Over the past decade, Malta has established itself as a leader within the gaming industry through its efforts to accommodate the latest technologies as well as create an environment which fosters innovation. This has been particularly evident over the past year, where Malta took the bold step of introducing a new Gaming Law.
In the very recent past, iGaming however, seems to be only one of the IT and ICT innovative industries that is making headlines and growing rapidly in Malta, considering that blockchain and AI are at the forefront of Malta’s push towards it becoming a true ICT and IT hub.
Has Malta truly become the Silicon Valley of Europe? And can it truly be considered a tech hub?
Malta has always tried to place itself at the forefront of new niches especially in the IT and ICT sectors. Fourteen years ago, Malta enacted its remote gaming regulations, which set the tone of the growth within the IT and ICT industries. Thus, resulting in a decade of success crowed by Malta becoming the largest licensing jurisdiction in Europe.
This year was a particularly important and historical one in the context of Malta becoming an ICT and IT catalyst, witnessing developments that have catapulted the country to new heights. Indeed, in July, Malta made history when it enacted the world’s first comprehensive distributed ledger technology (DLT) legislation regulating blockchain (and other DLT) based businesses, their service providers, cryptocurrencies and initial coin offerings.
Just a month after, in August 2018, Malta revamped its iGaming legislative framework, reflecting the ever-evolving technologies and requirements, providing a new set of rules to future proof its iGaming industry. In November it was announced that Malta shall be working on a national strategy to position the island at the forefront of Artificial Intelligence (AI) and the Internet of Things (IoT).
While we may not have become a ‘traditional’ Silicon Valley as such, there is definitely a lot happening. Indeed, these rapid changes are expected to impact different economic sectors in Malta and my transform current job roles.
As a seasoned lawyer who has experienced the growth in this pro-business environment, why did the gaming industry flourish so much and why does it keep attracting foreign investor gaming companies?
Having worked within the gaming industry for over 15 years, I have personally experienced the changes that have been made to the gaming laws over the years, as well as the implications such changes have had on consumers and operators.
I believe that the gaming industry has seen continuous success in Malta because of the avant-garde approach adopted within a delicate industry often seen as high-risk. Malta was able to understand the complexity of the industry while nonetheless promoting its further development by introducing numerous initiatives and ensuring that the laws in place are future-proof.
Over the years the legislative and policy changes undertaken made the regime more robust while not necessarily and at all times fulfilling the operators’ wishes. Malta did not want to be loose – it wanted to provide a solid protective legal framework while facilitating the setting up of operations.
Indeed, the approach and developments were always mainly concerned with establishing a balance between two opposing needs: the optimum protection for players whilst upholding a regulatory solution for operators. It is this open but cautious attitude that, I believe, has brought about an average of a 100 new applications per year within the gaming sector, a significant accomplishment for Malta.
This is evident also in the way the Malta Gaming Authority is dealing with the use of cryptocurrencies and DLTs in gaming. The MGA did not jump into allowing immediately operators to use DLT systems or accepting cryptocurrencies from players, like some other jurisdictions did. Instead it launched a testing environment, allowing it to weigh the situation and decide accordingly.
It is hoped and expected this is done thoroughly and swiftly for Malta to keep being relevant in this space.
In your opinion how is blockchain disrupting the gaming industry?
As the DLT industry develops and its application in various businesses expands, for game developers and gaming operators, the adoption of DLT may become a necessity. The nature of iGaming lends itself to rapid adoption of DLT and virtual currencies. Online gaming operators tend to be tech-savvy entities who already have experience with the issuance of what may be considered digital assets, such as in-game tokens or credits. For gaming companies, making the shift to DLT and especially cryptocurrencies should not be as disruptive but possibly a natural transition.
Already as of now, one can identify a number of aspects that may be impacted, or disrupted by DLT and perhaps in not-so-distant a future.
Cryptocurrencies may be used as means of payment – gaming operators have already showed elevated interest in being allowed to accept cryptocurrencies as payment from their players. Games may start to be fully or partially hosted on a DLT environment possibly for transparency and to prove the fairness of the games. DLT systems can facilitate KYC procedures although reconciliating the immutable nature of DLT with the protection of players’ privacy may pose challenges. Smart contracts may start to be used for the execution of gaming transactions possibly to better ensure that once a bet is lost or won, the appropriate pay-outs are carried out in accordance with the pre-determined conditions of the smart contract. This would possibly create greater trust and transparency in remote gambling operators and possibly reduce situations of complaints by players.
How can Malta remain sustainable as a tech hub when competing with bigger countries?
Indeed, it may not be the size but the ethic: the agility to be able to adapt to change, the ability to recognise an opportunity before others and the promptness to make things happen fast. Malta’s size and ethic may indeed be a key to its success – being a small country may mean that things can be done faster. It may also mean that the country must be on the ball and invent and re-invent itself continuously to remain relevant, despite its size.
Since time immemorial, Malta seems to have managed to do this. The country seems to be putting plan to action even now by creating numerous initiatives to further attract investors to its shores. It has introduced scholarships for students to obtain a Masters’ and Doctorate degree in DLTs and blockchain at the University of Malta. It has also launched the island’s vision for the future development of AI with the aim of making Malta one of the top 10 countries in the world with an AI policy. By envisaging a future for both academia and start up companies in relation to AI, Malta is working towards adopting a holistic approach towards the industry.
The latest initiative Malta has adopted is the further recognition of eSports as a growing niche, giving additional importance to the competitive and professional gaming community in Malta.
Silvana Zammit is Partner for Gaming, ICT and Fintech at Chetcuti Cauchi Advocates. Dr Zammit is a gaming law specialist advising on all aspects relating to the industry, particularly business start-ups requiring a licence for their operation. Working closely with the authorities, Dr Zammit provides tailor-made advice for the obtainment and maintenance of licences.
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