Malta’s igaming industry has made it all the way to the prestigious Forbes magazine for all the wrong reasons after its links to corruption and the mafia were laid bare in a feature piece.

A wide-ranging opinion piece by contributor Will Nichol outlines Malta’s rise from obscurity to a gaming mecca and its links to corruption scandals and mafia allegations.

Malta became the first European Union member state to regulate online betting in 2004 and has become one of the world leaders in the industry. The country’s tax rebate system and regulatory framework became incredibly attractive for key operators, generating billions in tax revenue.

“By 2018, 300 companies with the same licenses were operating from the island. Today, Malta is home to roughly 10% of the gambling companies in the world. The Malta Gaming Authority issued licenses that delivered tax receipts of more than $1.4 billion in 2019—a sum equivalent to 12% of the nation’s entire GDP,” he notes.

However, as outlined by Nichol, Malta’s gaming industry has a dark underbelly, which is now under the microscope following the assassination of journalist Daphne Caruana Galizia and the ensuing investigations.

Most recently, former Malta Gaming Authority Head Heathcliff Farrugia was charged as part of a trading-in-influence investigation linked to main suspect Yorgen Fenech. The Times of Malta revealed that Farrugia shared details on rival casino operators and tried to block the publication of an inspection into money-laundering operations at Tumas Gaming, where Fenech served as CEO.

“Scandals have been mounting since 2017. The extent to which Malta’s once-attractive remote gaming license will now appeal to legitimate multinational gambling companies is – for now – unknown,” Nichols writes.

Still, Nichols notes that these issues are widespread.

In 2017, former MGA employee Valery Atanasov revealed to Reuters a wealth of email exchanges identifying how the regulator has created “conditions that allow suspicious financial operations, money laundering and other criminal practices”.

Meanwhile, the Italian Anti-Mafia Directorate’s “Operation Double Game” identified that RaiseBet24.com laundered $74.2 million for the Cosa Nostra. The company was licensed by the MGA and was able to operate legitimately because of it.

The article also makes reference to investigations published by the Black Sea and MaltaToday, which outlined how Oleg Boyke used Maltese companies to pay low tax rates on $69 million worth of profits.

Speaking to a former deputy finance minister to a European Union member state, Nichol suggests that a rethink of the industry is on the cards. 

“Malta can now choose to subsist via the offshore and gambling sectors – while angering its fellow EU members – or it can choose reform and diversification, which after a 17-year addiction to gambling revenue would leave an enormous hole in the country’s budget,” Nichols writes.

Malta is currently facing a crucial second MoneyVal test. If it fails, the country will be grey-listed and could present an economic catastrophe for the nation. The government remains bullish on its chances to pass the test. However, exposure to the international stage could pressure the government in introducing more far-reaching changes.

Should Malta move away from the gaming industry? Comment below