In April 2004, the former nationalist government published new Remote Gaming Regulations which for the first time provided for a comprehensive list of licences for remote gaming that may be obtained in Malta. Malta became the first EU country offering a legal framework for the operation of remote gaming. Since this time, history has shown that these regulations have been a clear success: by end of the year 2014, there have been 283 licensed gaming operators holding in total 469 licenses, an increase of 21% compared to 2013. The government revenue from gaming tax has increased by 15% in 2014 compares to the previous year, amounting now to over €25 million. Remote gaming contributes 12% to Malta’s GDP (2013), employing directly over 8,000 people. The upward trend is still unbroken, alone 120 new applications had been submitted in 2014.
July 2015 brought some bad news to the cozy Maltese gaming world with the arrest under a European Arrest Warrant of several Italian nationals living in Malta. They were operating an entire online betting network of companies, part of which was headquartered in Malta, with direct connections to the ‘Ndrangheta, the notorious Calabria criminal organization.
The Malta Gaming Authority has shortly after the arrest suspended the licenses of Uniq Group Limited (Betuniq) and Betsolution4U Limited, followed with the suspensions of the licenses of Fenplay Limited, Soft Bet Ltd, Soft Casino Ltd and Alibaba Casino Ltd.
All these companies have used the fiduciary services of local companies GVM Holdings, run by David Gonzi, son of former Prime Minister Laurence Gonzi and PKF Fiduciaries, run by Georges Mangion. A fiduciary is responsible for managing the assets of another person, or of a group of people, and fiduciary services are commonly used to hide the identity of the ultimate beneficiary owners of companies, primarily for tax purposes. Fiduciary services are a great part of services offered by local legal firms to foreigners. It seems that in the case of these Italian companies, something went really wrong in the due diligence of the ultimate owners: all institutions such as the involved law firms, the Malta Gaming Authority (formerly the Lotteries and Gaming Authority), the Malta Financial Services and the local banks have failed to follow a strict due diligence on the ultimate owners. Only the request of the Italian authorities has triggered the action of the local authorities.
Every licensed remote gaming company must have a Key Official: a liaison person between the Gaming Authority and the licensee. The designated official must always keep abreast of all the operations being undertaken by the licensee, he must be a director of the licensee and must be physically present in Malta. Most of the law firms offering gaming related services, and independent consultants, offer key official services. Many of them are actually key officials of different companies (a really lucrative business without much work till shit happens such as in the case of the Italian companies), this fact is certainly creating a sort of conflict of interest.
What would be the right way forward for Malta as a center of gaming excellence?
In a perfect world, a person should only be the key official of one company. I would also suggest the fading out of fiduciary services in Malta, these are the remains of offshore
jurisdictions and should not have their place in any EU country. I would also expect existing remote gaming licenses to be re-scrutinized by the different authorities, and why not, introduce yearly due diligences on the gaming companies, a practice banks have introduced on their commercial customers a while ago.
Malta should attract foreign investments for its qualified people, for the strict modern remote gaming legislation and not for the “laisser faire” of the authorities in their due diligence on foreign investors.
Related article: Is Malta as remote gaming legislator passé?
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