Regulating The Gaming Landscape

The MGA regulates the various spheres of the gaming industry in Malta

The authority ensures a culture of fairness and transparency, making sure players are protected and preventing corruption and crime from taking hold. Ivan Borg sat down with Heathcliff Farrugia for an exclusive interview.

You’ve been with the MGA for over 4 years now, filling a number of key roles. What were the biggest challenges associated with each role?

Working with such an important regulator, both locally and internationally, is always very challenging. Whilst occupying the COO role, the main focus was on the transformation the Authority was going through, specifically the organisational restructuring and the focus on appropriate human resourcing.

As to the CRO role, the main challenge was to make the directorate more efficient, whilst at the same time strengthening our efforts on monitoring and supervision of our licenses’ compliance with their regulatory licence obligations.

Heathcliff Farrugia

Taking over the CEO role, my primary challenge in the first 6 months was to ensure the MGA remained focused on the introduction of the new gaming law, and its practical implementation – including the continuation of our shift towards a more risk-based approach to our decision-making processes across all functions within the organisation.

How does the MGA manage to combine the regulatory rigour necessary to fulfil its role, with the level of agility required in the igaming industry?

Admittedly, this is no mean feat, since the pace of the industry we regulate is impressive. However, the two are not mutually exclusive, and at the MGA we continually strive to achieve this difficult balance. Technological developments and innovative ideas are the rule of the day and regulators need to work hard to educate themselves in order to have appropriate regulation in place.

This is why our approach to regulation is underpinned by constant consultation with the industry and other affected stakeholders. Our regulatory objectives are set out at law, and the Authority is well aware of what it wants to achieve; as a regulator, our primary responsibilities remain those of protecting players, ensuring gaming is fair and free from crime.

The igaming industry in Malta has grown dramatically in a relatively short period of time. What role did the MGA have in making that growth possible?

The regulated iGaming industry in Malta is now nearing its 15th year. On this front, as a regulator we have always endeavoured to ensure that the legal regime is responsive to changes in technology and industry practice, whilst retaining the focus on keeping the industry well-regulated.

The MGA’s regulatory ethos for new products, technologies and practices is centred around the avoidance of prohibition in favour of proper and robust regulation, which in our view is the best means to protect players and is also well-received in an industry as dynamic as the gaming one. This has ensured that Malta remained attractive to serious gaming companies seeking a reliable place of establishment, which has led to the development of the holistic ecosystem which is now present on the island.

As the industry continues to grow and evolve, what challenges do you anticipate from a regulatory standpoint?

The gaming industry is currently in a phase of consolidation and is maturing very rapidly. One challenge which always remains is that of keeping the pace with developments and ensuring that any issues which

Malta Gaming Awards 2017

may arise from the fact that the law inevitably lags behind technological development are addressed swiftly. Moreover, the industry is affected by a growing number of legal instruments that are horizontally applicable to multiple sectors, and therefore ensuring coherence between the various requirements and synergy with the entities in charge of guaranteeing compliance with these other applicable laws, is an area of focus for the MGA.

How do you see regulatory developments in other jurisdictions (US, Sweden & the UK, for instance) impact similar efforts by the MGA?

As aforementioned, we embrace the view that regulation is preferable to prohibition. In the context of regulating an industry which is very much cross-border in nature, the MGA follows with interest developments in other jurisdictions, as the sharing of information and best practices is always helpful to ensure continuous improvement in the performance of our functions.

Different countries have different objectives and priorities, but certain shared views are always present, such as the focus on the protection of players and vulnerable persons. The recent joint statement by several regulators participating in the Gaming Regulators European Forum (GREF), to name one instance, is a clear example of the benefit of open channels of communication between regulators.

Is there any emerging technology that the MGA is monitoring as a potential source of disruption on the regulatory front?

I believe the world is currently looking at Distributed Ledger Technology (DLT), also known as Blockchain, and related DLT assets, and Malta is undoubtedly focused on ensuring that these technological innovations are met with appropriate and proportionate regulation where necessary, across the various affected sectors.

Many believe this technology has the power to revolutionise the way industries do business, and hence we are closely monitoring the developments on this front. With this in mind and cognizant of the rapid

Mr Farrugia, CEO MGA

rise in interest from gaming operators to leverage DLT assets, in particular VFAs, and DLT as a technology in their operations, the MGA has reinforced its strategy to be at the forefront of gaming regulation, and after months of public consultation, has recently issued its guidelines for a sandbox framework, allowing the controlled introduction of VFAs and DLT by licenses, seeking to achieve the right balance between embracing innovation and ensuring regulatory compliance.

We have also seen applications of virtual and augmented reality in gaming products, which are likely to increase as these technologies become more widespread and are refined in a manner which makes their use more seamless with users’ day-to-day activities. Artificial intelligence is an area we are also following with interest, as it may in the near future become necessary to ensure that certain obligations are equally applicable to an artificial intelligence as they are to natural persons.