iGaming Daily

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Bill 55, a powerful piece of legislation built to protect MGA licensed operators across Europe and solidify the island's reputation as an industry hub. But also a controversial bill as EU figures cry out about incompatibility with the trading bloc's own laws. So as the industry once again gathers on the island, we ask is Bill 55 a force for good or a haven for avoiding consumer protections and competition laws?

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Welcome back to iGaming Daily, sponsored by Optimove, the iGaming industry's number one CRM marketing solution. I'm Charlie Horner, and today I'm joined by iGaming expert editor Joe Streeter and SBC's media director Martin Elliott. We're live on the show floor from SBC Summit Malta. Gents, thanks for joining me. How are you doing today? Yeah, I'm doing all right, Charlie. I was at the spectacular Infinity Party last night.

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That was unreal to be honest. I'm nursing a little bit of a headache today, but we move and I'm enjoying the conference. Already some fantastic sessions this morning. Talking about empowerment, management styles, and also crypto and aligning Malta and its focus on crypto with NECA, the EU regulation. So, yeah, lots already this morning alongside a great night last night.

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Perfect, and Martin I'm sure you're feeling fresh as a daisy? Actually I am because unlike Joe I didn't go to the Infinity Party because I went to bed at 9 o'clock. I'm very well behaved as always. Very responsible. Yeah, and you know it's a pleasure to be here in 32 degree heat wearing a suit. Yeah, Sanders don't slip on iGaming daily. That's right, I mean you know just to let people behind the curtains to see the magic we always...

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put suit and tie on to record iGaming David every day. Bill 55 is something that iGaming expert has covered quite a bit, Joe. But why are we talking about it today in particular? Well, because we're in Malta, largely, right? And it is very, it's obviously a very, it's a Malta, Malta bill, a Malta piece of legislation. We know that in Malta, the gaming industry is a massive contributor to the economy and

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The MGA has kind of built Malta into a hub for iGame and that didn't happen by accident. That happened as a result of a vision of a clear path with goals and sustainability to get there. Bill 55 has played a role in that but what the future looks like for Bill 55 now remains interesting because there were two operators, MGA licensed operators.

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were kind of dragged into litigation in Austria. We know Austria is a monopoly on its gambling laws, its gambling framework. So anyone offering operations in Austria that isn't part of that monopoly is deemed, is unable to do so, deemed illegal. Yeah, mean, ultimately, think in the cases you're talking about, several Austrian gamblers tried to sue

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operators to get their money back that they'd lost. Because the argument that the Austrian courts had to hear was, these operators technically are legal because they've got a multi-licence but not licensed in Austria, so they shouldn't have been able to take cash from these particular players. And I think there was some legal support for that argument within Austria. However, what Bill 55 says, and I'm

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Paraphrasing here, because I if I read out the entirety of a bill at this point, it would be quite dull listening for everyone. But part of it is that the courts in Malta don't necessarily have to adhere to legal decisions made in other countries, even if it's in new countries. So traditionally, Malta has sort of traded on this idea. We're part of the EU, so if we give a license, companies can operate anywhere in the EU.

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And before regulation spread across Europe, people sort of turned a blind eye to that. Now, however, more countries in Europe either have regulation or are moving towards regulation. And they're saying, no, we don't want the multi-based operators here. Come and get a license in our system, which is typically a much more restrictive regulatory regime than the one that the MGA has developed. The MGA is part regulator, part business developer, because gaming is about

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11-12 % of the economy here. So it's the MGA's job to support that industry. And it does house, you know, if you're wrong to say it doesn't have any standards, it's still player protection, fairness and so on is still part of their relit. But they are, I don't think I'm giving away any secrets if I describe them as more relaxed, do you think Joe than Yeah, I think that's It is worth noting though that with the case of the two Austrian players, the Rumbles on that as I've heard spoken about quite a bit at this conference.

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The Austrian regulator didn't have anything to do with that case, it was just the Austrian courts. An important distinction to make I think. The Maltese courts obviously sided with the Maltese operators after, or the MGA operators after the Austrian courts had gone the other way. That decision has now been appealed by the legal team behind the two Austrian players. So we kind of await to see.

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What happens there, think part of the case for the MGA operators was that was around Austrian rules kind of reaching Article 56 of the EU Treaty for competition laws. yeah, expected to hear Article 56 spoken about a lot as this case kind of I think reaches its conclusion. Yeah, and Joey, you were at an event.

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on Tuesday with QH Partners and I believe that Bill 55 was part of that. Could you just reveal a little bit about what was said there and whether there was arguments for or against Bill 55? Yeah, very pro Bill 55. Also, I was on a panel on Wednesday morning with the MGA and a few others talking Bill 55 and obviously proponents of it here in Malta.

