“It could truly hurt the country”: Industry reaction to Malta’s move to protect MGA-licensed firms

With approval direct from the President, Malta has enshrined into law a new addition to its Gaming Act to protect Malta Gaming Authority-licensed (MGA) firms from facing litigation in foreign markets.

The bold move will, in theory, protect companies from legal action from foreign bodies should the alleged offence remain legal under Maltese regulations.

Additionally, it also allows courts to refuse enforcement in Malta of any foreign decision.

The addition of the caveat to the Gaming Act has already piqued interest from across Europe, with the German regulator, the GGL, confirming it was monitoring the situation.

The new measure, which Malta bases on EU law to offer services across the trading bloc, will be met with furore from locally licensed markets.

The MGA licence defence has been used in Norway by Kindred and in Austria by Flutter and 888.

However, regulators and lawyers in those markets have challenged the legality of the situation.

In fact, in Norway, after the Borgarting Court of Appeal rejected Kindred’s appeal to operate in the market via its MGA-licensed Trannel subsidiary, the regulator was bullish in its comments.

Atle Hamar, Norwegian Lottery Authority director, said: “We are very satisfied with the judgement from the Court of Appeal. It shows that large international gaming companies must adhere to Norwegian law and stop offering illegal gambling aimed at Norwegian players.”

Speaking to EGR, Stefan Bohar of AdvoFin, who has been involved in claims for damages for Austrian customers against the likes of 888, said the move could prove to be costly for Malta.

Bohar said: “The new law is now meant to define public policy in a way, that enforcements against gambling providers licensed in Malta are made impossible. I believe that the law will likely lead to the European Commission launching infringement proceedings against Malta and/or a decision by the ECJ, which will state, that the law is not compatible with European law (which it evidently is) and therefore is void.

“This whole issue could cost a lot of money in terms of legal fights or even lead to fines against the country. I don’t see where this is going. It could truly hurt the country.

“Moreover, the European Court of Justice have discussed the matter of the Austrian Gambling law multiple times and it is evident, that based on the numerous judgements of the ECJ, there is no public policy ground to deny the enforcement,” he added.

In Sweden, which is also set to introduce local licences for B2B firms, BOS general secretary Gustaf Hoffstedt said the debate could be quashed by the EU also immediately.

He said: “I understand Malta’s frustration with the gambling legislation of individual member states, which not infrequently runs counter to free movement of goods and services between EU member states.

“Having said that, I still think this is an unfortunate development. In 2017, the European Commission announced that it was closing all infringement cases in gambling matters against member states, and that it would not pursue any new cases.

“Thus, the field was open from individual member states to violate the free movement and EU law in the knowledge that such behaviour will never have any legal consequences. I prefer every day of the week that the European Commission takes up gambling-related infringement cases again and thus upholds EU law, rather than Malta or any other jurisdiction takes steps to protect themselves in the absence of EU law enforcement.”