It's a tiny rock in the Mediterranean that has become a global hub for online gambling.
In this episode, we look at how this happened, what it means, and how it has fundamentally changed one of Europe's smallest countries.
[00:00:00] Hello, hello hello, and welcome to English Learning for Curious Minds, by Leonardo English.
[00:00:12] The show where you can listen to fascinating stories, and learn weird and wonderful things about the world at the same time as improving your English.
[00:00:21] I'm Alastair Budge, and today we are going to be talking about a subject that is close to my heart, both emotionally and geographically.
[00:00:31] And that is the question of how Malta, a tiny country in the middle of the Mediterranean Sea, became a, if not the, global centre for online gambling.
[00:00:44] It’s a fascinating story that gets you thinking about the interconnectedness of the global economy, what small countries do to survive, how wealth is created, distributed and shared, or not shared, and how this affects the societies where this all takes place.
[00:01:02] So, I hope you’ll enjoy it.
[00:01:04] OK then, Poker Island, the story of How Malta Became An Online Gambling Hub.
[00:01:14] It was a quarter past seven on a Saturday morning. I was queuing to pay in a local supermarket, holding my young son’s hand.
[00:01:24] We'd gone out to buy butter and milk, as making pancakes on a Saturday morning had become somewhat of a ritual for us.
[00:01:34] In front of me in the queue were two tall, blond haired men in their mid-20s.
[00:01:41] They'd clearly not yet gone to sleep, it had been a busy night, and they were buying cigarettes and beers to keep them going. They were both red in the face, and rubbing their noses, telltale signs that all manner of substances were still flowing through their bloodstream.
[00:02:01] The cashier scanned the last item, and told the first man the price.
[00:02:06] “Fourteen Euros twenty seven please”.
[00:02:09] “Sure”, he said, in a Scandinavian accent.
[00:02:13] He reached into his pocket, bringing out a huge wad of 50 euro notes, thousands if not tens of thousands of Euros simply hanging loose in his trouser pocket.
[00:02:26] He tried to take one out and hand it to the cashier, but as he did so he fumbled, with the rest falling to the floor.
[00:02:36] I looked down at the ground, which was covered with what must have been thousands of Euros falling all around his feet. The man didn’t seem to notice me, but bent down and started picking up the dropped fifties, stuffing them into his pocket like he was picking up rubbish.
[00:02:56] “You’ve missed one”, said the cashier kindly, pointing out a fifty Euro note under his foot.
[00:03:02] “Thanks”, said the man, collecting his change, the beer and cigarettes, picking up the remaining fifty, and joining his friend who was waiting outside.
[00:03:13] So, what were these men doing in Malta, why did they have so much money that it was falling out of their pockets, what has this all meant to a tiny island nation and what can we learn from all of this?
[00:03:26] Well, I should start with a brief introduction to the location, the place we are talking about today.
[00:03:33] It’s called Malta, and it’s a tiny island, or technically collection of three islands, in the Mediterranean, just south of Sicily.
[00:03:44] If you picture Sicily, the football at the bottom of Italy, then you go almost exactly 100km south, you will hit Malta.
[00:03:53] But you’ll need to look very carefully, because it’s easy to miss.
[00:03:58] The island of Malta itself is only 246 km squared, and the entire country, which consists of two other smaller islands, is only 316 km squared.
[00:04:13] To put that in perspective, the metropolitan area of London is 8,382 kilometres square, so you could fit almost 27 Maltas inside London.
[00:04:26] And to go on a very quick, a whistlestop, tour of Maltese history, it has been occupied by everyone from the Phoenicians to the Knights of Malta, then briefly the French before being occupied by the British for over 150 years.
[00:04:42] It is, essentially, a tiny rock in the middle of the Mediterranean. It was useful from a strategic point of view, because it has a deep harbour and was a useful place for other powers to hold, but there really isn't anything there, no natural resources, no oil or gas, it’s just a rock in the sea.
[00:05:05] And it has gone through periods of great wealth and abject poverty, with the rulers of the day often enjoying lavish standards of living while the local people, well, didn’t.
[00:05:18] It became independent from the UK technically in 1964, but not fully until 1979, when the British navy left.
