The Malta Gaming Authority (MGA), the gambling regulator in Malta, announced it has decided to cancel Betago Limited’s authorization. Although the announcement came Thursday, the Authority explained that it is in effect as of January 8, 2024. The latest decision comes after the MGA uncovered that the operator breached the established gambling regulations in the country. Before the cancellation of the authorization, last year, Betago’s license was suspended. This suspension effectively stopped the operator from offering its gambling services to players online.

Now, considering the latest decision, the operator has been directed to settle all outstanding fees due to the MGA. Betago was given seven days to comply with this demand, effective from the day its authorization was canceled. Not unexpectedly, the MGA also directed the operator to refund all money due to legitimate players, confirming that such actions are in accordance with Malta’s Gaming Act, Chapter 583.

“The Malta Gaming Authority has decided to cancel the authorization awarded to Betago Limited, bearing reference numbers MGA/B2C/355/2016, effective as of 08 January 2024 in terms of regulation 10 (1) (a) with direct application of reg. 9 (1) (c), (d), (i), (l) and (m) and regulation 10 (1) (b) of the Gaming Compliance and Enforcement Regulations,“

reads a statement released by the MGA

The Operator Needs to Remove Any Reference to the MGA

To verify that the operator complied with the aforementioned requirements, the MGA confirmed that a back-end report along with the relevant bank statements must be provided within a seven-day period. This otherwise will enable the gambling regulator to ensure Betago has issued refunds to all of its players who still had funds in their accounts.

Unsurprisingly, Betago can no longer feature any reference to the MGA via its website. The gambling watchdog said the operator needs to “remove, with immediate effect, any reference to the Authority and the authorizations in accordance with article 51 of the Act.”

The tough action against Betago comes after recently, the MGA confirmed it suspended Rush Gaming’s license. Upon announcing the suspension, the Authority confirmed the operator is eligible to appeal the decision under Article 43 of the country’s Gambling Act.

Suspending the authorization awarded to Rush Gaming is effective from January 9, 2024. Per the suspension, the operator can no longer offer online gambling services. Yet, Rush Gaming needs to ensure its registered users have access to their accounts and proceed with refunds of all money due.

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The Malta Gaming Authority (MGA), whose purpose is to regulate gaming industry sectors by ensuring fair and transparent gaming, crime prevention, and the protection of minors and vulnerable players, has placed a Cancellation of Authorization number ‘MGA/ B2C/425/2017’ against Arabmillionaire Limited. 

The latter will need to notify its players of the new development and provide fund withdrawals to any current players, together with clear guidelines on the procedure. They will also need to send a transaction report to the MGA and settle an outstanding fee of €50,000 ($52,708) within five days from the date of receipt of their letter.

The Initial Notice, Filed in August 2022

The initial Notice of Cancellation was issued by the MGA on August 4, 2022, and offered the company 20 days to “show cause” as to why the regulator should not enforce the measure that was highlighted in the respective Notice, according to reg. 10 (2) (a) of the Gaming Compliance and Enforcement Regulations (S.L. 583.06).

Following the issuance of the Notice, Arabmillionaire and its consultants informed the MGA of the “major restructuring exercise” it was undergoing while requesting, among other things, a freezing of its license with the intent to finish and settle all outstanding problems.

Pursuant to these submissions, and in spite of the several different breaches that constituted grounds for authorization cancellation, the MGA decided to suspend the Arabmillionaire’s license on October 12, 2022, as a means of offering the company the chance to rectify its standing with them.

The MGA, whose 2022 report reflected on a troubled year, also informed Arabmillionaire they would initiate the cancellation of its license in case it would not remedy its breaches and settle all outstanding payments to both the MGA and its registered players while providing “full assurance” that it is capable of holding the authorization and operating under its terms. 

Arabmillionaire, Given “Ample Time” to Address the Issues

Arabmillionaire chose not to appeal the MGA’s license suspension decision. In spite of being offered “ample time” to tackle the breaches, the company did not “rectify its position and cooperate” with the MGA. 

The authority also explained that all its attempts to communicate with the company following November 2022 “have been rendered futile” and that their breaches never stopped. 

The MGA stated that, in addition to the payment of the outstanding license fee mentioned in their Notice, Arabmillionaire’s license fee for the year 2023 fell due on June 13, 2023, during the operative period of the license suspension. 

Accordingly, the MGA considers Arabmillionaire owns an additional amount of €25,000 ($26,350), totaling €50,000 ($52,708) in annual license fees for license periods starting June 13, 2022 and June 13, 2023, respectively.

The MGA also reserves the right to take additional measures to recover the outstanding dues from the company provided they would fail to “rectify accordingly” and also in case they would not settle all outstanding claims from all registered players.

