GPWA Times Magazine - Issue 32 - June 2015

you’re using DataCash — they are hold- ing the money. However, erring on the side of caution, the LGA wasn’t happy to let go of the whole thing. Every month, the licensee needs to file a document in- dicating all player balances individually. The regulator is sensible enough not to ask you to give them your database, so each player is identified by a unique ID. However, if you have 100,000 players in your database, every month you need to indicate what each player holds in terms of an outstanding balance. Against that, you have to provide the LGA with dec- larations that show that you have suffi- cient money to cover those balances. So I wouldn’t say it’s foolproof. Nothing is foolproof, but I think it’s very difficult to be able to go beyond that. That was the argument that other jurisdictions made: that it isn’t foolproof because the report you file on the first of the month can be different from what the situation is on the 15th of the month. Under Maltese law, we’re paying tax- es and file reports on the 21st of every month. Your report has to reflect what happened the day before you filed. I can appreciate the argument that nothing is foolproof. However, there’s no law in the world that is foolproof. You will always find people who might try to tamper with things, who might try to spot a loophole, to take any opportunity that comes their way. But then, of course, there are conse- quences for that. Keep in mind that under Maltese law, every licensee needs to have a key official, and the key official needs to be a resident of Malta. It needs to be a director of the company. So at any time, the LGA has a point of contact with the li- censee. It’s the key official’s duty to make sure that taxes are paid, that licenses are paid, that the reports are filed on time. Of course, if you don’t fulfill your obliga- tions, there are consequences. You were the legal and enforcement director at the LGA. What did you do in that capacity? I stayed there for two and a half years. My (primary role) was drafting legislation. The remote gaming regulations were the start of it. At the time, the LGA (needed to) draft remote gaming regulations, vid- eo lottery terminals regulations, commer- cial bingo regulations, bingo regulations, broadcasting media regulations, small games regulations — all kinds of stuff. The other part of it was enforcement, of course. Enforcement was then handled by an inspectorate — a chief inspector that had his own team. My job was to oversee what the inspectorate was doing. While I was there, Malta’s licensing re- gime was still in its infancy. It was more of a time when the regulator was equipping itself, preparing for things to come. The jurisdiction took off at a later date when numerous operators decided to anchor in Malta. It wasn’t easy to go to conferences and tell people, Malta has a new regula- tory regime. You can get a license. U.K.- based operators were familiar with that. Other operators were not familiar with that at all. Do keep in mind (Malta is) a small island, so it’s always going to be a hard sell if you’re doing something as a small island and you’re doing it for the first time. Of course, you have to explain to people what the benefits are, why you should be getting a license — and it took time. Once the first few substantial operators and software providers decided to anchor in Malta, the jurisdiction then picked up mo- mentum. I think the industry started real- izing that being able to say I’m licensed, my operation has to withstand scrutiny — from the players’ perspective, you were also earning their trust. From an infrastructure standpoint, what did you do to get Malta ready for this? Infrastructure-wise, it was more difficult. Generally speaking, when you compare law and technology, you always have a problem. Law never manages to come even close to catching up with technolo- gy. No matter how proactive you are, law is always going to be overtaken by tech- nology. We’re seeing it happen even now. We started by saying, "We need to have your servers here so that we can control them." Slowly but surely, the industry moved on to virtual servers. It became more difficult to see what’s happening. Today we’re speaking about cloud archi- tectures, whether they are public architec- tures or private cloud architectures. This is something that, as we speak, regulators worldwide are still trying to figure out. Should we allow it? Shouldn’t we allow it? For Malta at that point, it was really dif- ficult, because it did have some chal- lenges it needed to overcome from an infrastructure perspective. We were also aware that there were some challenges that we couldn’t overcome. The reality is that no matter what, Malta will always be a spoke in the Internet wheel. It’s an island. Bandwidth is always going to be problematic. When you get to the point when it’s no longer problematic in terms of efficiency, and we’re at that point now, it’s still going to be very expensive so as to make you not very competitive. Back in 2004, Malta had very limited in- frastructure that could accommodate the gaming industry. There was only one data center that could provide co-location services. Bandwidth was very expensive, and latency times were horrible. If you wanted to have a poker network, in 2004 it was next to impossible. Things have improved. I’m told by our cli- ents that they have no issues with latency times anymore. They are well within ac- ceptable parameters. They do not have any issues with reliable bandwidth. They do, however, have an issue with the cost of bandwidth. The most expensive mega- bit in Malta costs 15 times more than the most expensive megabit in the U.K. The cost of bandwidth is a problem. However, I’m happy to note that Malta is well aware of its limitations in this field, so it progressed to what is, in my opin- ion, the best solution. If you want to have your hardware — and that includes your gaming system and your control system — you could have it anywhere from day one. There was a time when the regulator would tell you your gaming system and your control system needed be in Malta. That’s no longer the case. You can have your critical hardware anywhere within the EU or the EEA. You can also have it outside the EU and the EEA, provided you get the specific approval of the regulator. I have to say that such approvals are not unreasonably withheld. Of course, you need to go through system audits. 42 The future of iGaming in Malta