Malta Gaming Authority CEO Carl Brincat has highlighted the regulator’s ongoing efforts to preserve the value of the Malta licence amid a decline in applications.

Brincat emphasised the importance of maintaining a strong and secure licensing framework to ensure the integrity and reputation of the Maltese gaming industry in the authority’s 2022 annual report.

The report comes at a time when Malta has been making headlines in the industry due to proposed legislative changes aimed at protecting MGA-licensed companies from foreign court rulings.

Recognising that the gaming industry operates on an international and cross-border scale, the MGA said continuous dialogue with institutions and representatives at the EU level remained high on its priority list.

“We have continued to defend unjust restrictions to the freedom to provide services and the freedom of establishment that our licensees have the right to enjoy because they are established in a Member State that forms part of the EU internal market,” the report stated.

Moreover, CEO Brincat highlighted the MGA’s efforts to build strong bilateral relationships with foreign and local counterparts.

“We believe that transparency fosters good collaboration, which ensures more effective supervisory oversight and, at the same time, bolsters the reputation of the jurisdiction and the licensees established here,” Brincat wrote in the report.

“This also safeguards the value of the MGA’s licence, as we intend to ensure that it is a mark of excellence that inspires players’ trust worldwide,” he added.

A key economic contributor

The MGA report underscored the significant economic impact of the gaming industry on Malta.

The Gross Value Added (GVA) generated by the industry amounted to €1.5bn, accounting for approximately 9.6% of the country’s overall GVA.

When considering indirect effects, the industry’s contribution increased to over 12.4%.

Moreover, by the end of 2022, there were 11,245 individuals employed in activities covered by MGA licenses, with the majority (92.2%) working in the online sector.

Taking into account employment indirectly related to the gaming industry, the total employment in the sector reached 15,774, representing about 5.5% of Malta’s total workforce.

Fewer new licence applications

At the end of 2022, the number of companies licensed by the MGA and operating in Malta – including online and land-based entities – stood at 350.

These companies held a total of 358 gaming licences, however, with 41 new gaming licence applications submitted during the year, Malta received fewer applications in 2022 than in previous years.

Although the MGA did not provide total GGR generated by its licensees, the authority revealed that it collected €78.7m in compliance contribution fees, levies and consumption tax throughout the year.

However, within this total, contributions from the iGaming sector decreased by 10.5% from €52.3m in 2021 to €46.8m in 2022.

Identifying vulnerabilities

CEO Brincat emphasised that the MGA’s commitment to safeguarding the value of the licence is just one aspect of its broader mandate to ensure the long-term sustainability of the gaming industry in Malta.

He highlighted that over the past year, the MGA conducted studies to identify vulnerabilities in Malta as a gaming jurisdiction.

The authority intends to collaborate with practitioners and national stakeholders to “turn these challenges into opportunities”.

One vulnerability identified by the MGA is the upcoming changes to the international corporate tax framework, specifically the introduction of global minimum taxation in 2024.

Under this reform, large international companies with an annual turnover exceeding €750m will be subject to a minimum income tax rate of 15%.

However, the MGA stated that the risk of gaming operators relocating to other jurisdictions in response to the tax reform is “projected to be limited”, given its global application.

“Nevertheless, the MGA has intensified its efforts, together with other national stakeholders, to ensure that a sustainable strategy for the gaming sector is in place to mitigate any potential difficulties and ultimately safeguard Malta’s competitiveness as a jurisdiction,” the MGA report stated.

Penalties and licence cancellations

In addition, 2022 was also characterised by Malta’s removal from the Financial Action Task Force (FATF) grey list in June 2022.

The MGA conducted 28 compliance audits and 228 desktop reviews in 2022, along with additional AML/CFT compliance examinations carried out by the Financial Intelligence Analysis Unit (FIAU) or on behalf of the MGA by the FIAU.

These activities led to the issuance of 10 warnings and the cancellation of six licences. This, however, marked a significant decrease from 69 warnings in 2020 and 64 warnings in 2021.

Additionally, the MGA imposed 16 administrative penalties and three regulatory settlements, amounting to a total financial penalty of €179,150.

Furthermore, 25 licensees were subject to remediation and/or administrative measures due to breaches identified in previous examinations, resulting in penalties exceeding €738,000.

During 2022, the MGA also disqualified six individuals and companies from the industry for failing to meet the regulator’s probity standards, primarily due to money laundering and terrorism financing risks.