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Welcoming environment lures gambling sites to seek licensing

Article - January 16, 2015

Regulatory changes to Europe’s online gaming industry are providing challenges but also opportunities to Malta’s flourishing position in the sector on the international stage, and thereby attracting myriad companies such as Betsson and Mr Green

The Mediterranean nation has emerged as one of the world’s leading authorities of online gaming and companies have flocked to the country to make the most of an attractive regulatory framework as well as a skilled workforce and favourable tax incentive schemes.

Two companies that have done just that are Mr Green and Betsson, which have both located themselves in Malta to make the most of its pan-European gaming licence. However, as the growth of gaming online has boomed, some European countries are bringing in new regulatory systems, including the UK, which introduced a bill in November to tax foreign players heavily.

Such moves are leading operators to look at the expertise available in Malta, such as iGaming outfit Mr Green. The company’s CEO, Bo Wänghammar, believes operating in Malta provides numerous advantages but admits that the challenges facing the industry around regulation come from outside of the Mediterranean country.

“The real challenge is that it has been an unregulated market in Europe and now we are quickly moving into a situation where the online casino market is being regulated and taxed in most European markets,” he explains. “Also, the regulatory setup is different in every market. This brings a certain level of complexity, but we are welcoming regulation very much.”

Mr Green is currently in the process of applying for a temporary licence to operate in the UK, one of the continent’s major markets, with a full permit to follow later. It’s a key part of Mr Wänghammar’s strategy at Mr Green, as the firm seeks to stay ahead in the competitive world of online gaming and adapt to new trends and platforms.

“Mobile use for gambling or gaming has increased dramatically,” Mr Wänghammar explains. “Two to three years ago, only about 3-4 per cent of all players used a mobile device when playing online casino. We believe that the mobile share will soon be massive. In our business plan we have mobile in the forefront of everything we do.”

A similar trend has emerged at Betsson, which has experienced rapid growth since opening its first office in Malta in 2005. The company now has 650 employees and its CEO, Ulrik Bengtsson, says mobile is helping bolster revenues and is set to drive future profits.

“A lot of our game services are mobile only, and the mobile penetration of the company has grown dramatically from less than 10 per cent a few years ago to 24 per cent of our total revenues,” he explains.

Mr Bengtsson, whose company operates across Europe, is also set to be affected by the regulatory changes to the online gaming industry but believes commercial necessities will drive change.

“You have licence regimes like France for example, where it doesn’t make sense to apply, because the point of consumption tax is very high. I think that eventually, France will realise that you cannot run this in a way that is commercially not viable. Eventually the barriers will break down so they will have to re-establish or relicense that licence regime.”

Although Betsson has a provisional licence in the UK, the firm’s CEO says he is focusing on growth in other territories first, partly because the country’s iGaming industry is a mature market. Despite that, further investment is being made in the UK and a potential move could be made when the market allows.

The two firms are also part of iGaming’s bid to ensure that responsible gambling comes as an industry standard. Other gaming trends are also affecting the likes of Mr Green and Betsson, particularly the rapid uptake of online gambling by women. With bases in Malta, both companies are well placed to pick up on such developments and make the most of the expertise that the country has attracted.

“We were looking at the market and saw that there were no brands directed at women,” says Mr Wänghammar. “We found that very few sites had the understanding of what women wanted and what kind of environment women wanted to play casino in. So we started Garbo, and it is working really well. We are now tweaking the concept and looking at how to bring it to the international market.”

Such developments are helping to not only boost gaming companies’ profits but also propelling Malta’s own GDP. iGaming is the country’s second largest industry after tourism, and investments are being made across the ICT sector to position the nation for continued growth.

SmartCity Malta, a €220 million office development, will see a host of international technology firms enter the country and base their operations from the hub, providing a network of knowledge-based companies. Infrastructure is being developed to support companies offering the likes of a back-up Internet supply or electricity, while the country’s government hopes SmartCity will ramp up its reputation as the global hub of gaming.

“The country is going through a transformation, catering to an international audience and international business so fast that I think people living here five years ago have a totally different picture of Malta,” says Mr Wänghammar. It’s a view shared by Mr Bengtsson, who suggests the country could become a Silicon Valley of gaming.

“If you can understand what the skills set is that will be unique for the industry and if you can make sure that the people who have this skills set stay in Malta, then you have a very sustainable position,” says the CEO of Betsson.