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12% of on-line betting companies’
gross profits will go to Malta’s coffers
by David Kelleher
Malta’s role as a base for offshore betting companies
could generate millions of liri for the government over the
next three years as revenue estimates for electronic gambling
total over £120bn.
According to Merill Lynch research, total revenue generated
by electronic gambling is expected to be £124bn by 2004
and the number of mobile phones in hand should reach one billion
by next year. If the estimates are correct, mobile phones will
outnumber personal computers by 2:1.
And the island’s excellent location, technical expertise
and competitive tax incentives for on-line bookmakers who relocate
to Malta, is slowly putting Malta on the bookmakers’ map.
It is also encouraging for the government and the Minister of
Finance that nearly 12 per cent of each company’s gross
profits will flow into the country’s coffers.
According to Vincent Caldwell, chairman and chief executive
officer of betinternet.com, an on-line bookmaker specialising
in totalisator betting, and horse and greyhound racing, Malta
is very attractive to the on-line bookmakers.
“Even though the UK chancellor Gordon Brown has removed
taxes on punters and introduced a tax on gross profits, Malta
is still far more attractive to us. The 0.5 per cent tax on
each transaction in reality works out to be around 12 per cent
of gross profits, well below the 19 per cent that will be charged
to bookmakers in the UK,” Mr Caldwell told The Malta Business
Weekly.
Mr Caldwell was in Malta along with technical director William
D. Mummery, to oversee betinternet.com’s operations in
Malta.
Betinternet.com was set up in May 1998 on the Isle of Man. With
experience in the Irish betting market, it sought to increase
its client base by looking outwards at other markets.
On 17 March 2000, the company launched its on-line service and
went public two months later.
“We have grown rapidly over the past nine months. We are
taking bets from 95 countries and expect to have a turnover
of around Lm45m this year. In Christmas 1999 we had eight staff.
The figure now stands at 50,” Mr Caldwell said. His company
is examining numerous channels of revenue and new betting sources.
They are looking very closely at mobile commerce, an on-line
casino and external gaming operations all year round.
“We have long-term plans but what is important is that
all our operations follow stringent regulation. We do not want
to be seen as another offshore betting company looking for tax
free betting,” Mr Caldwell explained.
On-line betting is on the increase and this is attributable
to a number of factors.
“People have more leisure time, there is more live coverage
of sports and other events on which bets can be placed, impulse
betters are on the increase, and there are more female participants.
Another two factors that are also relevant to such a change
in mentality is the cultural acceptance of betting and the lifting
of limits on prohibition of gambling in numerous countries,”
he added.
Betinternet.com has joined forces with a major betting group
in the United States in a bid to revive greyhound racing and
to expand its business opportunities. Totalisator betting allow
betters to see highlights of all the greyhound or horse races
in the UK and Ireland and place bets as the races are underway.
The odds are announced simultaneously. Euro-off track, as the
venture is called, gives Betinternet.com an extensive client
base and technical expertise.
“At present betinternet.com has clients from 95 countries
and receives around 550,000 hits per day.
Our sites are also multi-lingual, including Chinese, and the
Thai site is expected to be up and running in four weeks’
time. We have around 1,000 new accounts every month,” Mr
Caldwell said.
Mr Caldwell is very keen on tapping mobile betting, which is
expected to be a very lucrative business in the coming years.
As technologies get better, the easier it will be to relay and
receive data on one’s mobile phone. Betinternet.com has
also joined forces with MGS, a technology company, that takes
all data in XML format and delivers the content to all mobile
phones in one single format. The data can also be received via
a Palm Pilot.
“The mobile phone will cease to be solely a means of voice
traffic. Mobile phones will be used as data devices in the coming
years,” Mr Caldwell said.
“This will come about when there is increased mobility.
When devices are more independent, growth is registered in free
or subsidised hand-held devices and the audience using these
devices will increase. On technological level, 3G will transform
the market,” he added.
The Malta-based operation will serve as a hub for all transactions
received by betinternet.com from its various operations. They
will be directed to the local hub, verified, processed and re-sent
to the outlet or server.
“We are using Malta as a ledgering system and not for betting.
There will be substantial amounts of money passing through the
system. This will obviously be of benefit to the local economy,
as the government will take 0.5 per cent on each transaction,”
Mr Caldwell added.
The Maltese operation is expected to be operational by the third
quarter of this year.
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