[00:05:29] And although it is an independent country, with a fiercely proud people, it still retains many signs of its former occupier: English is one of the two official languages, they drive on the same side of the road as in the UK, the electric plugs are the same, they even have the same distinctive red post boxes as in the UK.
[00:05:52] And after it gained its independence, the Maltese economy did grow relatively healthily, but it started from a very low bar - in 1980 the GDP per capita was around €12,000, less than half of its closest neighbour, Italy.
[00:06:12] To put it another way, it was a very poor country with not much going for it apart from good weather.
[00:06:20] Fast forward to the modern day and Malta is one of the fastest-growing economies in Europe, with Ferraris cruising down the streets and luxury yachts docked in its marinas.
[00:06:33] So, what happened?
[00:06:35] Well, two words: online gambling.
[00:06:39] Over the past almost 20 years Malta has transformed itself from a cheap package holiday destination to the Las Vegas of the Mediterranean, or perhaps more accurately the Las Vegas of the Internet.
[00:06:55] On the first of May, 2004, when along with Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, Malta joined the European Union.
[00:07:09] 15 became 25, and the union now encompassed the majority of the continent’s geographical area.
[00:07:17] Clearly, even if online gambling didn’t exist, joining the EU would have been a huge boom for Malta, as it allowed free movement through other member countries, and made it much more attractive both as a holiday destination and a destination for people to come and learn English, and then travel to other countries in the EU.
[00:07:39] But we are talking about gambling, so why is this important?
[00:07:44] Well, before the ink was dry on the agreement for Malta to join the EU, politicians in Malta had a plan.
[00:07:53] The plan was to create a regulatory framework to give licences to online gambling operators, which would allow them to what’s called “passport” to other jurisdictions.
[00:08:06] To operate an online casino you need a licence, and casinos could set up shop, they could base themselves in Malta, and then allow gamblers from all over the world to play on their online casinos.
[00:08:20] So, Malta created this favourable regulatory framework, meaning that it was relatively easy and affordable to get a licence to start an online casino, and start accepting customers from everywhere from Stockholm to Berlin.
[00:08:36] Malta also has several other advantages for these online gambling companies.
[00:08:42] The first was a very low corporate tax rate, effectively 5%. When compared to the tax rates in Scandinavia, which is a particularly popular region for online gambling, clearly there were considerable savings to be made.
[00:08:59] Secondly, and again this is related to costs, Malta’s low cost of living and low salaries, at least 20 years ago, meant that online gambling companies could pay what would have been low wages in Stockholm but would have allowed their employees to live lavish lifestyles in Malta.
[00:09:19] Now it’s a completely different story, as I’ll come to explain, but even 10 years ago it was possible to earn a salary of, let’s say, €1,500 a month in Malta and live like a king.
[00:09:34] And a third factor was simply geographical. It’s a tiny Mediterranean island with beaches and sun most of the year.
[00:09:43] Compared to the dark winters of Northern Europe, well, you can see the attraction of 300 days of sun.
[00:09:51] So, what happened?
[00:09:54] Sure enough, the Maltese government's plan worked.
[00:09:58] Slowly but surely, companies upped sticks, they moved south, attracted by favourable legislation, low taxes, and the possibility of paying their staff significantly less than they were paid before.
[00:10:12] The first company came, then the second, the third and the fourth, and now there are literally hundreds of online gambling companies.
[00:10:22] As the Maltese government hoped, employees from these first companies left to start their own companies, employing more people, paying taxes, renting apartments, buying food, doing all the sort of things that people do, all the sort of things that bring money into an economy.
[00:10:40] And on the subject of money, especially in the early days of online gambling in Malta, these companies would make eye-watering amounts of money, often with very small teams.
[00:10:53] It was a complete gold rush, and 18-year-olds working on websites from around their kitchen table ended up making millions of Euros every single month.
[00:11:04] Now, before we get into the impact of this, it’s worth giving you a brief outline of how online gambling works, because after all, the money comes from somewhere.
[00:11:17] So, there is you or me, the person who decides that they want to gamble online.
[00:11:23] Well, not actually me, perhaps not you, but according to some statistics, up to 20% of the world’s population gambles online.
[00:11:33] So, what happens?
[00:11:35] Well, there is a person, let’s call him Jim.
