One spring night in 2007, Joseph Borg and several colleagues from Malta’s tiny gaming commission stayed late at their office to listen to the news from London. Online gambling was still a relatively new industry, but Malta, a sun-scorched island nation south of Sicily in the Mediterranean, had recently passed a law allowing companies registered there to offer web-based casino and slot games to customers anywhere in the world. The U.K., by contrast, was about to announce a tax on profits generated by internet betting, a development Borg hoped would bring a rush of business to the European Union’s smallest member state, which has just 500,000 citizens.
As Borg listened to the radio that evening, an announcer revealed the most important detail of the British levy: It would be set at 15%, much higher than expected—and triple the rate for gambling companies in Malta. “All hell broke loose,” recalls Borg, an attorney now in private practice. He and his eight-person team canceled vacations and worked weekends to handle the hundreds of applications from companies looking to relocate. “It was like, ‘Oh, my God, this is epic.’ ”