Malta - The New Gambling Center

Something is really going on in Malta regarding online gambling. After the new amendments to the UK Gambling Act 2005 were introduced on September 1st, there is a large number of gambling license applications entering this small and beautiful island. Malta can become one of the most important gambling centers in the World.

On September 1st, important amendments were introduced to the UK Gambling Act 2005. Under those amendments, only gambling companies based within the European Economic Area (EEA) or on a Government White List will be able to advertise in the UK. As expected this will have a large impact on gambling companies that will try hard to obtain licenses inside EEA.

In fact, it seems that gambling companies have already chosen a place for their operations – Malta. Being one of the latest EU members (since 2004), Malta is an excellent place to apply for a gambling license because of the EU member status and the very low tax rate, of only 2.5%. Malta had 85 iGaming firms licensed on the island as of September 1st, while a letter of intent has been distributed to 76 others and a further 36 companies are waiting the outcome of their license applications. Several high profile iGaming companies chose to relocate their servers in Malta as is the case of Inter Casino and Inter Poker.

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The low tax rate applied in Malta and the EU member status, along with the recently approved UIGEA in US, puts Malta on a strong position to become the World center for Online Gambling.

Regarding the UK Gambling Act, we must say that there is a real flaw on it – the 15% tax rate approved, to be applied to online gambling. It is not a competitive tax rate, and will not attract any major gambling businesses to UK territory. In fact, until now, only 15 iGaming firms applied for an UK license and none is a high profile company. The UK Gambling Act may fail on the intention, and the profits will be collected elsewhere. The UK is providing a legal frame for online gambling and will end up giving the profits to others.

With the advent of the Internet, distances were really shortened. There are many businesses that can easily be run from any place, especially when we are talking about services. This way companies can easily base their businesses on any country and develop their network from there. A free EU market means not only competition amongst companies but also across Governments and their fiscal policy. Ireland was able to attract many companies because of their lower tax rate. Online gambling is a specific business that does not need to have a specific location, so, the tax rate applied will be probably the main factor that these companies will have in mind when choosing a location. Malta understands this fact and was able to put a step ahead of UK, and we can’t blame them.