Major betting companies to be based in Malta

by Anthony Manduca

Malta's betting regulatory authorities are presently processing a large number of applications from major international betting companies to set up international trading companies in Malta and offer their services online to non-Maltese residents.

Last February the Minister of Finance issued a legal notice which amended the Public Lotto Ordinance to enable international betting offices to be set up in Malta to conduct betting transactions by electronic means to people residing outside Malta.

Vincent Farrugia, the chief executive of the Gaming Board, told The Malta Business Weekly that a large number of very diverse applications from well known betting companies were currently being processed. He said that the applications all came from international companies from various parts of the world. Asked whether these included famous huge betting companies, he replied: "Yes."

The Malta Business Weekly asked Mr Farrugia why Maltese residents would not be allowed to bet online. He said: "The reason was to protect Maltese people from betting. It has nothing to do with protecting the local casinos and the type of betting that these companies will be offering is different to the gambling found at Malta's casinos. The online betting involves betting on horse races and similar sports related gambling."

Contacted by The Malta Business Weekly, Simon Busuttil, the head of the Malta - EU Information Centre, said that such "discrimination" against local residents is permissible within the European Union. He said: "Within the EU each member State is not allowed to discriminate against citizens of other EU countries but an EU country is allowed to regulate the conduct of its own citizens, as long as other EU citizens within the same country are given the same treatment."

According to the legal notice amending the Public Lotto Ordinance the government will be charging a 0.5 per cent tax on each individual bet. Financial sources say that the government could collect quite a large amount of money through this tax especially since the online betting is open to people throughout the world.

When the international trading companies are set up in Malta this would no doubt help create jobs in the financial and information technology sector in the country.

Mr Farrugia said that there were a number of incentives which encouraged the betting companies to set up in Malta: "First of all the 0.5 per cent tax is relatively low which is always an incentive. However, it is not only a matter of a low tax rate. In Malta we have a very advanced IT infrastructure and a very IT literate workforce. Also, the regulatory framework in Malta is very professional indeed and this is a very important factor for these companies," he said.

According to the legal notice it is the duty of the Gaming Board to regulate, control and supervise the operations of a betting office. Furthermore, the person granted permission to operate a betting office has to present a full set of financial statements to the Gaming Board every six months. In comparison to an actual betting shop, an online betting site allows people to bet through the comfort of their personal computer. It is estimated that the American online gambling industry is worth close to US$500 billion compared to the US$27 billion which casinos and other betting shops generate every year.