The gaming industry risked shrinking by as much as four per cent over the coming decade had measures to boost the island’s competitiveness not been taken, an economist has found.

Gordon Cordina, who conducted a study on behalf of the Malta Gaming Authority, told the Times of Malta the island had started losing its competitive edge as a number of other countries were offering similar conditions for companies considering moving their operations to the EU.

“We have seen rapid growth in the gaming sector from its inception to today,” Dr Cordina noted.

“This is partially thanks to the favourable licensing we offered companies. But if the current international trends of countries offering similar incentives continued and we did not react, then the local sector might have started to suffer.”

He was quick to add that his forecast was an economic exercise, which tended to be capricious as it depended on a number of different factors remaining unchanged.

The future of local gaming was hardly looking bleak, he said.

Dr Cordina believes that once a set of changes are made, the sector’s value added will grow by about 22 per cent between this year and 2026.

That translates into an additional €230 million annually.

The gaming watchdog (MGA) this week unveiled plans for a comprehensive legislative overhaul set to open Malta up to a new gaming market and “drastically improve the island’s competitiveness”.

Its executive chairman, Joe Cuschieri, said the proposed Gaming Act, currently in white paper form, would bring together different gaming-related laws and subsidiary regulations and directives into one umbrella legislation.

It would also empower the authority to oversee the sector in the same way the Malta Financial Services Authority regulates the financial services industry, granting it better enforcement and oversight.

More importantly, the reform is targeting a relatively new niche market – business-to-business gaming.

The main offer on the table? A gaming tax exemption to encourage companies to consider setting up shop on the island.

Dr Cordina said the new market, coupled with the growth expected from the other changes, could result in an additional 1,400 jobs. The industry currently employs just under 7,000 people.

Launching the white paper, Digital Economy Parliamentary Secretary Silvio Schembri yesterday said that a number of public consultations and research initiatives had been conducted before the proposed law was drafted.

“The new legal framework will create an environment where consumer protection, compliance and best practices are at heart,” he said, adding that the plan was to make the sector “future proof”.

Mr Schembri said the government knew it had to act fast to enable Malta to be at the forefront of the global gaming economy. A five-week consultation period will be allowed before the draft law is taken to Parliament.

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Main legal changes

■ Replacing the current multi-licence system with just two forms of licence – business-to-consumer and business-to-business.

■ Strengthening player protection framework by focusing on the authority’s mediatory role through a player support unit.

■ Introducing a new and more efficient process for criminal and administrative justice. A new distinction between criminal and administrative offences.

■ Introducing the concept of administration to protect a business in distress, if necessary to assist in the winding down of a business or operation.

■ Introducing an automated reporting system.

■ Exempting B2B licensees from gaming tax, thus increasing Malta’s competitiveness as a hub for these sectors.

■ Streamlining taxation into one flow.

■ Bolstering the gaming authority’s role in the fight against manipulation of sports competitions by introducing new obligations on operators to monitor sports betting and report suspicious bets.

Fact box

How important is the gaming sector to the Maltese economy?

■ Gaming contributes around €1.1 billion in value added to the economy every year.

■ In 2013, a survey commissioned by the Malta Remote Gaming Council and carried out by Deloitte had shown the economy had benefited from €22 million paid in gaming taxes and €45 million in income tax and other contributions and taxes by remote gaming employees alone.

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