Malta facing issues as an iGaming hub

By May Lawrence

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Malta is a small island country located in the Mediterranean. It is ranked 185th based on its territory and has a population just above 500 000. Despite that, it is has been the base for many online gaming companies in the last few decades. The island’s lifestyle improved at the beginning and it looked like heaven was brought down to earth. But these days Malta is a more expensive place to live than the richest countries in Europe. What went wrong?

Why the iGaming companies preferred Malta

For many years lots of online bookmakers choose to set their business branches there. From all European Union Members, Malta first regulated online gambling and created the Malta Gaming Authority. So, most of the companies that determine Europeans as key customers are now being conducted from that administrative body.

As another very important reason, we must distinguish the incredibly advantageous tax lays which were created especially for that sector. But despite being liberal, they still generate quite lot of money paid for license and corporate taxes, VAT, different related fees, etc. That made the local linked businesses raise their prices, too and slowly things started to get out of control.

Being a part of the European Union since 2004, Malta had access to the entire market. Soon, talented people possessing the right set of skills have been attracted to move and develop there. Native speakers, with deep knowledge in marketing, being a live dealer, software engineering, and other related skills, were a perfect candidate for a position in the fast-growing industry. High salaries, cheap rents, and lucrative social packages brought them to boost the iGaming industry.

Things going down

Being a small island means that you have limited renting space. Companies started struggling with their need to find a place to set their headquarters and employees. As a result, that caused the rents to skyrocket. Some business analysts are predicting a property bubble which is masking the situation even worst.

Another sign is the significant decrease in the quality of life. The overcrowded cities started to experience issues with traffic control and the cost of entertainment. Bars and restaurants became really expensive and beaches hardly accessible.

All of the above reflected on the talent potential, too. Actually, all gambling sites are fighting to attract a limited number of free employees. Many specialists from countries like the UK and Germany can receive better or the same salaries at home without having to pay so much for going out once a week. The lack of a workforce turned into high remuneration packages. That and the continuously rising prices pushed many of the small players out of the market.

Furthermore, many online casino providers bonded their staff members with special clauses not allowing them to work for a competitor.

Brexit mess

With BREXIT being voted from the Brits, the withdraw from the European Union is now secured. That means that local companies will no longer have free access to foreign workers and benefits which the Union provides. Many large online platforms started to move their offices in countries more friendly to their needs, such as Malta. And if that can be seen as an opportunity it can also become a problem. The island country is way behind other similar destinations like Luxembourg and Frankfurt when it comes to infrastructure. Lower quality of schools, not enough office spaces and rising prices may force brands like BET365 to make a different choice. That can push relocation of others, too

MGA license devaluation

As a major pillar holding Malta as a leading iGaming hub, its importance is significant. Yet, Sweden, Italy, Switzerland, Belgium, the Netherlands, Spain and Portugal also regulated their online gaming markets. Their administrative bodies are obligating every provider of online casino games to establish themselves and hire personnel locally. That makes the MGA license unnecessary and many can choose to move their branches out of there.

The government, on the other hand, is not helping to prevent that. As always, they assume that all players in the sector are rich and don’t mind paying extra for everything. And that could be fair if there aren’t other suitable locations and the regulator was that important as in the beginning.

Final words

Malta is still attractive for many online gaming companies and software providers. But the boom is now over and soon we all will feel the tide. Of course, it still can rely on its beneficial tax system. But the clouds are thickening there, too. The European Government is making pressure on offshore and tax havens like Luxembourg, Liechtenstein and Malta. It is a matter of time to see changes in their policy as well.

The future might not look very bright but the truth is that everything is in their hands. Is Malta going to be able to hold its position? We just have to wait and see.

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