In June, the authority announced it would push for the implementation of fresh legislation that would protect the country’s online gaming companies from global prosecution. 

At the start of the year, the same regulator brought significant changes to its Player Protection Directive, asking licensees to monitor harm-related markers. 

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The Malta Gaming Authority (MGA) has released its 2022 Annual Report and Financial Statements. The move and similar moves by government entities are widely seen as efforts to provide clarity of mission and transparency of operations.

In that light, Malta has been mostly successful throughout the years, at least in as far as the information provided is somewhat useful to potential license holders and consumers. However, the type of information and the depth to which activities are reported can leave a lot to be desired.

5,280 players requested assistance

While the number of player complaints is reported, the type and severity of potential violations are not reported in context nor are the results of any decisions related to specific disputes. Further, alternate dispute resolution is mandatory so it is assumed that only complaints that fail arbitration and that ADR service providers consider worthy to escalate are ever considered by the gaming authority.

As well, plans to change the law or even bills introduced to mdo so are rarely ever reported either on the website news section or in the periodic or annual reports until policy or law has changed such as when operators may have been aware of a comment period but players had no clue that the minimum theoretical return to player percentage (RTP) for MGA-regulated online slots would drop from 92% to 85%, ostensibly to bring it “into line” with the land-based sector.

More recently we had to learn from news outlets that follow such disputes that a bill had been introduced to the legislature which would modify the gambling act yet apply to all other European Union trade disputes absolving any Malta-registered company from responsibility to conform to EU trade law by escaping enforcement of judgments when a Maltese licensed online casino is sanctioned or fined by another EU member state.

While the previously mentioned and other information may be available in official government gazettes or press releases, in the spirit of transparency and consumer confidence it should at a minimum be linked to from the MGA website if not included in periodic and annual reports.

The topline numbers and a link to the financials and report can be found here (here).

A brief summary follows:

• 5,280 players requested assistance
• 28 compliance audits were conducted and 228 desktop reviews
• 25 licensees were subject to remediation and/or administrative measures
• 6 individuals and companies were deemed by the Fit & Proper Committee to not be up to the Authority’s probity standards due to various factors
• 41 gaming license applications were received during 2022. Thirty-one (31) licenses were issued
• 1,500+ criminal probity screening checks were undertaken
• 48 interviews with prospective Money Laundering Reporting Officers (MLRO) and key persons carrying out the AML/CFT function
• 9 Letters of Breach were issued following breaches of the Commercial Communications Regulations
• 85 responsible gaming-themed website checks were performed with 38 URLs found to have misleading information

In publishing the report, MGA CEO, Dr Carl Brincat said: “This report is testament to our collective efforts in promoting a fair and sustainable gaming ecosystem. Through proactive measures and leaner regulation processes, we strive to ensure a level playing field that nurtures innovation while safeguarding against any potential risks.

“As the global gaming landscape evolves, our role becomes even more critical. We embrace this responsibility with utmost determination, working tirelessly to stay ahead of emerging trends, technologies, and challenges. We remain steadfast in our pursuit of robust frameworks that inspire confidence, protect vulnerable individuals and render Malta the home for gaming operators of goodwill.”

Source: The MGA publishes its 2022 Annual Report and Financial Statements, Malta Gaming Authority News, June 2, 2023

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Former Malta Prime Minister Joseph Muscat is at the center of yet another scandal after a media report claims he has been given an €11,800 ($12,300) monthly consultancy contract from a company linked with the Dragonara casino boss.

Exotic Bird Company Used as a Front?

Muscat started receiving the lucrative monthly payments as part of a €141,600 ($151,500) annual consultancy contract with an exotic bird company owned by casino tycoon Johann Schembri just nine months after the property lease deal for the casino owned by Schembri was extended, reported Times of Malta.

Muscat, who had to step down as Prime Minister in January 2020, following allegations of protecting people involved with the murder of journalist Daphne Caruana Galizia in 2017, was responsible for overseeing the deal which slashed the annual ground rent payments and extended the property lease for the prime St Julian’s site by 64 years without a public tender, saving millions for the casino.

According to documents obtained by the media, in April 2020, just three months after Muscat resigned as Prime Minister and while still a member of the parliament, he began receiving monthly payments from Organicum, a company owned by Dragonara casino managing director and shareholder Johann Schembri.

Financial documents reveal that Organicum deals with breeding exotic birds and making organic produce, has biological assets worth €100,000 ($107,000), employs just two people, and has declared hundreds of thousands of losses in 2020 and 2021, raising concerns about Muscat’s lucrative consultancy contract.

