Iosif Galea: Safer gambling has become more important than ever!

An Expert’s vision from Malta:

Gambling consultant Iosif Galea has 16 years worth of experience in the gambling industry and provides advice and assistance to investors and iGaming operators in setting up and relocating in conformity with the requirements of the Maltese gambling laws and regulations. Iosif told us about his work in MGA and the future of Maltese and European regulations.

From the casino floor to the MGA

Please tell us a little bit about yourself? What do you do?

I’m an independent gaming consulting manager, operating from Malta. I used to work for the Maltese Gaming Authority (the regulator here) for 6 years and then I went into my independent self-employment business venture. I consult with gambling companies relative to gambling licenses within the EU like Malta, the UK, and other EU countries.

Mostly I offer consultancy about compliance and regulatory services. I’ve been in gambling industry for about 16 years.

Can you name some companies which have co-operated with you?

I’ve worked with many companies like Tipbet, Playtech, Scout Gaming Group, Pragmatic Club, and many others. These have been sportsbooks, casinos, or other gaming companies who would like to have consulting services relative to their operation, like betting, gambling, P2P services, fantasy sports etc.

So, you help companies to avoid breaking regulation rules? Do you only consult? Do you offer legal support or something similar?

For new companies, or established companies seeking to enter a new area of the gambling market, I can assist with gambling license applications and with the supporting documentation for applications, such as business plans, market research, technical documentation, and revenue potential. I understand the advantages offered by key e-gaming jurisdictions such as Malta, UK, Denmark, Italy, Curaçao and Alderney. Clients can benefit from this knowledge in determining the most suitable location for their e-gaming business. My main area of expertise is remote gaming regulations and regulatory compliance.

You have a great experience working with MGA. How did you end up there?

I worked at the MGA from 2005 till 2013. I ended up at the MGA as I was working at a land-based casino and did some courses relative to online gaming during 2005 and had applied for the job with the Malta Regulatory hence the MGA.

What did you do in the MGA?

At the MGA, I worked in the licensing department, post licensing department and the Enforcement Department with the online gaming operators.

Is there any educational institution for such professionals in Malta?

Yes, there are few educational institutions related to gaming in Malta. For example, iGaming Academy.

COVID and safer gambling

Is a Maltese license a sub-license for a foreign operator?

There are two types of licenses in Malta. There is a B2B (business to business) license, which is a license for software companies and content providers. And there is a B2C (business to customers) license, which is a license for companies that operate providing services directly to their customers.

How much should you pay for a B2B or B2C license? Is there any difference between them?

There are MGA fees for setting up a company in Malta, compliance fees and some others. There are too many fees to list them all. The price depends on many factors. Let’s say there is a B2C company that wants to apply for the license. They need to incorporate the company in Malta, and set up a bank account in Malta. It will cost approximately 5 to 6 thousand euros. And then you can apply for the gaming license with the MGA which will cost around 10 thousand euros. And also, you have to take into account the fees for the consultancy and the capital for the company.

How much you should pay for consultancy services in Malta?

Consultancy usually costs not more than 10 thousand euros but then that depends on the type of igaming operation and the complexity involved.

Could you tell us how many licenses have been issued by the MGA? How many operators work under an MGA license?

There are 275 online gaming operators with a Maltese license.

How many licenses had been issued when you came to the MGA? Also what type, mostly sportsbooks or casinos?

At my time at the MGA, 200 of the 275 licenses had been issued and I believe more casino licenses were issued than sportsbook ones.

What do you think about the future, can this number of licenses increase in the coming years? What effect has Covid 19 had?

MGA took heed of all relevant developments and is constantly proposing adequate and proportionate measures. The MGA issued notices and directives to its licensees that, in accordance with the Commercial Communications Regulations to which they are subject, all commercial communications must be socially responsible, especially in the light of the current situation. Any direct or indirect reference to COVID-19 or any related circumstance would be considered to amount to a breach of this regulation. The MGA has also implemented the temporary measure of accepting all submissions relative to operator reporting and applications for new gaming licenses in soft copy.

Since the MGA is one of the most reputable regulators, I genuinely believe that due to the current COVID-19 lockdown, safer gambling has become more important than ever for the regulator. The lockdown proved to be a mentally and financially challenging situation for players, iGaming operators and anyone else involved in the industry, hence the same pandemic has led to heightened risks of gambling related harm.

Increasing safer gambling measures introduced by regulators with more monitoring and customer interventions, stepping up safer gambling messages and measures like promoting deposit limits, together with a tough crackdown on affiliates and calling out rogue black-market operators are the things that will make a difference during and after the pandemic period.

Do some other jurisdictions have more operators with their licenses?

Malta and Germany are the two top jurisdictions that operate in Europe.

What are the most popular EU countries to operate in with the Maltese license?

These are the Nordic countries and Germany.

