How has the iGaming sphere contributed to Malta’s success?
The gaming sphere in Malta has flourished over the past 13 years, making us the European hub for such operators. Today, the gaming industry contributes to over 11 per cent of Malta’s overall GDP. Industry stakeholders and decision makers understand its significance to the economy as a whole, resulting in a strong commitment to this sector.
Reports have shown that employment in the gaming industry in Malta rose by 31 per cent during the first half of 2016. Online gambling’s Gross Gaming Revenue (GGR – stakes minus winnings) is expected to rise from €16.5 billion in 2015 to €24.9 billion in 2020.
Malta has been able to capitalise on its EU first mover advantage, and has continued to be proactive in developing its regulatory framework to sustain the island’s competitive edge at the forefront of the gaming sphere. Today, Malta hosts approximately 270 gaming operators, including the likes of Kindred, Betsson, Tipico, Paddypower Betfair and Mr Green, with a workforce of over 9,000 multinational industry professionals.
Inevitably, the spill-over benefits that are reaped from a booming industry affects the entire ecosystem.
How is this growth affecting the audit, tax and advisory sector?
As the complexities of compliance become ever more present and consolidation continues to take precedence, Malta’s advantage of having a robust ecosystem with stakeholders to support innovation and digital entities, will continue to support these entities, whether they are starting up, financing or aligning themselves for an IPO. Service providers will continue to guide and lead companies to further success.
As KPMG in Malta, what growth within Malta are you predicting in the short- to medium-term?
The latest figures available from the Malta Gaming Authority indicate that the number of customer accounts held by remote gaming operators in Malta is growing at a quick rate, as is the number of employees working within the industry. This is a sign of strong performance.
Additionally, healthy economic growth of between 1.7 and 1.9 per cent (European Commission Spring 2017 Forecast) is forecasted for the European Union and Eurozone over the next two years, in line with the global recovery being experienced. Growth within key markets for remote gaming operators augurs well for the future of this industry.
In terms of human resources, what skills are currently in need?
As a result of our growth within the digital industries, there is an acknowledged shortage of professionals such as accountants and specialised lawyers, but in particular software developers. The current number of developers, in spite of the increased churn rates coming straight out of local educational institutes, is not enough to satisfy the demand across industries in Malta, particularly in the gaming industry.
On the remote gaming front, the levels of increased competition and an ongoing requirement to remain compliant, has heightened the demand for such talent significantly. As a result of this shortage, online gambling operators tend to dilute or indeed outsource part of their development commitments to the likes of Romania, Poland, Latvia and Ukraine. In turn, salaries, particularly within this line of expertise, are soaring, which are being felt across industries.
This also affects other fledgling industries, such as the videos games sphere on the island. Although a number of highly reputable development studios have moved to our shores over recent years, concerns persist – unless the demand for operators reaches an equilibrium, then staff may be lost to the gambling sphere, with the carrot of higher salaries. Until we successfully manage this demand, it will be more difficult to attract further prestigious developers to our waters.
Is the education sector catering for these needs?
Both private and public institutes are coming together to work alongside the government to roll out initiatives to cope with the increased levels of demand. The government recognises this is an area that must be addressed to retain our growth levels within gaming, and entities such as Gaming Malta are helping to turn ideas into viable solutions.
Malta is currently testing the Blockchain waters. What potential does this hold for the local economy?
The exploration of applying Blockchain technology to the local economy is still in its early stages. The technology has the potential to be groundbreaking, resulting in increased efficiency and reduced costs for businesses. Blockchain has the potential to strengthen the audit trail for data, enhance regulatory compliance, and open the door for new forms of innovative businesses and employment opportunities.
The range of possible applications for Blockchain technology is extremely vast, ranging from financial services, to payment solutions, gaming, capital markets and much more. The technology has tremendous potential both in service delivery, implying the redefinition and creation of new jobs, and in the type of end user services, potentially resulting in customer welfare gains.
There is an acknowledged shortage of professionals such as accountants and specialised lawyers, but in particular software developers
However, it is important to understand and be aware of the opportunities, as well as challenges and limitations, presented by this new technology.
Malta is also pitching itself as a startup hub in the Mediterranean. What added value would this give the local economy?
Despite Malta’s geographical size, our startup community is growing, and fast, making our island a serious contender to become a regional and global leader in tech and innovation.
Malta’s tech scene is flourishing, particularly within the iGaming and FinTech sectors, as well as non-regulated industries. In recent years, the Maltese economic landscape has pivoted towards a digital viewpoint, which has had a profound impact on the Maltese economy. The iGaming industry has attracted thousands of young foreign entrepreneurs to the island which in turn has up-skilled the economy with new digital skill sets in areas such as programming, business intelligence, data analytics, digital marketing and design; which inevitably has driven investment into other digital sectors. Blockchain is another area that is gaining clout across the globe, and local rollout strategies are currently underway in a bid to build up the necessary foundations locally.
Malta has much to offer as a country. Located in the Mediterranean, it has an excellent climate, rich history and culture and is one of the few countries in the EU to use English as a first language. The accessibility of regulators and government entities are features which boost the country’s appeal.
While these features all contribute to Malta’s charm to startups, the cost benefits, test-bed appeal and grants that Malta can offer to budding entrepreneurs help put Malta on the map. The next aspect should focus on how Malta can sieve through the wealth of disruptive tech to be in a position to carve out and identify technological advancements that can be capitalised and supported through our unique ecosystem.
Support for Malta’s startup community is growing at an encouraging pace. Over recent years, Malta has taken many positive steps towards creating an entrepreneurial ecosystem, whereby startups can thrive and team up with investors and venture capitalists.
In recent months, Malta has seen the creation of incubators, shared working spaces, the introduction of seed-financing schemes, as well as the set-up of lobby groups organising informal get-togethers to share good practice and to pave the way for further governmental support. Malta has recognised that it needs to concoct the right set of ingredients to pave the way for entrepreneurial commercial success.
Organisations such as KPMG, the MFSA, MBB, MCA, MIC, MGA, MITA, Gaming Malta and Malta Enterprise are all playing key roles in shaping Malta’s future and supportive culture within this sphere. In conjunction to this support, local events, including The Entrepreneur Investor Summit, Zest, Malta Innovation Summit, Startup weekend and Ideasfrommalta, are all helping to firmly put Malta on the map and reach international recognition among stakeholders.
What is the Silicon Valletta initiative?
In 2016, the Silicon Valletta initiative, a private organisation bringing together the most influential CEOs in the Maltese digital ecosystem, was forged. SV’s strategic goals are to raise awareness of the digital sector, connect Malta’s emerging startup scene with the government and investment sectors, and bring the CEOs of Maltese-based digital businesses together.
The scope of Silicon Valletta is to build stronger relationships among professionals and startup entrepreneurs based in Malta, as well as provide opportunities for its members to socialise, learn from each other and develop each other’s ideas. Silicon Valletta is supported by KPMG and the MCA and was set up to represent the founders and investors on the island that are challenging the status quo, alongside the need to lobby for support and brand the island’s many attractions.
Its drive is to ensure that Malta is not just a consumer of the technological revolution, but a contributor. This requires the creation of an ideal environment for such intellectual property to be created, as well as the celebration of the jurisdiction showcasing both potential and foundation of our strengths.
Russell Mifsud is a senior manager at KPMG and specialises in the iGaming industry and digital space for the firm in Malta. He also forms part of a core group of professionals that specialise in gaming within the KPMG network globally. He works closely with the audit, tax and advisory teams locally and internationally in order to assist with identifying risks and opportunities, with a view to add value to clientele across the network.
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