Both Parties Deny Any Wrongdoings

Contacted for comments, the former prime minister denied any wrongdoings but refused to comment on the consultancy agreement, and instead, chose to attack the media for being “hell-bent on characterizing legitimate and documented work” he does “as in some way untoward.”

Schembri defended the consultancy contract, claiming that it is unrelated to the Dragonara casino deal and “any statement, suggestion or inference to the contrary is refuted as entirely untrue, incorrect and purely speculative” and that the company holding the casino concession, Dragonara Gaming Limited, “has never paid any consultancy fees to Dr. Joseph Muscat.”

Muscat is also involved in a corruption probe into another monthly consultancy contract worth €15,000 ($16,050) with a Swiss company, Accutor AG,  which was allegedly used as a front to pass on kickbacks from the acquisition deal for Vitals hospitals by Steward Healthcare Malta in 2018.

Casino tycoon Schembri is a major player in the gambling sector of the island country. Last year, his umbrella company, IZI Group, was awarded the running of the national lottery.

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An increase in the number of lawsuits levied abroad against Malta-based operators has prompted the government to consider introducing additional legal protections. The proposed amendment aims to shield businesses from potential liability arising from legal actions initiated in foreign jurisdictions. However, European lawyers heavily criticized the new measures, arguing Malta was trying to circumvent local courts.

Gaming Companies Will Have Another Layer of Protection

The proposed amendment is a response to growing concerns within the industry about the potential risks associated with cross-border legal actions against operators. By establishing clear guidelines and limitations, Malta aims to provide operators with greater regulatory certainty, enabling them to focus on growing their businesses and delivering safe and responsible gambling services.

Introducing such legislation would primarily benefit operators offering their services in Europe’s gray market, skirting local restrictions to provide an alternative to regulated companies. These operators often have significantly fewer restrictions and frequently draw the ire of local regulators. If the new bill passes, such businesses will operate with relative impunity.

The Court shall refuse recognition and, or enforcement in Malta of any foreign judgment and, or decision.

Malta Bill 55 Gaming Amendment

The bill also addresses the issue of “forum shopping,” wherein plaintiffs deliberately choose jurisdictions that may be more favorable to their claims, irrespective of the operator’s primary licensing jurisdiction. By setting explicit criteria for foreign jurisdiction enforcement, Malta intends to discourage such practices and promote a fair and balanced legal landscape for operators.

The Bill Can Obstruct EU Judiciaries

Malta’s decision to proceed with the legislation had an immediate impact abroad. Austrian and German lawyers have approached the European Commission, arguing Malta was attempting to obstruct European courts. If successful, the amendment will immediately interfere with enforcing past and present offenses, potentially nullifying several verdicts against Maltese operators.

Karim Weber and Benedikt Quarch represent clients engaged in legal battles against Maltese operators violating local regulations. If successful, the operators must reimburse the plaintiffs’ deposits and possibly suffer additional sanctions. According to the lawyers, the amendment would deprive EU citizens of their fundamental right to legal protection.

The government of Malta has no right to intervene in the independent arm of the judiciary…, especially when (it) has a vested biased interest totally in favor of gaming companies.

Lawyers Karim Weber and Benedikt Quarch

In 2021 Malta was put on FATF’s greylist for systemic regulatory and enforcement failings. Even though the country eventually appeased the financial watchdog through substantial reforms, corruption, and money laundering remain endemic issues that still plague the nation’s reputation. With tensions quickly rising, the European Commission should soon settle the matter and prevent potential escalation.

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Malta’s Parliament has introduced a bill that would allow the EU member nation’s courts to ignore enforcement of any foreign judgment. Such a far-reaching measure, seen by many as illegal in the European Union, includes decisions by courts outside of Malta concerning gaming law. In fact, the proposed change in Maltese law is included in the country’s Gaming Act (Amendment 55).

The decision to shake up EU courts is most likely a direct response to Germany and Austria’s recent legal actions against online gambling operators licensed and based in Malta but offering services in other EU countries – specifically Austria and Germany.

EU Law, a Complicated Framework of Balance

While the authorities in those and other countries assert and may have found or participated in creating case law that supports their position, nothing is ever quite as simple as it seems in such a sprawling union of member states, each accepting compromise and asserting their own interests.

Many countries have been able to win court cases allowing them to establish gaming monopolies within their own borders ut EU courts have often struggled to balance the right of the member state to protect its citizens (and that is often the only reason such exclusionary laws are allowed), and the rights of other member states to provide services across the whole of the Union in the spirit of free trade and against monopolization.

According to a report on G3 Newswire, the bill was first read into the record on April 24th, 2023. Austrian and German lawyers representing their respective countries say that Malta’s Bill 55 – “blatantly undermines European Rule of Law by blocking the fundamental rights of EU citizens and Residents”.