Germany, Curaçao and AML

Many EU countries are trying to pass their own gambling laws. Will there still be the demand for the Maltese license in the future? What if I want to operate in Austria or another EU country?

In the past, a provider with a European Union license such as the licenses from the Malta Gaming Authority or Gibraltar could operate in Germany. Having said that, due to the rise in German players, the German government has set new stipulations that will really challenge online casinos.

The year 2020 saw the German Gaming Authority witness a massive increase in German player accounts with casino operators, and now wants to regulate the market themselves by July 2021. It will require operators to hold a German license with a uniform, countrywide regulatory catalogue. With the new German online license, table games and live casinos will be no more, as these will be reserved for land-based casinos who have their own licenses. Existing online casinos that want to obtain the German license are supposed to stop offering table games and live gaming.

Subsequently, casinos that ban table games from their game range, are more likely to receive the new license in July 2021.

Furthermore, gambling websites with a German license will not be called casinos anymore and will carry the terms "Spielbank” or “Spielhalle” which are synonyms for the word casino. The change in terms is an attempt to give the impression that the user will be entering an arcade-like gaming experience rather than a gambling site.

The big question now is how Germany will react to operators with the Curaçao license. Currently it seems they have an advantage over the MGA license, but the Netherlands applied financial pressure on the local government. Last month the Dutch government announced that it had reached an agreement with its Curaçao counterparts regarding “measures and structural reforms” intended to make the country financially stable.

Do you think that Curaçao offshore licenses may really be prohibited soon?

Many people chose a Curaçao gaming license because the process is quick, the license is cheap, and the taxes are minimal. However, a Curaçao gaming license does have its drawbacks. The main drawback is that the Curaçao gaming license suffers from a bad reputation. The licensing standards in Curaçao are weak, meaning that almost anyone can get a gaming license. Because the cost of a license is cheap, taxes are low, and the licensing procedure is quick the licence lacks credibility, but there things are the advantage of a Curaçao license for many.

Because of Curaçao’s relative lack of gambling oversight, many countries in Europe and North America prohibit Curaçao-licensed casinos from being accessed by their citizens. This greatly restricts the market of such casinos. Similarly, banks are hesitant to open accounts for Curaçao casinos. Curaçao also does not help players resolve disputes with its casinos. As a result, Curaçao casinos can sometimes steal players’ money and disappear. Furthermore, in Curaçao, there is no regulated time frame for when casinos must pay out winnings and players can find themselves waiting months to be paid.

Can you compare the regulations of Curaçao and Malta?

It’s much stricter in Malta. In Curaçao only due diligence on the company owners and ultimate beneficial owners is done. In Malta apart from that, MGA also checks compliance and all the operations.

What can you say about the opinion that Maltese regulator is not very harsh with operators in case they break the rules of other countries or even break a law?

It depends on what kind of regulation or a law is broken. For example, Malta is very restrictive on player protection and anti-money laundering, which is a very serious thing. The fines can go up to 1-2 million euros.

Has money laundering been a huge problem in the past? Does it remain the same now? Why are the MGA so serious with it?

As a European Union member state, Malta has implemented all EU Directives regulating the prevention of money laundering. Furthermore, Malta is part of MONEYVAL (the Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures formerly PC-R-EV), established in September 1997 by the Committee of Ministers of the Council of Europe to conduct self- and mutual- assessment exercises of the anti-money laundering measures implemented in Council of Europe countries.

Malta is not listed in any international blacklisted countries which are likely to be used for money laundering activities. Malta actively participates in initiatives adopted at international levels such as by the EU Committee on the Prevention of Money Laundering and Terrorist Financing, the MONEYVAL Committee of the Council of Europe, the Financial Action Task Force against money laundering and the OECD.

The principal sources of Maltese law on money laundering as a criminal activity and the prevention thereof are two statutory instruments, namely the Prevention of Money Laundering Act (Cap. 373 of the Laws of Malta), augmenting other provisions found in the Criminal Code (Cap. 9 of the Laws of Malta), and the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR S.L. 373.01). Furthermore, subject persons which according to legislation means “any person required to maintain internal reporting procedures and to report transactions suspected to involve money laundering or funding of terrorism” are also required to comply with the detailed Sectoral Implementing Procedures on the Prevention of Money Laundering and Funding of Terrorism published by the Financial Intelligence Analysis Unit (FIAU) in conjunction with the Malta Gaming Authority (MGA).

When did Malta start focusing on Anti Money Laundering (AML) cases?

Since 1989, land-based casinos based in Malta started introducing specific AML procedures. This process continued with Malta implementing the provisions of Directive 2005/60/EC of the European Parliament and of the Council of Europe as of 26 October 2005 by means of the Prevention of Money Laundering and Funding of Terrorism Regulations (S.L. 373.01).