[00:11:39] Jim probably searches on Google for something like “best casino bonuses”, he’ll find a website with a load of reviews, he’ll click on a link to a casino that promises to give him €100 if he deposits €100, let’s say.
[00:11:55] He’ll go to that online casino, he’ll deposit his €100, the casino will give him an extra €100 to play with, but statistically speaking, he’ll probably end up losing it all.
[00:12:06] Or he might win a little bit, then he’ll lose a bit, he might deposit some more money because he thinks “I almost won, let me just have one last try”.
[00:12:15] But he’ll end up losing everything he put in.
[00:12:19] And where does this money go?
[00:12:22] If you’re thinking, “well, it just goes to the online casino”, well let me tell you it’s usually a bit more complicated than that.
[00:12:30] The first recommendation website, called an affiliate, will most likely get a percentage of what Jim lost. The casino will normally license the actual game from a game provider, and they might get a percentage of what Jim deposited, or what he lost. And the company that manages the flow of money might also get something.
[00:12:50] The rest goes to the casino operator.
[00:12:53] And Jim, of course, well, he’s left with nothing.
[00:12:57] If he had deposited enough money, perhaps the casino’s internal systems would have flagged him as a “high potential” player, a “VIP”, and he might get a nice message from someone informing him that they’ll give him more credit to come back.
[00:13:13] So he deposits more money to get the credit, maybe he even wins big. Perhaps he might win tens of thousands of Euros.
[00:13:22] But if he does, in many cases the casino will give him the money back in smaller tranches, not the entire amount at once. Unless, that is, he wants to use it as credit in the casino, in which case he can have it all back immediately to play at once.
[00:13:39] So, Jim decides to do this, after all, he got lucky last time.
[00:13:44] Then he loses it all again.
[00:13:47] And if Jim was a really big fish, someone gambling tens of thousands of Euros every day, he would probably have someone who would text him at all hours of the day, inviting him to concerts, on holidays, to sporting events, and showering him with gifts, all with the intention of getting him to log back in to the casino and deposit more money.
[00:14:12] There’s a saying in English, “the house always wins”, meaning that the casino always comes out on top, that you can never beat the casino. And it’s a saying for a very good reason; it’s true.
[00:14:24] And although some casinos do go bust, they do lose money, statistically speaking they will always come out on top.
[00:14:33] Now, why am I mentioning this, why am I going into such detail? I’m certainly not advocating that you start gambling online.
[00:14:42] As you probably know, it can be a slippery slope, can be addictive, and leads to the destruction of marriages, homelessness, and suicide.
[00:14:51] So don’t start.
[00:14:53] But I mention it because the important thing to underline is that every single cent that has come into Malta through online gambling has come from someone like Jim, often sitting alone on their mobile phone in a toilet cubicle at their office, typing their bank details into yet another online casino to try to regain the feeling of that first win.
[00:15:16] The adverts for these online casinos show glamorous men and women having fun at poker tables, but the reality is that it’s much more likely to be someone on their own playing a slot machine on their phone.
[00:15:30] And when it comes to quite how much money online gambling has brought to Malta, how much money has been lost by these players, by punters, the sums are enormous.
[00:15:43] Today the online gambling industry directly contributes around 14% of Malta’s GDP, and is worth around €2 billion a year.
[00:15:55] €2 billion might sound like pocket change, a small sum, for a larger country, but remember this is one of the smallest countries in Europe. It’s about €4,000 for every person on the island, every single year.
[00:16:12] It has become a key employer, responsible for tens of thousands of people, and remember this is out of a local population of under half a million people.
[00:16:23] And some of the biggest online gambling companies in the world are now based here, or at least have some of their operations here.
[00:16:32] Indeed, 10% of all online gambling companies have a presence in Malta, in this small country that would be a tiny neighbourhood of London.
[00:16:43] And what has this done to Malta? What has it done to the island?
[00:16:48] Well, for lots of people it has meant that they have made lots of money, with some growing spectacularly wealthy.
[00:16:56] For the casino owners, the people and companies who own the affiliate websites and the game providers, clearly they have been direct beneficiaries of this.
[00:17:07] But this isn’t restricted to the people directly involved in online gambling. There has been a property boom in Malta over the past 10 years, with property prices rising 200% in the space of a decade.
