Dialogue and data are the keys to effective gaming regulation
IMGL President Quirino Mancini opened the Casino Beats Summit in Malta with a one on-one interview with Carl Brincat, CEO of the Malta Gaming Authority. Phil Savage captured their discussion together with additional thoughts from Carl himself.
Quirino Mancini: Malta has been a pioneer in regulating iGaming so has a perspective on 20+ years of the industry’s development. What are the top lessons you would like to share with newly regulating markets?
Carl Brincat: Regulating an industry that is constantly changing and evolving can be challenging, but for me, there are two key elements. The first is to maintain an open dialogue and collaborative approach with licensees and all stakeholders. Casino Beats is just one of many conferences we attend throughout the year. Our presence at such conferences, the regulatory workshops we hold and the fact that we rigorously consult on regulatory developments shows that the Malta Gaming Authority is engaged with the industry and forward-facing in our development of innovative policies.
Second, I must stress the importance to us of being a data-driven authority. Data is our most valuable asset. It serves as a guiding force for various functions across the Authority, ranging from legislative reforms and policy development to software development and data protection. We try to ensure that our decision making is always driven by data and evidence rather than making policies that are driven by reactions to adverse occurrences or perceived risks.
These are the two most important issues in my view: having a constructive dialogue with the industry and ensuring that decisions are underpinned by evidence.
QM: The industry is seen by some as profiting from the weaknesses of the vulnerable. Does a Maltese license improve or worsen this perception and what can the MGA do to support and improve the industry’s reputation?
CB: Gambling has been a part of human history for centuries, and it will always exist, whether we try to ban it or not. Prohibition or the lack of effective regulation leads customers towards unregulated gambling activities, which can be significantly more harmful to people and society than gambling which is sensibly regulated. Unregulated offerings may prey on the vulnerable but the same cannot be said for regulated operators. Regulated operators spend a lot of time, energy, and money developing tools and know-how to prevent problematic gambling behaviour, and to detect it and assist the players affected when prevention is unsuccessful. Gambling may carry a risk of addiction, but the same can also be said for other activities that may spiral into behavioural addictions if they become compulsive. It is how we help people avoid that addiction, and address it if it occurs, that matters most: harm minimisation.
The MGA has worked tirelessly to increase the effectiveness of our oversight of the gaming industry at large, and to bolster cooperation with our foreign counterparts and share best practices. Our position is that, above all else, safe, sustainable, and responsible gambling is of paramount importance to the sector. The recent amendments to the Player Protection Directive are testament to the MGA’s commitment to continue prioritising the welfare of players. The amendments introduce five markers of harm that indicate where a player might be experiencing problematic gambling. This has created a benchmark for all MGA licensees to follow when determining effective measures and processes to detect and address the issue.
With Maltese regulation so focused on harm minimisation, operators that choose a Maltese license show their intention to conduct their business in a manner which is sustainable for its players.
QM: What do you say to those who claim that Malta undermines national sovereignty by issuing gambling licenses to operators who use them to offer their products in jurisdictions where their activities are unregulated?
CB: Online gambling is, by nature, a global and cross-border
activity. Hence, in our view, the natural starting point when it comes to regulating an online business is to recognise that it is not restricted to one jurisdiction alone. Rather it is an advantage that a business can offer its services across borders, whilst always respecting its legal obligations wherever its customers may reside.
That said, given that gambling is a business which is often subjected to regulation, we acknowledge that there are limitations to this approach. It is for this reason that our licensees are required to show they have justifiable legal reasons when they offer their services in other jurisdictions. These reasons will naturally vary depending on the jurisdiction. Within the EU, for example, Malta has always defended, and will continue to defend, its licensees’ freedom of establishment and freedom to provide services – essential pillars of the European common market since its inception. Where there are restrictions to those freedoms which are justified in line with the jurisprudence of the Court of Justice of the European Union, Malta respects those frameworks. Regrettably, there still remain a handful of countries that insist on regulatory models that, in our view, are not compliant with EU law and can push players towards the unregulated black market; a situation which is helpful to no one – least of all, to the players.
Malta has always worked to defend its position in relation to these jurisdictions and will continue to protect its long-standing public policy which seeks to protect the status of the Maltese gaming licence, as well as any licensed activity which is lawful in terms of the Gaming Act and other applicable regulatory instruments. In doing so, any challenges to the rights of the licensees and the validity of the licence which are not in line with Malta’s time-honoured policy position will continue to be contested. While every jurisdiction is free to introduce its own regulations and policies within their territory, one must not lose sight of the fact that it remains our principal priority as regulators to ensure that customers are able to play within a regulated market which is subject to strict legal obligations aimed at protecting players and which is overseen by a competent regulator that will take swift enforcement action in cases of non-compliance on the part of the licensee.