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It's something of a protection, it enables this industry to continue to work as freely as it possibly can and continue to innovate. And as Martin said, a massive chunk to the Maltese economy is enabled to continue to thrive. So yeah, it will be interesting. There's obviously not too much being given away because the case continues on and we approach the appeal stage for.

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the two claimants in Austria. So we'll wait to see what happens there, but it's going to be an interesting one for sure. the big case is, the thing you will hear cited is Article 56 of the EU Treaty and competition laws. Are we heading to the ECJ for the European Court of Justice for essentially at the end of this process is on what seems quite a small matter for anyone outside the industry might wonder why the EU and...

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the government in Malta is spending all this money on a legal case, but presumably we are heading to the European Court of Justice for a final ruling at some point. It seems so, right? It seems so. the two individual cases are small, but I think they represent a bigger, you know, a much wider impact for... Yeah. You know what I'm trying to say? Like, they could have a big impact on this bill and on the Maltese gambling industry and Malta's relationship with the EU as well and other EU states.

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in terms of gambling and gambling regulation. Yeah, excellent. I wonder if the reverse is also true, right? If you're saying that you shouldn't be gambling using an unlicensed casino, if you've won money, can the operator then sue you? Because it's illegal for you to have won that money from them. Very true. I would love to see a few more of those cases. that's something to ponder. Let's have the short break and then we'll come back and we'll talk about tax in the UK.

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Welcome back to iGaming Daily and the Betiming Gaming Council in the UK has responded to potential gambling tax rises, rallying industry voices against the Chancellor Rachel Reeves' plans to hike rates. The trade body has cited a YouGov poll demonstrating the public is against tax rises for gambling and has asserted that those rate hikes would support black market operators. I guess, first of all, Martin, what's the details of this? Well...

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At the moment the government has announced a consultation on the possible harmonisation of gambling taxes. We have different rates on sports betting, on online casino, on gaming machines in pubs and casinos and land-based casinos. So there's a range of different tax rates and then under the guise of simplification the government is having a look to whether we should have a single

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tax rate. I mean that's oversimplifying the situation a bit but essentially that's what we're doing. And the fear is that this will be used to actually put up the rate. So it might move from up to 21 % for example for across the whole thing. The government is extremely short of money. If you heard anything from the spending review and so on and you know there are lots of pressures to fund the NHS.

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There's huge pressures for social care, which consecutive governments over 30 years have kind of kicked down, kicked into the future about how we're going to fund social care. You know, huge pensions bills as we've got an older population. And the government is really scouting around for money, having made the, without meaning to get too political, the somewhat unwise promise during the election campaign that there will be no rises to income tax, VAT, corporations tax, employees, national insurance.

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So the money has to come from somewhere. And the fear of the industry here is that it's much easier for the government to say, we're going to tax a specific industry. let's be honest, everyone who's had a bet has lost a bet at some point and ended up with a bookmaker having their money. People are not that sympathetic to bookmakers because of that. However much they enjoy betting, I don't think you're going to get a public backlash. It's not a vote loser if you implement this kind of change.

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However, and there's a big kicker here, it goes to 21%, it would be annoying. It would be annoying, it would wipe out a chunk of profit for particularly mid-range operators who probably can't afford that. The bigger guys I think would be able to absorb it, it would be a bit painful to put that in the report to shareholders. But at that level, doesn't raise that much money. It's barely worth the government doing it. So.

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The former prime minister, Gordon Brown, who is still extremely influential and well thought of within in labour circles and you know, he's one of the big beasts of UK politics. He has given his backing to a proposal from a think tank which would harmonise all these rights at 41%. And he's saying that in absence, he's arguing that this will raise three billion pounds a year.

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and that should be a ring vote for spending on initiatives to end child poverty. I think we're all in favour of ending child poverty. It's quite a convincing argument. It is. I mean, that's a nice way to get your way. I don't know about you, I'm not in favour of mass redundancies in the gaming industry, which might be the effect of it. We've seen the headlines this week as well about flutter as well, and that's before these potential tax risers come in. Now, you do mention that Gordon Brown is incredibly influential.

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He probably hasn't put this article in the New States without consulting senior members of the government, whether that's officials or the Treasury itself. So do you think that these tax rises are going to come in? Do you think they're going to be 21 %? Do think they're going to be 41 %? What can we be preparing for and what do you expect? I expect a tax rise of some description. I mean, 41 % is...

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kind of ludicrous really. So maybe that is too far, but it's one of those situations where the government will say, we're going to do something quite extreme. And then go, oh, we've listened and we're going to be more reasonable at, I don't know, 25 % or 30 % or whatever. Look how reasonable we'll be. We're friends with the industry. We're friends with the wealth crisis. So this intervention from Gordon Brown has changed the debate around this. And I think the BGC is...