[00:17:21] Indeed, if you come to Malta today, there is barely a single place on the island where you will not be able to hear a large pneumatic drill in the background.
[00:17:32] This is good news for property developers and the construction industry, but for almost everyone else it is destructive, in the literal sense.
[00:17:42] You’ll see beautiful old townhouses being knocked down by wrecking balls, you’ll see the previously unspoilt countryside with huge cranes dotting the landscape. There’s even a joke that Maltese people tell, that the “crane” is now the national bird of Malta.
[00:18:00] With this influx of people and money, it has meant that the cost of living has increased hugely, and young people starting out with their first jobs have very little chance of ever owning their own apartment unless they have help from their parents, or if they join an online gambling company.
[00:18:19] But the effects of Malta becoming an online gambling hub are even further reaching.
[00:18:25] Specifically, it has made it an even more attractive destination for organised criminals to launder their profits.
[00:18:33] Now, real-life physical casinos have long been used by criminals to launder their money. Dirty cash goes in, and it comes out at the end clean as a whistle.
[00:18:46] Online casinos on some levels make this slightly harder, because digital money leaves a trace, but on another level it makes it much easier, because you don’t have to physically take the cash to the casino.
[00:19:02] As a result, organised criminals have used, and still use, Maltese online casinos to launder billions of dollars.
[00:19:11] Indeed, in January of 2023, there was an EU report that described Malta and I’m quoting directly, “a mafia paradise where billions of illegally obtained euros are laundered”, and an “ATM, a cash machine, for the Italian mafia”.
[00:19:31] But, you might be thinking, I thought you said there was a regulator for this industry, that Malta was one of the first countries to create a system to regulate all of this?
[00:19:41] Well, yes, but the regulators aren’t always very good at regulating.
[00:19:46] Indeed, two of the most senior executives at the Malta Gaming Authority, the government authority that regulates the online gambling industry, have been charged with corruption.
[00:19:59] In the case of the former CEO, literally the boss of the regulator, he was charged with selling insider information to a man named Yorgen Fenech. If you recognise that name, he is also the man accused of masterminding the assassination of the journalist Daphne Caruana Galizia.
[00:20:19] So, although Malta is very keen to portray itself as a clean and respectable place to do business, when the man responsible for regulating an industry is accused of doing deals with the country’s most famous murder suspect, well it doesn’t exactly ooze confidence.
[00:20:37] And indeed, not only because of this, but because of a wide range of financial scandals, Malta was actually placed on something called the “grey list” by the “FATF”, the Financial Action Task Force. We don’t need to go into detail of exactly what this is, but it is essentially a naughty list of countries believed to be involved in money laundering and crooked behaviour.
[00:21:02] It's now off this “grey list”, after promising to better regulate the financial sector, but as that EU report is evidence of, there are still plenty of people who believe that Maltese online casinos are a vital part of organised criminals’ money laundering operations.
[00:21:21] So, what next?
[00:21:23] The past 15 years or so have been characterised by huge economic growth and increased levels of prosperity in Malta, driven predominantly by its transformation into the Las Vegas of the Med.
[00:21:37] But what does the future hold?
[00:21:40] Well, it seems like the good times are not going to last forever.
[00:21:45] Many of the reasons that made Malta an online casino paradise are no longer, or at least they are not as attractive as they once were.
[00:21:55] Many Northern European countries don’t allow online casinos from Malta to operate in their jurisdiction, or if they do, they are heavily regulated.
[00:22:06] What’s more, the cost of living in Malta has dramatically increased since the early 2000s.
[00:22:13] Whereas even 10 years ago a company might have been able to pay an employee €1,500 a month and that employee would have been very happy, this now no longer affords them the same standard of living.
[00:22:28] Sure, it’s still cheaper than Stockholm, but not so much cheaper.
[00:22:34] What’s more, there is the constant construction, pollution, and traffic, and in many respects the quality of life is a lot lower.
[00:22:44] So it’s harder to attract people to come versus 15 years ago.
[00:22:49] And because there are now so many online gambling companies, competition is much harder, and the heyday is, according to some, over.
[00:23:00] Indeed, several online gambling companies have left the island altogether, because there simply aren’t enough reasons to stay.
