News | Sunday, 12 April 2009

Malta’s gaming free-for-all blessed by government

Dozens of gaming halls have mushroomed around Malta since 2007 because the Lotteries and Gaming Authority has never issued a single licence to any of these operators.
In a free-for-all ostensibly blessed by government, various individuals have opened gaming shops everywhere because the LGA has not issued licences, despite being empowered to do so.
Nested inside residential areas, and sometimes in the vicinity of schools, some 100 gaming outlets have sprouted relatively unhindered.
All that was required so far was a ‘change-of-use’ permit from the MEPA for the conversion of old shops into gaming parlours.
According to two leading entrepreneurs who spoke to MaltaToday, in 90% of the cases the LGA never presented an objection to MEPA. “It is this situation that has allowed so many individuals to open up gaming shops everywhere you go, even next to schools and churches, because there are no licence conditions being imposed,” Johann Schembri, the director of Pinnacle Gaming which operates Fairplay outlets, said. Among the MPs who raised the serious matter was Labour MP Leo Brincat, who in a slew of parliamentary questions asked whether the government can declare the state of legality, or not, of the gaming shops.
Brincat has also asked the government to specify whether the LGA has a duty to issue these licences and do its job by actually regulating the industry.
The apparent vacuum means gaming shops remain potentially open to the more dangerous consequences such a scenario could present – from exposure of gambling to children, to criminal activity taking place inside the shops.
The shops operate video lottery terminals (VLTs), which are similar to slot machines, except that they are computerised and connected to a centralised computer system to assure the integrity of the games, social responsibility and proper fiscal controls.
But without even being levied a gaming tax, or a strict and expensive licence that would otherwise be jealously guarded by only responsible operators, gaming shops have flourished unconstrained.
Schembri explained that the opening of so many dedicated gaming shops was a natural consequence of the new gaming laws that came into force in 2007.
“The government was prudent enough to gather this fast developing and potentially lucrative industry under one law, passed in 2001. The law’s fifth schedule, which enables the LGA to licence gaming machines, was enacted in 2007, clearing the road for the authority to licence the sector,” Schembri said, adding that the sector is now ready to be licensed.
“Traditionally amusement machines were operated in bars and clubs on a revenue-sharing basis. In 2005, the LGA embarked on a public consultation process. It was clear that with a future of strict licensing and an authority promoting a fee structure, business models were to change. Most operators opted to open their own gaming outlets.”
But despite the authority’s power to issue a licence with rigorous conditions, the initial applications were never processed. “Despite the LGA’s power to issue a licence, this never happened. On 18 October 2007, the LGA presented a roll-out plan, starting with the registration of machines against a €1,000 fee per machine and additional €250 per machine per month. The LGA also posted application forms on its website. But the processing of these applications seems to have never happened since then,” Schembri said.
The end result has been an industry with no conditions imposed upon it, Ivan Camilleri, the director of Allied Games, said.
“We have a promising industry which can be given a direction by licensing. Changes are needed to guide operators to restrict business to suitable areas, away from schools and with necessary internal security to ensure underage persons are not admitted into the premises,” Camilleri said, hinting at the potential social dangers of non-regulated gaming shops.
Among these conditions would be the technical specifications for the VLTs, which according to Fairplay’s own website would address “the undesirable social outcomes of current gaming such as accessibility of gambling to vulnerable and under-aged players.”
Schembri said that if the LGA had to start imposing strict criteria, such as reporting and compliance issues, the market would change almost instantly since not every operator would be able to afford such criteria.
On his part, Camilleri said the industry wants to be regulated in order to ensure high quality gaming and unequalled responsibility. “I believe in good quality property set-up, dedicated outlets with supporting facilities, and an industry that can ensure all machines comply with a minimum percentage payout. This is typically set at 86%. I find a 92% payout keeps our players happier and the future will make us compete by offering bigger payouts, with some machines giving as much as 96%.”
Schembri said that apart from distance criteria from schools or places of worship, operators should also know what is happening inside their own gaming rooms. Schembri, who also operates bingo halls, said a ‘know-your-client’ policy allows gamers in only against presentation of identity cards.
“I look forward to the day when a gaming licence will be granted on the merits of the operator’s capability to guarantee it upholds the future licence conditions. With this in place the country can make use of a profitable industry and earn a potential €12 million a year in added taxes while enhancing social responsibility. In the meantime, in the absence of licences, some of us are self regulating and look forward to the day when a licence will be granted as a privilege and not as a right.”
Ivan Camilleri said that a gaming licence had to be such a privilege that operators would not even risk compromising it. “You wouldn’t chance having kids inside the gaming room, if you stood to lose the licence.”
“In a regulated environment, we can look forward to enhancing our services up to those found in 5-star hotels. We have already seen good quality tourists in our outlets. Our operations incur usual business running expenses and investment in professional help, financial consultants and internal accounts and procedures. I am hoping regulation will encourage such standards across all our gaming industry.”


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