last year, but with disappointing results. The UK Gambling Commission recently warned the Remote Gambling Association trade group that GamStop is not yet up to scratch, with the gaming regulator’s executive director Tim Miller claiming he had “yet to see proper evidence” that it works.
Uncertainty over what a post-Brexit regulatory landscape could look like is already weighing heavily on numerous sectors of the British economy. The UK registered the weakest economic growth out of all the G7 nations in 2017 and in May 2018 posted the worst economic quarter in five years. As the ongoing “Brexodus” leaves British households out of pocket, employers without the highly-skilled workers they need, and major corporations from Barclay’s to Goldman Sachs opening up shop on the continent, it looks increasingly likely that the gambling sector is just one of many to try its luck abroad.
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