[00:23:09] So, if this is a reversing trend, if online gambling has peaked in Malta, what's next for this little rock?
[00:23:19] Well, Malta has always been quite creative in its quest to attract money to the island.
[00:23:26] First there was online gambling, then the country started selling citizenship, selling passports, it experimented with cryptocurrency in 2017, and Maltese politicians have made bold but unsubstantiated claims about becoming a centre for Artificial Intelligence.
[00:23:47] One thing is for sure, and that is that Malta hasn’t yet managed to find another “golden goose”, another industry to attract that will bring as much money into the island as online gambling has.
[00:24:01] For many in Malta, this isn’t such a bad thing.
[00:24:06] After all, the arrival of online casinos fundamentally changed the character of the country and kickstarted a period of development that turned the country into a construction site.
[00:24:18] Sure, it left many people with heavier wallets, with more zeros on their bank balance, but for anyone who wasn’t directly involved, and who didn’t reap the benefits, they were left scratching their heads and asking themselves, “who really won the jackpot?”
[00:24:39] OK then, that is it for today's episode on the rise of online gambling in Malta.
[00:24:45] I hope it's been an interesting one, and that you've learnt something new.
[00:24:49] As always, I would love to know what you thought of this episode.
[00:24:52] Have you been to Malta before? In case you weren’t aware, it’s a big destination for people coming to learn English, although this is now dwarfed by the size of the online gambling industry.
[00:25:04] If you have been, did you know that the country was such a centre for online gambling?
[00:25:09] I would love to know, so let’s get this discussion started.
[00:25:13] You can head right into our community forum, which is at community.leonardoenglish.com and get chatting away to other curious minds.
[00:25:21] You've been listening to English Learning for Curious Minds, by Leonardo English.
[00:25:26] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.
[END OF EPISODE]
[00:00:00] Hello, hello hello, and welcome to English Learning for Curious Minds, by Leonardo English.
[00:00:12] The show where you can listen to fascinating stories, and learn weird and wonderful things about the world at the same time as improving your English.
[00:00:21] I'm Alastair Budge, and today we are going to be talking about a subject that is close to my heart, both emotionally and geographically.
[00:00:31] And that is the question of how Malta, a tiny country in the middle of the Mediterranean Sea, became a, if not the, global centre for online gambling.
[00:00:44] It’s a fascinating story that gets you thinking about the interconnectedness of the global economy, what small countries do to survive, how wealth is created, distributed and shared, or not shared, and how this affects the societies where this all takes place.
[00:01:02] So, I hope you’ll enjoy it.
[00:01:04] OK then, Poker Island, the story of How Malta Became An Online Gambling Hub.
[00:01:14] It was a quarter past seven on a Saturday morning. I was queuing to pay in a local supermarket, holding my young son’s hand.
[00:01:24] We'd gone out to buy butter and milk, as making pancakes on a Saturday morning had become somewhat of a ritual for us.
[00:01:34] In front of me in the queue were two tall, blond haired men in their mid-20s.
[00:01:41] They'd clearly not yet gone to sleep, it had been a busy night, and they were buying cigarettes and beers to keep them going. They were both red in the face, and rubbing their noses, telltale signs that all manner of substances were still flowing through their bloodstream.
[00:02:01] The cashier scanned the last item, and told the first man the price.
[00:02:06] “Fourteen Euros twenty seven please”.
[00:02:09] “Sure”, he said, in a Scandinavian accent.
[00:02:13] He reached into his pocket, bringing out a huge wad of 50 euro notes, thousands if not tens of thousands of Euros simply hanging loose in his trouser pocket.
[00:02:26] He tried to take one out and hand it to the cashier, but as he did so he fumbled, with the rest falling to the floor.
[00:02:36] I looked down at the ground, which was covered with what must have been thousands of Euros falling all around his feet. The man didn’t seem to notice me, but bent down and started picking up the dropped fifties, stuffing them into his pocket like he was picking up rubbish.
[00:02:56] “You’ve missed one”, said the cashier kindly, pointing out a fifty Euro note under his foot.
[00:03:02] “Thanks”, said the man, collecting his change, the beer and cigarettes, picking up the remaining fifty, and joining his friend who was waiting outside.
