EU’s new illegal sports betting stance bad for Malta, good for other jurisdictions

european-union-sports-betting-bitcoinThe shifting European Union definition of illegal sports betting spells trouble for Malta’s online gambling licensing regime, while opening up possibilities for non-EU licensing jurisdictions such as Antigua.

In 2014, the Council of Europe proposed a new definition of illegal sports betting that required the activity to be legal in the member state in which the customer resided, rather on where the operator was based.

Malta, which derives 11% of its gross domestic product from its online gambling sector, asked the European Court of Justice to weigh in on the matter. A year later, Malta withdrew its request, while promising to achieve the desired effect through “other solutions.”

Over the weekend, the Independent quoted Malta Gaming Authority (MGA) chairman Joe Cuschieri saying that the EU’s proposed change to the Convention on the Manipulation of Sports Competitions would “effectively render illegal all operators who offer their services via their MGA license in other European states.”

Malta has said it supports the anti-match-fixing aims of the proposed change, but suspicion runs deep that the change is more about protecting EU member states’ desire to prop up ‘walled garden’ online regimes, a stance Malta believes contravenes EU edicts on the cross-border restriction of trade.

In order for the proposed redefinition to take effect, each EU member state must give its approval. Malta has stood alone in refusing to give its approval, a stance that earned it public condemnation from Members of the European Parliament (MEP) at a plenary session in Strasbourg last Thursday.

On Monday, Malta’s Competitive Minister Manuel Mallia tried to drum up political support for the government’s stance by challenging the opposition Nationalist Party (NP) to call on its MEPs to support Malta’s gambling industry in its time of need.

The NP responded by pointing out that it was responsible for setting up Malta’s iGaming industry in the first place and it would “continue to defend the sector against the interests of other large economies threatening it.” However, the NP also claimed the government was playing a “high-risk game” in attempting to make the gaming sector a partisan issue.

Whether or not Malta will be able to successfully fend off this challenge, the uncertainty surrounding MGA licensees’ future ability to serve EU markets will likely drive operators to consider alternative licensing jurisdictions, particularly those not subject to EU directives, including Antigua.

Jurisdictions that allow their licensees to use alternative currencies such as Bitcoin will also benefit from the EU’s sports betting changes. Many EU countries already employ means to block traditional payment channels between punters and international gambling sites, opening up opportunities for payment methods that lie outside these governments’ ability to interdict, including Bitcoin.