Malta Create Brexit Headache For UK Gambling Operators

Few government-led moments have had the same sort of all-encompassing influence over society as we’re seeing from Brexit. The referendum to leave the European Union in 2016 was won thanks to claims from those promoting Leave that it would be the ‘easiest’ thing in the world to come up with a deal, only for the truth to prove to be anything but.

Whatever your personal take on the idea of getting out of the EU, it has gone on much longer than anyone envisioned three years ago and has dominated the political spectrum far longer than is healthy.

That has led to businesses from all corners of society struggling to know how things are going to work out, with the uncertainty surrounding whether we’re going to get a deal, leave without a deal or even leave at all causing most industries issues. That is especially the case in the gambling world, who depend on our relationship with the European Union for trade.

Many are based in areas such as Malta and the Malta Gaming Authority is now warning that there will be difficulties for UK companies wanting to hold a Maltese licence to offer services to the rest of Europe.  Bet365, as an example, have already move significant amounts of their operations from Gibraltar to Malta.

UK Companies Will Have To Make Changes

The Malta Gaming Authority has warned UK-based gambling operators that they will have to make sure that they’ve made some changes if they’re hoping to continue to hold a valid licence from the MGA moving forward. In order to both get and then maintain a licence from the Maltese authority companies will have to be established in the European Economic Area, something that the United Kingdom won’t be if the country crashes out without a deal.

In practice, that means that companies will have to move their operations out of the UK to a part of the world that will be part of the European Union in order to keep a Maltese licence. British gambling companies decided to base themselves in areas like Malta and Gibraltar a long time ago because of the tax breaks offered by the areas in comparison to remaining in the UK. Around 400 companies are registered in Malta, compared to fewer than 50 in Gibraltar.

Being based in Malta has previously offered UK companies the dual advantage of tax breaks as well as access to the European market, but that looks like it will not be an easy process in the wake of the UK failing to get a deal with the EU over Brexit. Whilst Boris Johnson’s self-imposed deadline of the 31st of October has now been removed because of an extension to Brexit negotiations until January 2020, there’s still a chance that the United Kingdom could fail to get a deal in the future and that will be problematic for gambling companies.

Maltese Gaming Authorisation Regulations

In Malta, the Gaming Authorisation Regulations say that a company must be established within the European Economic Area in order to hold one of the country’s gambling licences. It is stated so in regulation 10 of the legislation. Another regulation, number 22, also says that a licence holder in the EU that wasn’t licensed in Malta but that provides services there will need to apply for one of the country’s recognition licences. It is this licence type that will almost certainly cause UK operators problems.

Any operator that is either based in Malta and operates in the UK or else based in the United Kingdom but offers its services and supplies to the Maltese will be affected. Whilst they will have 12 months to establish their operations in the EEA, that doesn’t mean that it will be any less tricky to get things sorted. The MGA has put forward detailed plans for transitional measures that are intended to ensure that regulatory disruption is avoided but, as with pretty much everything else around Brexit, it is a complicated matter.

The Department for Digital, Culture, Media and Sport has been issuing guidance for gambling companies to help them prepare for a no deal Brexit as well as possible, including making sure that employees can have visas to work and can apply for the EU Settlement Scheme. There’s also been an acceptance that any licence that has been submitted prior to Brexit occurring will be honoured for 12 months, but that will only result in kicking the can down the road as it will still need to be sorted after that period has run out.

The affect on Gibraltar specifically is already being felt, with big worries on the peninsula that it may lose one of its biggest revenue earners to Malta.

What It Means For Gambling Companies

The answer to this question isn’t an easy one to give. Brexit is, to put it simply, something of a mess. The Maltese Gaming Authority has said that it will still be willing to recognise documentation that has been issues to British standards, such as certificates for games and random number generators, but that is just a scratch on the surface of the complications that will be brought about by the UK leaving the European Union without a deal. Companies may well be permitted to carry out key functions out of offices in the United Kingdom without penalty, but that is akin to putting a sticking plaster over a gaping wound.

One of the biggest issues for the gambling industry is the uncertainty that continues to dog Brexit. Even now an extension has been granted until January, but what will happen at that point remains to be seen. The matter has been complicated further by the call for a general election in December, meaning that we don’t even know which political party or parties will be in government come January, let alone what their stance on Brexit will be. That is compounded even more by the fact that the form of Brexit can vary wildly depending on the manner of the UK’s exit.

All told, it’s the complications and the unknowns that will cause as much trouble and difficulty for the betting industry as any problems with the Malta Gaming Authority and their regulations.