[00:03:13] So, what were these men doing in Malta, why did they have so much money that it was falling out of their pockets, what has this all meant to a tiny island nation and what can we learn from all of this?
[00:03:26] Well, I should start with a brief introduction to the location, the place we are talking about today.
[00:03:33] It’s called Malta, and it’s a tiny island, or technically collection of three islands, in the Mediterranean, just south of Sicily.
[00:03:44] If you picture Sicily, the football at the bottom of Italy, then you go almost exactly 100km south, you will hit Malta.
[00:03:53] But you’ll need to look very carefully, because it’s easy to miss.
[00:03:58] The island of Malta itself is only 246 km squared, and the entire country, which consists of two other smaller islands, is only 316 km squared.
[00:04:13] To put that in perspective, the metropolitan area of London is 8,382 kilometres square, so you could fit almost 27 Maltas inside London.
[00:04:26] And to go on a very quick, a whistlestop, tour of Maltese history, it has been occupied by everyone from the Phoenicians to the Knights of Malta, then briefly the French before being occupied by the British for over 150 years.
[00:04:42] It is, essentially, a tiny rock in the middle of the Mediterranean. It was useful from a strategic point of view, because it has a deep harbour and was a useful place for other powers to hold, but there really isn't anything there, no natural resources, no oil or gas, it’s just a rock in the sea.
[00:05:05] And it has gone through periods of great wealth and abject poverty, with the rulers of the day often enjoying lavish standards of living while the local people, well, didn’t.
[00:05:18] It became independent from the UK technically in 1964, but not fully until 1979, when the British navy left.
[00:05:29] And although it is an independent country, with a fiercely proud people, it still retains many signs of its former occupier: English is one of the two official languages, they drive on the same side of the road as in the UK, the electric plugs are the same, they even have the same distinctive red post boxes as in the UK.
[00:05:52] And after it gained its independence, the Maltese economy did grow relatively healthily, but it started from a very low bar - in 1980 the GDP per capita was around €12,000, less than half of its closest neighbour, Italy.
[00:06:12] To put it another way, it was a very poor country with not much going for it apart from good weather.
[00:06:20] Fast forward to the modern day and Malta is one of the fastest-growing economies in Europe, with Ferraris cruising down the streets and luxury yachts docked in its marinas.
[00:06:33] So, what happened?
[00:06:35] Well, two words: online gambling.
[00:06:39] Over the past almost 20 years Malta has transformed itself from a cheap package holiday destination to the Las Vegas of the Mediterranean, or perhaps more accurately the Las Vegas of the Internet.
[00:06:55] On the first of May, 2004, when along with Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, Malta joined the European Union.
[00:07:09] 15 became 25, and the union now encompassed the majority of the continent’s geographical area.
[00:07:17] Clearly, even if online gambling didn’t exist, joining the EU would have been a huge boom for Malta, as it allowed free movement through other member countries, and made it much more attractive both as a holiday destination and a destination for people to come and learn English, and then travel to other countries in the EU.
[00:07:39] But we are talking about gambling, so why is this important?
[00:07:44] Well, before the ink was dry on the agreement for Malta to join the EU, politicians in Malta had a plan.
[00:07:53] The plan was to create a regulatory framework to give licences to online gambling operators, which would allow them to what’s called “passport” to other jurisdictions.
[00:08:06] To operate an online casino you need a licence, and casinos could set up shop, they could base themselves in Malta, and then allow gamblers from all over the world to play on their online casinos.
[00:08:20] So, Malta created this favourable regulatory framework, meaning that it was relatively easy and affordable to get a licence to start an online casino, and start accepting customers from everywhere from Stockholm to Berlin.
[00:08:36] Malta also has several other advantages for these online gambling companies.
[00:08:42] The first was a very low corporate tax rate, effectively 5%. When compared to the tax rates in Scandinavia, which is a particularly popular region for online gambling, clearly there were considerable savings to be made.
[00:08:59] Secondly, and again this is related to costs, Malta’s low cost of living and low salaries, at least 20 years ago, meant that online gambling companies could pay what would have been low wages in Stockholm but would have allowed their employees to live lavish lifestyles in Malta.