Under the provisions of Directive (EU) 2015/849 of the European Parliament and of the Council, on 20 May 2015, Malta introduced the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), 2017 (L.N. 372 of 2017) on the 1 January 2018. Subsequent to, all Business to Consumer (B2C) Gaming Operators, licensed to provide a service involving the wagering of a stake with monetary value in games of chance, including games of chance with an element of skill, via electronic means of distance communication upon request from the recipient of said services, with the opportunity to win prizes of money or money’s worth, have become ‘subject persons’.

With the current obligations, gaming operators are required to apply a risk-based approach (RBA) with their on-going business which is a core foundation of the 4th Anti-Money Laundering Directive and thus requires ‘subject persons’ to conduct and document a money laundering (ML), terrorist financing (TF) business risk assessment. Gaming operators are also bound to appoint a money laundering reporting officer (MLRO) of sufficient seniority whose main responsibility is to consider any internal reports of unusual or suspicious transactions and, where necessary, follow up the same by filing a STR with the FIAU. Furthermore, the Directive provides that licensees are to apply CDD measures ‘upon the collection of winnings, the wagering of stakes, or both, when carrying out transactions amounting to EUR 2000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked’.

How big is the anti-money laundering department? How many people work there?

There are 10 people working in the department. There is also a financial intelligence unit that helps MGA to check iGaming operators.

Do you know some cases with the department involved? How often do they have to revoke a license?

It happened a lot last year. And there were fines issued. For example, Vivaro Ltd violated 10 provisions of the law and it was fined for more than 700,000 Euros. The operators have recently been taking such things seriously. MGA is harsh on everything, they check compliance, player protection, safeguards of the operations and players. In 2020 MGA forced 15 enforcement actions including 12 cancellations of authorization.

Proficient Maltese regulation

EGBA’s Ekaterina Hartmann told us that many people consider the MGA to not the best regulator, but the reality is that it is the best in Europe, would you agree? Why?

Most of the countries that do new regulations in gaming mostly copy the Maltese regulations and use them as the base for their own regulations. Malta was the first European country that issued the remote gaming regulations in 2005.

Comparing the Maltese regulations with the ones of the other European countries, which are copied from the Maltese, according to what you have said, what can you say about those regulations?

They do not copy, they’d rather use it as a base for their regulations. The regulations and legislations of the MGA are quite proficient and they have been used for the last couple of years for the guest online gaming operators, like Betsson, Betfair, Betvictor etc.

Can you compare the MGA with the UKGC or other regulators? What is the most important thing for the regulations to focus on?

Malta bases its fines and regulations more on compliance and anti-money laundering. UKGC bases them on player protection and some AML too. I think that the most important thing for the European Union are the anti-money laundering regulations. Because they cover both best player practices and the best player protection.

Where will all the regulations move in the foreseeable future?

The regulators should be in harmony with the EU law, because the EU law regarding anti-money laundering is a general law and all the regulators should follow it. Like it or not all the regulators should follow it in every country.

How are the MGA regulations managed at the EU level? Do they have some connections with Brussels?

AML and EU laws are issued and they’re public and they should be followed, because they’re issued upon every country which is a member of the EU.

Is it hard to be a compliance officer in Malta? What kind of problems do you usually have to resolve?

If you have some experience it’s not very hard, because you know the regulations and you can make iGaming operators follow the regulations. The main problem is in having all the necessary procedures written down on paper and implementing them in the system, making them work. You have to connect and get the ideas, get the compliance issues from various departments. And many things are difficult to implement because there are business issues and business priorities.

How much does an operator have to spend to meet all the MGA requirements?

It depends from case to case because there are a lot of requirements. If you operate a website, there’s a domain, and if you use this domain for the betting operations, you need to have an experienced team to comply with all the regulations with the help of a consultant like me.

As an operator what can I do, what is not allowed? What are the restrictions?

There is a check list from the MGA, of the things that are allowed and not. You can compare it with your operations to see if they comply with the check list. For example, such things may cover player registration, pay outs, withdrawals, responsible gaming etc.

From your 16 years experience, what can you say about development of the system?

MGA got better. The rules changed in August 2018 and it simplified the MGA regulations, which is why only two types of licenses are issued now (B2C and B2B) and it is a more simplified process for a gaming operator.

What do you think about the Maltese regulation and legislation in future?

Malta is developing other regulations related to gaming and gambling which may include cryptocurrency within iGaming regulations, so companies could use the cryptocurrencies for the operations. It will attract more operators towards Malta. Now only 6-10 percent of the major gaming operators use cryptocurrencies.

What is betting for you?

I bet on sports which I find fun. It’s fun as long as it is responsible. As long as you know your limits, how much you can spend and lose, it should not be a problem. I’ve also gambled in casinos before, but I like sports betting more. I like “long list” accumulators with 8 events. I mainly like betting on football.