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iGaming Jurisdiction: Why Malta?

Having a Jurisdiction in the European Union makes that Jurisdiction acceptable in all the other European Member States and gives more credibility to the Jurisdiction. The Maltese igaming jurisdiction is considered a serious one, where shady business transactions are not tolerated. Companies look at what the regulator lets you do, and what the regulator does not let you do. If a company is looking for somewhere cheap, and which can easily be sold off, that company will not come to Malta.  In Malta there are complicated procedures and due diligence is hard.

After a short-list of Jurisdiction is made out, companies start looking at other factors like corporation tax, licences, the general infrastructure, the local workforce and other important factors. These factors are the ones that put Malta on the consideration map. The local environment is pleasant and attractive and foreigners enjoy the way of life here and can lead a comfortable life, which makes the management of companies more open to move here and settle here with their families. Also most of the population are very fluent in English, thus avoiding language barriers, even if it is not the national language. Other nationals are enamoured with the weather, the social environment and the island way of life.

The maximum Gaming Tax that a company pays in Malta is € 466,000. But if a gaming company is based in England or in France, and taxes have to be paid in those countries, there are no caps or limits on the amount of gaming tax that has to be paid. Thus a company can end up paying € 20 million or € 30 million in gaming taxes. Gaming tax is the tax that is paid according to the type of licence that the company holds. The type of licence is based on what the company is offering.

Hiring human resources locally is easier and cheaper. At entry level, there are an abundance of resources looking for employment. At more senior levels, there is higher competition among the companies, thus increasing the cost of these resources. It is problematic to fill positions that require more than seven years of experience, due to the infancy of the industry in Malta, rather than due to the quality of resources. As the industry continues to mature, this issue will decrease. From an employee perspective, the salaries are good, thus it makes it an attractive industry in which to find employment.

In gaming companies which operate a Business to Customer operation, a multitude of language skills are required. One particular company needed fluent speakers in twenty four languages, for its customer support office. The traditional languages are relatively easy to come by, but other languages are harder to find. Most languages can be found in Malta, as there are a number of foreigners who are settled here, and want to remain here. Other resources are sourced directly from abroad. Japanese speakers are one of the most expensive to obtain and retain.   It is not legal to run gambling operations in Scandinavian countries.

The telecommunications or broadband infrastructure is considered as a good and stable infrastructure. Although it is not to the same standards as the infrastructure found in London or the other main European cities, the standard is not that much lower. In fact the stability of broadband has only in rare instances effected the day to day operations of gaming companies. On the other hand, broadband in Malta is considered very expensive when compared to other localities. When the first gaming companies started coming to Malta, there was only one cable connecting Malta to Sicily, and a microwave link, that could only be used for emergency purposes. Today, Malta has four cables.

There is still potential for growth in the gaming industry in Malta. Due to the regulated market, it will increasingly become harder for the smaller companies. The smaller companies would need to find a niche market in order to make it, and will probably be taken over by a big company after a few years. The number of acquisitions and takeovers that took place in the  last  year  was  noticeably higher  than  in  previous  years.    This  is  due  to  companies repositioning themselves. It is harder for the smaller companies. People starting the small companies, invest a large number of hours and a huge effort, so that the company takes off, and then they start to look for their pay day. They actually encourage being taken over by the larger companies. As these companies are mostly non-listed companies, take overs could be avoided if they were not desired.

Source: M. Azzopardi: A Study of Locality Choices by ICT and I-Gaming Companies in Malta, 2012.

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