[00:09:19] Now it’s a completely different story, as I’ll come to explain, but even 10 years ago it was possible to earn a salary of, let’s say, €1,500 a month in Malta and live like a king.
[00:09:34] And a third factor was simply geographical. It’s a tiny Mediterranean island with beaches and sun most of the year.
[00:09:43] Compared to the dark winters of Northern Europe, well, you can see the attraction of 300 days of sun.
[00:09:51] So, what happened?
[00:09:54] Sure enough, the Maltese government's plan worked.
[00:09:58] Slowly but surely, companies upped sticks, they moved south, attracted by favourable legislation, low taxes, and the possibility of paying their staff significantly less than they were paid before.
[00:10:12] The first company came, then the second, the third and the fourth, and now there are literally hundreds of online gambling companies.
[00:10:22] As the Maltese government hoped, employees from these first companies left to start their own companies, employing more people, paying taxes, renting apartments, buying food, doing all the sort of things that people do, all the sort of things that bring money into an economy.
[00:10:40] And on the subject of money, especially in the early days of online gambling in Malta, these companies would make eye-watering amounts of money, often with very small teams.
[00:10:53] It was a complete gold rush, and 18-year-olds working on websites from around their kitchen table ended up making millions of Euros every single month.
[00:11:04] Now, before we get into the impact of this, it’s worth giving you a brief outline of how online gambling works, because after all, the money comes from somewhere.
[00:11:17] So, there is you or me, the person who decides that they want to gamble online.
[00:11:23] Well, not actually me, perhaps not you, but according to some statistics, up to 20% of the world’s population gambles online.
[00:11:33] So, what happens?
[00:11:35] Well, there is a person, let’s call him Jim.
[00:11:39] Jim probably searches on Google for something like “best casino bonuses”, he’ll find a website with a load of reviews, he’ll click on a link to a casino that promises to give him €100 if he deposits €100, let’s say.
[00:11:55] He’ll go to that online casino, he’ll deposit his €100, the casino will give him an extra €100 to play with, but statistically speaking, he’ll probably end up losing it all.
[00:12:06] Or he might win a little bit, then he’ll lose a bit, he might deposit some more money because he thinks “I almost won, let me just have one last try”.
[00:12:15] But he’ll end up losing everything he put in.
[00:12:19] And where does this money go?
[00:12:22] If you’re thinking, “well, it just goes to the online casino”, well let me tell you it’s usually a bit more complicated than that.
[00:12:30] The first recommendation website, called an affiliate, will most likely get a percentage of what Jim lost. The casino will normally license the actual game from a game provider, and they might get a percentage of what Jim deposited, or what he lost. And the company that manages the flow of money might also get something.
[00:12:50] The rest goes to the casino operator.
[00:12:53] And Jim, of course, well, he’s left with nothing.
[00:12:57] If he had deposited enough money, perhaps the casino’s internal systems would have flagged him as a “high potential” player, a “VIP”, and he might get a nice message from someone informing him that they’ll give him more credit to come back.
[00:13:13] So he deposits more money to get the credit, maybe he even wins big. Perhaps he might win tens of thousands of Euros.
[00:13:22] But if he does, in many cases the casino will give him the money back in smaller tranches, not the entire amount at once. Unless, that is, he wants to use it as credit in the casino, in which case he can have it all back immediately to play at once.
[00:13:39] So, Jim decides to do this, after all, he got lucky last time.
[00:13:44] Then he loses it all again.
[00:13:47] And if Jim was a really big fish, someone gambling tens of thousands of Euros every day, he would probably have someone who would text him at all hours of the day, inviting him to concerts, on holidays, to sporting events, and showering him with gifts, all with the intention of getting him to log back in to the casino and deposit more money.
[00:14:12] There’s a saying in English, “the house always wins”, meaning that the casino always comes out on top, that you can never beat the casino. And it’s a saying for a very good reason; it’s true.
[00:14:24] And although some casinos do go bust, they do lose money, statistically speaking they will always come out on top.
[00:14:33] Now, why am I mentioning this, why am I going into such detail? I’m certainly not advocating that you start gambling online.
[00:14:42] As you probably know, it can be a slippery slope, can be addictive, and leads to the destruction of marriages, homelessness, and suicide.
[00:14:51] So don’t start.