One of the three conflicting legal principles that may be up for further definition, subordination, or adjustment is states’ practicing a right to develop country-specific gaming legislation to protect nationals from harm – specifically criminality as defined by the state’s own laws.

While stated without reference by code, some observers have stated that regardless of the “offending entities” being licensed in a member state and providing the ordained free movement of goods and services, the right to protect citizens from harm trumps a fellow state’s right to free trade.

For context, europa.eu explains the principle like this: “One of the keystones of the European Union (EU) internal market is the principle of the free movement of goods – the creation and development of an area without internal borders, where there are no unjustified restrictions to trade between EU Member States.”

National Gaming Monopolies Exist with Free Trade

However, according to the law in Austria, only one entity is allowed to offer online gaming in the country with all other providers being illegal by internal definition. Austria’s gaming laws are fragmented, however, ultimately only the federal monopoly holder, Casinos Austria’s subsidiary “win2day” is recognized by the government as a legal provider.

Germany on the other hand game out of the gate shooting upon the launch of their nascent regulatory authority stating it would prosecute any and all “outside” providers not recognized and licensed in Germany.

Austrian lawyers have filed thousands of cases against outside operators over the years and have been awarded claims of more than €350m throughout the course of several decades. Cases from long ago are still being processed against operators, often as class actions. The Maltese bill would stop the collections of those and other claims were it to pass in Malta and be upheld in courts of the EU writ large.

Malta has spent decades advancing electronic offshore gambling as a critical part of its economy, giving weight to the continuance this long into the tenure of the European Union – however – the chances of Bill 55 amendment to stand so all-encompassing is doubtful. If written to only protect gaming operators its chances would be nil.

German and Austrian lawyers are asking the European Commission to stop the law from being fast-tracked and rely heavily in their arguments on European Union’s (EU) Brussels I Recast Regulation, which deals directly with the recognition and enforcement of foreign judgments inside the EU.

Source: New Bill to protect island’s igaming operators from EU claims, G3 Newswire, May 19, 2023

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FIAU conducted an investigation that uncovered a serious need for an overhaul in Casino Malta’s internal procedures, especially ones concerning risk assessment, but other administrative shortcomings were also heavily outlined in the resulting report.

Multiple Breaches Established in FIAU Investigation

According to information from Malta Today, FIAU’s investigation found that the Eden Leisure Gaming-owned St Julian’s casino systematically failed in enhanced due diligence processes, especially with identifiable high-risk players. The report has it that this was evident in around 28% of the cases that FIAU reviewed during its investigation.

Another reason for the substantial €229,000 (approximately $242,500) fine was that Casino Malta breached several other laws, in addition to established regulations on risk assessments. This means that FIAU’s investigation and administrative fee will most likely be followed by multiple follow-up directives, which can also have consequences for the establishment.

FIAU’s investigation also uncovered that in around 20% of the profiles reviewed, the players were assigned a low or medium risk rating. This was despite their exhibiting behavior that can be a flag for high risk of money laundering, such as the size of the transactions, for example. 10% of the reviewed profiles didn’t have a permanent address, and 6% had given incorrect foreign addresses.

Another serious deficiency was that the casino often relied on self-reported information about its customers’ occupation details, with around 12% of the profiles providing only basic information. The same approach was extended to establishing the source of funds checks, without which a casino’s risk assessment practices can’t be adequate.

Examples of the Casino’s Risk Assessment Deficiencies

Multiple examples of the casino’s breaches were made public. A Turkish company chief executive was allowed to gamble more than €1 million (more than $1.06 million) all in cash from eight different banks and was assigned a low-risk status. Another player gambled more than €2 million ($2.12 million) and lost almost half of that and his SOF check consisted of establishing that his funds were coming from a reputable bank.

FIAU said that this was not sufficient for establishing the source of funds and only served as information about the flow of funds. This is a drastically insufficient approach to the risk assessment process, and there were multiple other instances where the casino’s risk assessment and due diligence came up short of what is legally required.

A former politically exposed person (PEP) was allocated a low-risk rating, which is incorrect. The PEP registered in 2015 and after the casino identified that he was allegedly involved in tax evasion and bribery in 2019, he was still allowed to gamble with large amounts of cash. FIAU added that the casino also failed to submit a Suspicious Transaction Report (STR) for the case.

Another STR-related failing was with a business owner who owed €500,000 in unpaid taxes – a fact the casino was aware of – and was still assigned the low-risk rating by the casino in 2019. Such a large sum owed in back taxes can be indicative of possible tax evasion – another well-known fact. However, because of the casino’s insufficient customer risk assessment (CRA), an STR was not submitted.

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