Tighter controls, particularly anti-money laundering regulations, are being blamed for the “turbulent” period being experienced by the gaming industry in Malta, according to one of the country’s top five companies. 

“We are becoming like a bank and need to do proper anti-money laundering due diligence as we are handling customers’ funds,” Justin Psaila, chief financial officer of GiG (Gaming Innovation Group, Inc) told Times of Malta.

Such screening may even involve assurances on the source of the funds being gambled whenever the amount exceeds a stipulated level.

Mr Psaila was asked for his reaction following speculation that the company, which has around 400 of its 650 employees at its lavish St George's Bay offices in Malta, would be forced to downsize its workforce.

Owned by an American mother company, GiG’s headquarters are located in Malta but it also operates in the UK, Sweden, Spain and Croatia. It is also listed on the Norwegian and Swedish stock exchange.

While strenuously denying there have been any layoffs and insisting that the company had no intention to leave Malta, Mr Psaila acknowledged that major decisions could be looming in the wake of an ongoing “strategic review”.

This process, which was meant to “unlock the company’s full potential”, was launched in the wake of the appointment of Richard Brown as CEO in November.

“We continually assess the situation to see if we have the right number of head count. Currently we believe we have. We have around 35 open roles in Malta for which there is ongoing recruiting, but if we keep the current strategy, I don’t see any major outflows and inflows except for the normal turnover. However, I don’t know what the future holds until we know what this strategic review means.”

Industry will be back on its feet. Malta is still a very good place

The company’s finances shrunk by €7.1 million in 2019, down to €30.2 million. By March 2020, the company has to meet its short-term deadline to refinance a €28 million bond issue on the NASDAQ stock exchange.

GiG is blaming this bumpy ride on recent developments in Sweden, saying that if this part of the operations had to be excluded from the equation, the company would have reached their 2019 financial targets.

“There is some short-term turbulence that all the industry is going through, not just GiG. Most of our competitors are also listed, and one can easily see the decline, unfortunately,” he said.

He noted that from the start of last year, Sweden stepped up its gaming controls, meaning they could no longer operate through their international licence obtained from the Malta Gaming Authority.

While, on one hand, this meant companies having to pay tax in Sweden as well, it also resulted in new competition as land-based Swedish casinos ventured into the online sector.

“Regulation does hit you in the short term. Sweden hit us, but in the long run it is good because you get rid of the ‘black’ companies,” Mr Psaila said.

While not delving into details, the CFO acknowledged that the industry in recent years has increasingly come under the spotlight over concerns that it could be used as a front end for money laundering activities.

As a matter of fact, renowned global banks like HSBC refuse to accept gaming companies as they are deemed too risky. This has meant that gaming companies were fast becoming like banks in terms of anti-money laundering regime.

As much as depositing a sum of €50,000 at a bank will not go unnoticed as the account holder would have to disclose the source of the funds, the same is happening in the gaming industry whereby if a certain level of gambling is exceeded, the player must give a detailed account of their stream of revenue, he added.

Such checks may vary from producing the payslip, listing one’s assets or clients having to flag their politically-exposed status.

However, Mr Psaila insisted that ultimately this re-regulation would be in customers’ interest as it would raise standards.

“This is not something related to GiG but it concerns everyone. Everyone in the industry is struggling due to new regulations,” he said.

“In the long-term, this is good. Industry will be back on its feet. Malta is still a very good place.”

As for the ongoing political turmoil, the CFO warned that the longer this period of instability lasted the higher the risks for the gaming industry particularly for recruiting high-skilled foreign staff.

“Nobody would want to relocate to a country characterised by political instability, he warned.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.