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Malta – New Bill to protect island’s igaming operators from EU claims

By - 19 May 2023

A Bill tabled in Malta’s Parliament is set to send shockwaves through the gaming industry. Lawyers from both Austria and Germany have stated that the amendment to Malta’s Gaming Act – Bill 55, which went through its first reading on April 24th – “blatantly undermines European Rule of Law by blocking the fundamental rights of EU citizens and Residents”.

Maltese Minister Silvio Schembri has proposed the amendment to the country’s Gaming Act that would enable the Maltese courts to refuse recognition and enforcement of any foreign judgement, including decisions related to online gambling. The proposed amendment comes in response to legal action taken by Austria and Germany against Maltese gaming companies that have been offering online gambling services to their citizens illegally.

According to Austrian law, only the Casinos Austria subsidiary ‘win2day’ is allowed to offer games of chance on the internet in Austria. Despite this, some Malta-based companies are ignoring this and offering their games online. Currently, the number of cases in Austria is around 3,500 with more than €350m awarded as winnings, however, the cases span 30 years, and it is estimated over €900m has been lost to ‘criminal’ organisations who have capitalised on Austrian players. Bill 55 would result in thousands of Austrian citizens being unable to claim these losses.

The Maltese argument hinges on the EU’s free movement of goods and services. Their case proposes that because each has a licence in Malta, that gives their companies the right to offer services in every market of the EU. In actuality, the EU permits its member states to develop individual country-specific legislation in relation to gaming regulations to protect nationals from acts deemed criminal by their own laws.

If the new Bill is passed, however, the amendment would grant the Maltese courts the authority to reject foreign judgements that are deemed to be in violation of Maltese law. Maltese gaming companies as a result could avoid repaying the plaintiffs in the class action lawsuits being brought against them. This move is intended to safeguard the interests of the Maltese online gambling industry, which has been a key contributor to the country’s economy for many years.

In addition, the amendment could lead to the emergence of a legal loophole that could allow Maltese gaming companies to continue offering online gambling services to citizens of other EU member states in violation of local laws. This could result in further legal challenges and increase tensions between Malta and other EU member states.

Lawyers from Austria and Germany have argued in a letter to the EU Commission that the proposed amendment is in total disregard for the European Union’s (EU) Brussels I Recast Regulation, which governs the recognition and enforcement of foreign judgements within the EU. Their letter requests that the EU Commission upholds the Rule of Law enshrined in the European Union and asks for their immediate and urgent intervention to prevent the Maltese government from fast-tracking this law.

The bill is in line to have its second reading and the letter to the EU Commission has not received a response. This issue is yet to have a resolution but will have wide ranging consequences for all parties involved if no agreement can be met.

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