Malta veto on sports betting rules stumbling block in Financial Action Task Force review

Malta could have to withdraw its EU veto on a sports betting convention if it is to finally get the all-clear from the Financial Action Task Force in the coming days on its Moneyval test.

A stumbling block to a final decision by the FATF, which decides whether Malta is placed on a damning list of untrustworthy financial jurisdictions, concerns an institutional deadlock imposed by the country in the Council of Europe’s parliamentary assembly, over the definition of ‘illegal sports betting’.

“We will probably have to bow our head and just get on with it,” said a senior government source on Malta’s adherence to the Macolin Convention, a Council of Europe treaty aimed at tackling the manipulation of sport.

Another government source said the Maltese government is still seeking clarifications on the issue.

The FATF is expected to take its first decision on 15 June, on the back of a report by the CoE’s anti-money laundering expert committee, known as Moneyval. Two years earlier, Malta had failed the exhaustive test of anti-money laundering rules, running the danger of being grey-listed as a risky jurisdiction.

Since then, international assessors gave Malta a to-do list for the FATF to review, which include a number of reforms.

But Malta is also expected to resolve the deadlock on the Macolin rules, despite the damaging effect this might have on the remote gaming industry in Malta.

Since 2014, Malta has contested a definition in the Convention which could affect its lucrative gambling revenues. Malta has objected to the definition of “illegal sports betting” because the article in question will make illegal any sports betting activity in one state, if the applicable law of the jurisdiction of the consumer of the betting service considers it to be so.

Malta has previously said that if ratified, this would mean that licensed gaming operators in Malta could be hindered from extending their operations abroad unless they abide by the laws of the other members states.

Malta’s rules on remote betting allow companies across Europe to have one licence with which to offer remote gambling to consumers. Yet these same companies could now be faced to apply for different licences in various member states, each with their own licensing costs.

There is broad agreement in Malta that its gaming industry depends on a successful licensing and regulatory framework to allow companies to use the island as a base, and offers its services globally.

Malta wants to ensure that betting companies in the EU keep enjoying this kind of free movement, where a service licensed in one member State – like Malta itself – be accepted in all others where remote gambling clients reside.

Malta has insisted that the Macolin definition only targets betting companies which are merely ‘not allowed’ in the jurisdiction of the consumer, something that affects legally-compliant and monitored companies in Malta.

It has also said the definition is an unnecessary intrusion into the regulation of betting.

The Malta deadlock has delayed ratification of the Macolin Convention, because the EU requires consensus to implement a Council of Europe convention. With seven Council of Europe member states ratifying the Convention – just enough for it to enter into force – and 19 states who have signed it, Malta’s veto prevents the European Commission signing it on behalf of all 28 member states.

While the Convention lays down provisions to outlaw and sanction illegal betting activity in sport, Malta insists the definition of ‘illegal gambling’ would be regulating other sectors of the gaming industry. It also says its national laws and the Malta Gaming Authority’s sports integrity unit are well equipped to fight suspicious betting together with law enforcement agencies and sporting bodies.

The Maltese have proposed that the definition of “illegal sports betting” be clarified to refer only to the manipulation of sports competitions within the context of the Macolin Convention. “Malta has aligned itself with all remaining provisions of the Convention, and only took this step in order to be in a position to sign and ratify the same Convention,” the government has previously said on the impasse.