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right to be worried about the direction this is taking. The simple fact is the government needs more money coming in. The economy is not in a disastrous state, but it's not in a great state when it comes to funding public services, in part because the national debt is colossal. It's around just over 100 % of GDP now, and it costs 105

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Actually, I bought this figure from Tim Montgomery, the reform backing political commentator. So it might be wrong. But he says he's done the calculations. It costs 105 billion pounds a year in debt interest we are spending. So if we don't actually start bringing in more money than we're spending on public services, the situation is going to get worse. They have to get the money from somewhere. This is a drop in the ocean in those terms, but it's not a drop in the ocean for the industry.

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But I think they need to start preparing for a higher tax regime here. And I think this might be the way that things are moving around the world, not just the UK. mean, the story, Brazil is already going. We've the market for five months. Let's put taxes up. Easy win, yeah. Illinois.

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Yeah, tiered tax rate systems as well. It's interesting, obviously the racing sector, the horse racing sector is one that will be deeply concerned by these potential taxes with its reliance on sponsorship and stuff. if we can steal a term from the horse racing sector, maybe we should look at Gordon Brown's form. Yeah, he has a history. His taxation strategy with the betting industry previously, and obviously we have to go way back to when he was in power making decisions like that.

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It wasn't such a bad one, right? It turned out to have pretty good consequences on the industry. He essentially got rid of the tax that punters used to pay. Because I think it was Betvix who were the first guys to go offshore and base themselves in Gibraltar and offer betting without taxes. You're not old enough to remember this Charlie, but when you went into a betting shop you used to have to choose whether to pay your 9 % maybe?

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something that most people couldn't do in their head and cashiers spent a lot of time doing it for them. You have to decide whether to pay that on the stake, 9 % of the stake or 9 % of the winnings. And because Bette Victor went offshore, were able to do it, and other people followed them. Gordon Brown came to Cheney's, oh, perhaps we'll just get rid of that tax and everyone will come back and base themselves in the UK. That didn't happen. But it has been a real boost to...

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online betting, online gaming in general, think. Can you imagine if you were to calculate 9 % on your stake on an online casino game, every time you were to stick some money in a slot, it'd be ridiculous. I'll let the record state as well that I also am not old enough to remember that, just in case, yeah, anybody's taking note. The damage the son's been doing in Malta this week to you, ageing process, is evident in that case.

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I'm just a bit wary of time, we're running out of time, but I just wanted to talk about the argument that the BGC has put forward because they say that if we raise taxes it's opening the front door to the black market. We've seen that happen in other markets like Germany and the Netherlands, etc. But do you think it's a tired argument? Do you think another more compelling story needs to be told from that perspective? Yeah, I think it's different because

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The Netherlands and Germany have come from a place where it's been a grey market, Not strictly illegal, but definitely not legal. So people have been used to dealing with these offshore companies. Slightly different in the UK, because we've had regulation for a long time, since 2005, the last gambling act, and online bookmakers were around from...

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2000ish I guess I have my first online bet. Goal. It's making me think how much money I've given away to bookmakers in 25 years. And I think we have, there were two things. One is the regulated industry really well established here. There are brands like Skybet, Bet365 and that. And for the majority of people in the country when they think of putting a bet on, I'm going to go to 365, Sky, LabRocks, William Hill or Betfred. Those are the five. So I don't think they're in danger of losing too much.

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But I also think the other thing is, I'm not convinced customers care whether the bookmaker they're dealing with has a license. Have you ever scrolled down to the bottom of the website to check that it's got the license information for putting a battle? I don't think they're bothered. I think if you offer a good service, a good product, they'll stick with you. But obviously, higher taxation makes it difficult to keep up. I do think, as an industry, we maybe have been guilty of...

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you know, wheeling out the threat of the black market or the, you know, the black market as a reason not to block any, to cause friction with any regulation in the past. And I hope that doesn't kind of come back to bite us now on regulation and taxes that could potentially seriously lead to the black market growing and safer gambling, just reducing as a result of just what would be crippling taxes, right? Yeah, I think so. think that meant

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That's a fair point. What is perhaps more endangered than punters shifting away is that the mid-size and smaller operas just go, yeah, waste of time there, so I could just do it without a license. So I'm not going to pay tax. I can scale my KYC back to the absolute minimum or even non, if you want to offshore. I can take credit cards. I can give whatever bonuses I feel like. And we don't, I don't think we want that, we? I it's fine if you're someone who...

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like the majority of people is capable of managing their gambling and gambling safer but the potential for exploiting the people who aren't capable of managing their gambling, who have a medical condition with it is huge so we should avoid it if we can and there'll be something rather perverse about action taken by the regulator actually ending up

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forcing people to go to those kind of off-roaders. A precarious place to end, but an end it is. Martin, Joel, thanks very much for joining me and thanks to the audience for listening and we'll see you next time on iGaming Daily.