Regulators and legislators must recognise that regulation and control should work to the benefit of all relevant stakeholders. In an industry which is so global, we remain hopeful that, eventually, there will be an acknowledgement that, despite their differences, the fundamental aims of every legislative framework are predominantly the same.
Working towards cooperation and, as far as possible, alignment, would benefit all parties involved. The MGA has repeatedly encouraged regulators to dedicate effort and resources, time and discussion towards the goals of consumer protection and the prevention and detection of crime and corruption.
QM: You have called for operators sign up to a “social license” which would position them as responsible providers of entertainment with safeguards for those who struggle to enjoy it without harm. How would such an approach work? Is it just about industry codes of practice or do you see a role for regulators to get involved?
CB: As I said at the start, the MGA strongly believes that evidence-based, self-regulatory measures and industry collaboration serve as a driving force to maintain and improve the sustainability of the industry. The notion of a ‘social licence’ has become a global priority – and not just within the gaming industry – as companies and governments become increasingly aware of the impact they have on society and the environment. Operators should strive for more than just compliance with regulation and mandatory standards, particularly in an industry where their services could potentially have detrimental effects on their consumers. Many operators already go beyond their duty of compliance in this respect and should communicate more what is being done right within the industry.
As regulators, I believe our role is to lead by example. Therefore, if we expect our licensees to go beyond the minimum required of them – sometimes at significant financial and opportunity cost – we should also embrace broader sustainability considerations in our own operations. On top of this, we should take our licensees’ sustainability efforts into account when determining their regulatory standing and their associated regulatory risk. We should reward behaviour that aligns with our desired industry standards, and not focus solely on penalising undesirable behaviour.
With this in mind, the MGA is working on a voluntary ESG (environmental, social and governance) code of good practice for the gaming sector. We are delighted to be the first regulator looking holistically into the sustainability of the gaming industry. The initial feedback from the sector has been very encouraging, and we look forward to working closely with our licensees to continue transforming the gaming sector into a more transparent and sustainable one.
Unlike other industries, ESG reporting is relatively new to the gaming sector. Although some of our licensees report on ESG publicly and set their own sustainability standards – which we applaud and fully support – we believe that the wider sector lacks common priorities for ESG in gaming. We aim to close this gap with our voluntary ESG code of good practice, where part of the approach will also be to give back to the industry, by providing them with information that they can use to improve their performance, and also by acknowledging the efforts that they make in this regard.
QM: You have no doubt observed the trend in Europe and elsewhere to restrict or ban outright the promotion and advertising of gambling. What is your view of such developments and do you think they contribute to safer gambling?
CB: While banning gambling advertising can be seen as a response to concerns about excessive gambling and its potential societal impacts, as I mentioned, gambling always did and always will exist, whether we try to ban it or not. The important thing is that people are empowered with the knowledge to make informed choices about where to engage in gambling activities in a legitimate and safe manner.
Although every country’s approach differs, I believe banning advertising can be counterproductive. It does not enable regulated operators to distinguish their services from unregulated ones; aside from undermining the investment that such operators have made to access a market, this also risks diverting players to operators that are not subject to responsible gambling requirements.
We believe that responsible advertising, coupled with robust player protection measures, contribute significantly to safer gambling. Our approach focuses on promoting responsible gambling practices, ensuring that operators comply with strict regulations, and providing resources for individuals facing gambling-related issues.
QM: It would seem that regulators have a lot of common ground in terms of their objectives and priorities. What would it take to achieve greater coordination of regulation?
CB: As I’ve mentioned before, the fundamental aims of every legislative framework are predominantly the same in that regulators typically strive to supervise a well-regulated industry that balances economic interests with the protection of consumers and society as a whole.
Enhanced dialogue between public authorities and stakeholders is therefore vital: the entire gambling industry (not only operators but also related stakeholders such as ancillary service providers and consumer associations) could play a crucial role in designing more responsive and cross-border regulatory strategies, as well as more effective instruments of enforcement to combat money laundering and corruption.
Facilitating the sharing of data helps gain a deeper understanding of industry trends, potential risks and emerging issues within an ever-evolving gaming industry. This would enable regulators to respond more effectively to challenges that transcend borders. Standardising best practices in areas such as anti-money laundering and responsible gambling can also help create a more uniform approach to gaming regulation, which gives the industry greater legal certainty and clarity, and helps us as regulators to use our resources effectively.
This does not only stem from a willingness on the part of regulators, but above all it depends on the respective governments acknowledging these common objectives, regardless of other differences that may exist, encouraging their regulators to cooperate with their counterparts in other jurisdictions, and allocating the necessary resources accordingly.