GPWA Times Magazine - Issue 32 - June 2015

I think that Malta’s regulatory regime in 2004 filled that void. It (adopted) legisla- tion specifically intended for the remote gaming industry. It wasn’t a question of moving the goalposts all the time. Prospective licensees knew exactly what to expect and what they had to conform to. They were aware that they needed to part with some of their money, because obvi- ously, they needed to pay license fees, and they needed to pay gaming tax. But it wasn’t a formula that insured that you take away all their money and leave them with the small change. I think Malta man- aged to create the right ecology for the in- dustry to gain a degree of respectability, and at the same time allow it to thrive. Did the government in Malta need much convincing that it should license and regulate online gaming? Well, I was involved in this from the out- set, and I would say, keeping in mind that politicians usually do tend to make your life difficult when you come up with an idea, no. I don’t think it needed much con- vincing. I think the government wanted to be convinced that Malta was doing the right thing — that Malta wasn’t trying to get into an industry that would tarnish its reputation. In fact, if you look at the remote gaming regulations, you will no- tice that one of most important pillars — I would say the most important pillar — of the regulations is player protection. The regulations center on player protec- tion. It’s not about how much money the government is going to make from it. It’s not about getting lost in small details that you usually find in any regulatory regime. You will find that almost all the provisions in those regulations concern player protection. Let’s keep in mind that 10 years later, 11 years later, where we now can compare Malta’s regulatory regime with other regulatory regimes in Europe, I would say that, in practice, Malta is still the strongest jurisdiction in terms of player protection. If you look at other jurisdictions, EU member states that have licensed gam- ing, to my knowledge, so far — and I’m saying so far because the U.K. might change that — none of them have a com- plaints department. The LGA has a very active complaints department, and no matter how small a player’s complaint is, they take it seriously. They ask the li- censee to give an explanation. On a regu- lar basis, because we represent quite a number of companies in Malta, we get complaints referred to us by the LGA. A good number of those would be people who would say, "I deposited or I wagered 1,000 euros and I didn’t win anything. I was playing poker, and I didn’t get the hand that I was expecting, so maybe there’s something wrong with the licens- ee’s RNG." Of course, there isn’t, because there are a number of requirements that the prospective licensee needed to ad- here to before getting a license. But the LGA will not tell the player, "No, you’re dreaming." Just to give the right assur- ances to the player, it would still refer his complaint. We would still have to develop an answer so that the player will have the comfort that there is a regulator looking after his interests. Malta was one of the first, if not the first jurisdiction to ring-fence player funds. Talk about the thought process behind that decision. When you think about it, a gaming opera- tor can do many things that would breach one or more conditions of its license. Any regulator that knows what it’s doing can take the necessary action to stop that. However, the biggest problem — or rath- er, the most noticeable problem — that you can have in the industry is an opera- tor who runs away with players’ monies. Once that happens, there is very little that a regulator can do. If the licensee doesn’t file the necessary notifications on time, the regulator can impose an administra- tive fine. If the operator breaches more se- rious conditions to its license, regulators can suspend the license and it can eventu- ally be canceled. However, if players’ monies disappear, you’re going to be able to cancel the li- cense, but that is very little comfort for the players who lost their money. I think it was only logical that in focusing on pro- tecting players’ interests, we would have a provision in our regulations that obliged the licensee to ring-fence players’ monies. That is one aspect that is taken very seri- ously by the regulator. The industry has evolved. Let’s be clear about that. When we speak about ring-fencing, we start from a point where the licensee would need to indicate a bank account that has been designated as a player’s account. The bank with which that account is held would be required to issue a declaration to the effect that those monies are privileged funds. If something happens to the opera- tion, those monies cannot be touched. If someone files a warrant of seizure, those monies cannot be attached. The LGA knew where the money was being held — a particular bank account, a privileged account held with a particular bank. The best way to handle players’ monies is to never have them in your possession. So in today’s world, almost invariably, players’ monies are held by the pay- ment gateway. The licensee never actu- ally holds those monies. With the passing of time, the LGA came to accept that as the new industry standard. If you’re us- ing (Skrill), if you’re using NETELLER, if Law never manages to come even close to catching up with technology. No matter how proactive you are, law is always going to be overtaken by technology. We’re seeing it happen even now." – Tony Axisa, CEO, CyberGaming Consultants 41 The future of iGaming in Malta