A 'One-Stop Shop' in Malta

Competition is nothing new for the online gaming business.

For years operators have been battling over players; software companies have been trying to align themselves with the proper operators and the competition among handicappers to get their service in front of the biggest audience is well known.

Countries that are trying to woo gaming operators are now starting to enter the fray and are enlisting corporate partners to essentially recruit companies to come and relocate within their borders.

On the leading edge of the new competitive front is Malta, the island nation located in the middle of the Mediterranean Sea. The country, which has been open to online sports books since 1999, recently gave the green light to expanding its gaming laws to allow for online casinos. As part of its initiative the country is working closely with Bell Med, a company that acts as a consulting aid to operators looking to settle in there.

Bell Med also advises the government on various interactive gaming regulations and systems testing and has been able to use its experience in those areas to help guide future operators to Malta. The company was set up in 1996 to provide the financial services industry an outlet when they wanted to turn to the Internet.

Mario Galea, an executive with Bell Med, said the government in 1999 tabbed his firm when it decided to pursue other e-commerce sectors to setup in Malta.

The early part of that process discovered that many e-commerce companies weren't as well off as many believed. Galea said it looked like a bubble that was about to burst, and the only sector that was really growing and making revenue was online gaming.

From there, he said, government and business interests in the country decided they would focus their attention on Internet sports books. The Gaming Board of Malta drafted regulations for the industry and quickly found a demand for its location.

"Within eight months Malta received 30 license request from operators," he said. "It was very successful."

Many of those prospective operators were from the United Kingdom and many fled to the island nation for the low cost of running operations. The campaign was so successful, Galea said, that getting operates to return from Malta to England was a big reason why the U.K. government decided last year to change the structure of its betting tax.

To counter the efforts from Great Britain, Maltese authorities decided to broaden the scope of the country's involvement in gaming. The jurisdiction decided to re-work regulations and codes to allow for online casinos, in addition to sports books, to operate from there.

The movement, which included changing laws that had only allowed for land-based operators to run online casinos from Malta, took a major step in December when the Maltese parliament voted for the change. With parliamentary approval behind them, the Gaming Board is quickly working on regulations and codes for the new business, and Bell Med is actively trying to get an influx of operators to relocate to Malta.

Galea said Malta has numerous selling points to online gaming operators, including no set-up fees and a low tax base. Sports books pay a betting tax of 0.5 percent, and the yearly corporate tax is only 4.17 percent. The jurisdiction is also in good standing with the Organization for Economic Cooperation and Development and other international watch-dog groups who blacklist countries that tend to be safe havens for money launders.

"Everything is well regulated," Galea said.

Operators who seek Bell Med's assistance can get help in every aspect of online gaming. Galea said the company can connect operators with credit card processors, hosting facilities, tax assistance, back-office management, legal advice and even 24-hour customer support.

"We want to build this business, not only from a legal framework, but also from an operational framework," he said. "We want to attract companies and help them start out. The mission was originally to help companies set up so they can run smoothly from day one. That is still is our objective, but we are now kind of a one-stop shop."

Galea said the company can help build a gaming system and make sure it is operated properly.

"Malta can protect your business and protect your image," he said. "There are the right banking and merchant services here."

So how does Galea know that Malta is a good place for gaming operators to relocate their business too? Easy, he said, when you look at how many of them also move to the island nation to live.

"They aren't just plugging in down here and leaving us to run the system," he said. "A lot of these guys come down here and see what the weather is like and how much of a European country it is and wind up moving down here themselves."