Speech delivered by Chairman, Malta Gaming Authority, 20 April 2017

Transcription

1 Leveraging the Remote Gaming Advantage Speech delivered by Chairman, Malta Gaming Authority, 20 April 2017 Good Morning ladies and gentlemen, The success of the gaming industry in Malta is obvious for all to see. In a span of just over a decade, the industry has grown to become one of the key pillars of our economy. The direct contribution of the gaming industry to the Maltese economy was valued at over 1 billion in 2016, equivalent to one-eighth of total Gross Value Added. Firms in the sector and associated businesses are estimated to employ around 9,000 persons on a full-time equivalent basis. The industry also contributed 56.3 million in gaming taxes towards the Government s budget in 2016, with the total contribution to the public coffers, including other forms of tax revenue generated by activity within the industry, estimated at around 120 million. I argue that this success is not a one-way discourse based on what the country has to offer to the industry in order to attract investment and activity. I believe that it is also strongly founded on what the industry and its continued growth are and can continue to offer to the country. And it is within this fundamental reciprocal relationship that we need to position Malta s strategy with respect to the gaming industry in order to avert the threats and reap opportunities at a global level. This, within an environment that is becoming more subject to national protectionism, at least across EU jurisdictions, and is attracting increasing risks and regulatory focus with respect to financial crime. On the other side of the coin, the industry promises to be one of the strongest consumption growth sectors globally and offers tremendous opportunities based on technological development and innovation across all levels of service delivery. I need not dwell at length on the advantages offered by Malta as a jurisdiction for gaming business licencing. Since its inception, the licencing regime in Malta offered a framework of world-class reputation, which coupled with cost and other competitive advantages led to exceptional business results. The value added of the industry grew by 13% per annum in two consecutive years since 2014, in spite of the gradual erosion of the ability of the Maltese

2 jurisdiction to offer access to EU markets. Indeed, in 2016, remote gaming activity in Malta benefited from business consolidation and investment programmes which confirmed the standing of Malta s jurisdiction. This took place as business increased the quality of service delivery and, very importantly, its compliance performance. This was not least reflected in the growth in employment within the industry itself, which in 2016 exceeded 30%. In the land-based segment, the gaming industry continued to grow in line with the disposable income of the population, while serving to enhance and diversify the service offering to an expanding tourism market. To the Maltese economy and society at large, the industry is providing highly paid jobs, of which around 3,000 to Maltese nationals, opportunities for skills transfers and social development through the existence of a cosmopolitan labour force, and income opportunities to numerous businesses, some of which were previously excessively dependent on seasonal tourism expenditure. The sector is delivering on the promise of growth in higher skill and value added jobs to meet the aspirations of an important segment of our labour force, while being relatively neutral in terms of its environmental impacts. The economy is now benefiting from gaming activity to an extent where some are expressing concerns regarding its implications for the availability of ICT and other skills, on wage and real estate price inflation, and on the overall possibilities of excessive dependence on any single industry. This scenario instils the Malta Gaming Authority with a strong sense of responsibility to ensure a continued and sustainable growth of the industry. This calls for a far-reaching and forward-looking repositioning of Malta s licencing activities, one which will serve to generate business growth while diversifying activities in a manner that makes them less vulnerable to external regulatory and other shocks, while providing fertile ground for innovation. In fulfilling this vision, the Authority is proceeding with the overhaul of its regulatory framework which was started in 2015 and which will come into force in This exercise will develop new business areas and enhance regulatory efficiency while improving compliance systems and player protection to meet the best global standards of practice.

3 From a business perspective, the new licencing framework will be based on three principal tenets. Firstly, it will entail a more focused approach to develop business-to-business activities. There is a global emerging trend for such activities to be licenced in order to enhance their marketability. Business-to-business activity also tends to be less vulnerable to financial crime, regulatory and other external risks, and promise to make an even more pronounced contribution to the economy as they are relatively more human capital intensive across a wide variety of skills. The second tenet is enhanced efficiency of regulatory processes across all areas of activity. This will entail streamlining and enhanced effectiveness in order to remove unneeded bureaucracy while ensuring that regulatory resources are focused where they are effectively needed through a risk-based approach. The third tenet is to ensure the flexibility necessary to meet current and future dynamics with respect to technological developments and market demands. An important step in this direction, which also serves as a small example of what the re-positioning is intended to achieve, was the introduction, in 2016, of an innovative regulatory framework for controlled games of skill, which strikes the right balance between business promotion and player protection. Perhaps even more importantly, the framework will be future proof to welcome under the Maltese jurisdiction the emerging technologies which will underpin gaming in years to come. We are seeing an increased convergence between game types, channels of distribution and markets. We are looking at new technologies such as skins gambling, virtual reality and others which will shape the industry to come. We are also studying the possible introduction of virtual currencies in a gaming context. In this regard, I am pleased to report that the Authority is undertaking in-depth studies of the role which crypto-currencies can play within the Maltese regulatory regime. In the context of the rapid developments in this area which are taking place at a global level, the Maltese regulatory system cannot afford any loss in competitive edge in this regard, especially to sustain its reputation as a forward-looking jurisdiction which is friendly to

4 compliant businesses. For this reason, the Authority is actively evaluating the circumstances and requirements necessary which could eventually enable operators to conduct business in this manner as well. From a compliance perspective, the regulatory repositioning process will achieve a high level of integrity consistent with on-going and future global requirements. The streamlining of the legal gaming framework on various levels and an overhaul of the tax and licencing systems are key elements of the process, which will above all upgrade the international reputation of the Maltese jurisdiction. This process has already begun through a close collaboration with the Financial Intelligence Analysis Unit with respect to combating money laundering, among other initiatives. I strongly believe that this work will help to build a safer world for us all. The Authority is also sharpening its focus on other key success factors for Malta s gaming jurisdiction over the medium term. In this regard, I believe that the question of human resources deserves close and immediate attention, and is indeed one on which the Authority will be increasingly engaging with other relevant stakeholders in the coming months. In this respect, we shall soon be launching the European Gaming Institute of Malta in partnership with the Malta College of Arts, Science and Technology. This institute will create an educational institution which will work in partnership with the industry and local training providers to increase the skills availability in Malta but also to deliver high quality training which is targeted and sector specific. Addressing this issue will require a combination of education and training efforts while rendering Malta an ever more attractive location for global talent from the fiscal and lifestyle perspectives. The development and attraction of human capital in the industry will be key to sustain quality-oriented and compliant growth which focuses on and contributes to business innovation. Other initiatives aimed at making Malta more attractive as a remote gaming jurisdiction include the setting up of a national betting exchange so that we create a structure where bets can be hedged. This and other future initiatives will further consolidate and strengthen Malta s gaming ecosystem

5 In conclusion, I can report that the gaming industry in Malta is expected to continue to grow steadily in 2017 and This will be underpinned by the organic expansion of existing operators, but it is also expected to be compounded by new investment, attracted especially by the revamped regulatory environment. Expectations with respect to landbased operators are also positive. I dare say that we are at the pinnacle of an exciting period of challenge and change, one which I confidently expect will see us consolidating and perhaps improving our contribution to the Maltese economy and society at large, by being at the forefront of an industry with global reach and which operates at the cutting edge of technological development. The success Malta has achieved in the remote gaming sector should be replicated in other areas such as financial technology, e-commerce activities, electronic payments, digital currencies and other digital economy sectors where Malta can have an edge over other jurisdictions. I believe that all of us in this room have a role to play in making great things happen. I thank you for your attention and wish you a great conference.