Thursday, July 25, 2024

Malta protects online casinos

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The controversial Maltese Bill No. 55 has been making waves in the iGaming community for a while now. Lawmakers have approved the law just a couple of weeks ago after Malta’s president signed it in early June. It has sparked a lot of controversies as it allows Maltese courts to refuse to recognize any foreign judgments related to MGA-licenced operators in the European Union.

Many of Malta’s largest online gambling operators offer online gambling on the European market. Thanks to the MGA licence, they can offer their services throughout Europe. However, the new law, although seen as a positive within Malta, has raised some eyebrows across Europe.

What is Bill No. 55?

Bill No. 55 is a new law in Malta’s legislation that protects the country’s online gaming businesses from foreign liability. It was tabled on April 24 and signed into law by president George Vella in early June. It comes at a fragile time in the European online gambling market, after some businesses are facing scrutiny over their Austrian operations.

The new law has had negative feedback across Europe. Many experts and iGaming business CEOs think that it goes against European online gambling laws. The European Union is pushing for safe and fair regulations when it comes to iGaming, and the Bill No. 55 is widely seen as going against it. With the new law, online gambling businesses licenced by the Malta Gaming Authority won’t be legally obligated to cover losses to customers, as Maltese courts can refuse judgment on any wrongdoing on foreign soil.

Per the bill, courts can now ‘refuse recognition or enforcement’ of any foreign judgment in relation to MGA-licenced casino sites. The legislation states that its objective is to support Malta’s long-standing policy to encourage establishment of gaming operators in the country. Malta’s lawmakers have defended the new law, stating that it supports private enterprises in line with the country’s Constitution.

Heavy criticism from European countries

Numerous countries in the EU have already criticized the new law. German and Austrian lawyers have already said it’s an attempt to undermine and circumvent ongoing lawsuits in the region. Lawyers Benedikt Quarch and Karim Weber have sent a letter to the European Commission, explaining how the law directly interferes with the EU’s online gaming legislation.

The lawyers represent clients who have been trying to recoup their losses after paying back customers for violation of local laws. Weber worked on the highly publicized Austrian Supreme Court case against PokerStars. In his opinion, Malta has no right to interfere with independent arms of the judiciaries. The lawyers have urged the Commission to intervene in the matter, but there’s been no response so far.

Operators facing liability for their Austrian operations

In late 2021, the Austrian Supreme Court ruled that PokerStars and all Flutter-owned entertainment companies are not licenced to operate in the country. As such, all contracts between these companies and Austrian consumers were void. The case concerned the validity of the gaming monopoly by Casinos Austria. It came after a player—represented by the Leinsmer Weber law firm—sued PokerStars for their losses.

PokerStars was ordered to pay the player back a total of €28,000 over five years. Since this case, thousands of others have been opened up. Operators are willing to pay their clients back instead of going to court in lengthy cases.

Some, however, have opted to fight. In early 2022, an Austrian player sued 888 for losing roughly €500,000 at the site. The court ordered the operator to repay the money, but it hasn’t complied. Since the company in question is 888’s Malta subsidiary, the individual is trying to obtain new judgment from Maltese courts.

That might be a problem with the new law. It will become very hard to obtain a positive ruling in this case, with Maltese courts now instructed not to order any damages against MGA-licenced operators.

Online gambling market is one of the premier entertainment industries in Malta. With the new bill in place, it will become extremely difficult for Maltese courts to rule in such events.

888 cites European free movement of services

888 has decided to go against the Austrian ruling and will take its fight back to Maltese courts where it might win. So far, a spokesperson for the company has cited European free movement of services which allow the company to operate in regions ‘where it has a justifiable legal basis to do so’. Like many other operators, it services Austrian players through its MGA licence. 888 has consulted many law experts on the matter, and their stance is that Austria’s ruling is against the free movement of services principles.

The company is confident in its legal position, especially since the new law went into effect this June. It might have a domino effect among MGA-licenced operators who will refuse to pay damages back to players. That’s exactly what operators want, and they’ve found refuge in Malta’s new legislation.

Is Bill No. 55 right or wrong?

It’s hard to say. For Malta, it’s good that the government is looking to protect its online casino businesses. However, it also gives them the power to refuse payments, even if their actions on foreign markets have been controversial. In short, this law doesn’t protect players, but operators, which is not in accordance to EU’s online gambling laws.

It remains to be seen what kind of effect the newly signed law will have across the European Union. One thing’s for sure – it will be heavily opposed by other countries besides Germany and Austria. On the other hand, it may see operators flocking to Malta as they’re now more protected than ever. After all, it’s a multi-billion dollar business, and everyone would love to avoid any repayments.

It’s clear that while the bill was signed into law, the EU won’t sit idly. It’s already looking at solutions, and we’re eager to see what the European Commission thinks of it. We hope any news come soon.

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