[00:14:53] But I mention it because the important thing to underline is that every single cent that has come into Malta through online gambling has come from someone like Jim, often sitting alone on their mobile phone in a toilet cubicle at their office, typing their bank details into yet another online casino to try to regain the feeling of that first win.
[00:15:16] The adverts for these online casinos show glamorous men and women having fun at poker tables, but the reality is that it’s much more likely to be someone on their own playing a slot machine on their phone.
[00:15:30] And when it comes to quite how much money online gambling has brought to Malta, how much money has been lost by these players, by punters, the sums are enormous.
[00:15:43] Today the online gambling industry directly contributes around 14% of Malta’s GDP, and is worth around €2 billion a year.
[00:15:55] €2 billion might sound like pocket change, a small sum, for a larger country, but remember this is one of the smallest countries in Europe. It’s about €4,000 for every person on the island, every single year.
[00:16:12] It has become a key employer, responsible for tens of thousands of people, and remember this is out of a local population of under half a million people.
[00:16:23] And some of the biggest online gambling companies in the world are now based here, or at least have some of their operations here.
[00:16:32] Indeed, 10% of all online gambling companies have a presence in Malta, in this small country that would be a tiny neighbourhood of London.
[00:16:43] And what has this done to Malta? What has it done to the island?
[00:16:48] Well, for lots of people it has meant that they have made lots of money, with some growing spectacularly wealthy.
[00:16:56] For the casino owners, the people and companies who own the affiliate websites and the game providers, clearly they have been direct beneficiaries of this.
[00:17:07] But this isn’t restricted to the people directly involved in online gambling. There has been a property boom in Malta over the past 10 years, with property prices rising 200% in the space of a decade.
[00:17:21] Indeed, if you come to Malta today, there is barely a single place on the island where you will not be able to hear a large pneumatic drill in the background.
[00:17:32] This is good news for property developers and the construction industry, but for almost everyone else it is destructive, in the literal sense.
[00:17:42] You’ll see beautiful old townhouses being knocked down by wrecking balls, you’ll see the previously unspoilt countryside with huge cranes dotting the landscape. There’s even a joke that Maltese people tell, that the “crane” is now the national bird of Malta.
[00:18:00] With this influx of people and money, it has meant that the cost of living has increased hugely, and young people starting out with their first jobs have very little chance of ever owning their own apartment unless they have help from their parents, or if they join an online gambling company.
[00:18:19] But the effects of Malta becoming an online gambling hub are even further reaching.
[00:18:25] Specifically, it has made it an even more attractive destination for organised criminals to launder their profits.
[00:18:33] Now, real-life physical casinos have long been used by criminals to launder their money. Dirty cash goes in, and it comes out at the end clean as a whistle.
[00:18:46] Online casinos on some levels make this slightly harder, because digital money leaves a trace, but on another level it makes it much easier, because you don’t have to physically take the cash to the casino.
[00:19:02] As a result, organised criminals have used, and still use, Maltese online casinos to launder billions of dollars.
[00:19:11] Indeed, in January of 2023, there was an EU report that described Malta and I’m quoting directly, “a mafia paradise where billions of illegally obtained euros are laundered”, and an “ATM, a cash machine, for the Italian mafia”.
[00:19:31] But, you might be thinking, I thought you said there was a regulator for this industry, that Malta was one of the first countries to create a system to regulate all of this?
[00:19:41] Well, yes, but the regulators aren’t always very good at regulating.
[00:19:46] Indeed, two of the most senior executives at the Malta Gaming Authority, the government authority that regulates the online gambling industry, have been charged with corruption.
[00:19:59] In the case of the former CEO, literally the boss of the regulator, he was charged with selling insider information to a man named Yorgen Fenech. If you recognise that name, he is also the man accused of masterminding the assassination of the journalist Daphne Caruana Galizia.
[00:20:19] So, although Malta is very keen to portray itself as a clean and respectable place to do business, when the man responsible for regulating an industry is accused of doing deals with the country’s most famous murder suspect, well it doesn’t exactly ooze confidence.
[00:20:37] And indeed, not only because of this, but because of a wide range of financial scandals, Malta was actually placed on something called the “grey list” by the “FATF”, the Financial Action Task Force. We don’t need to go into detail of exactly what this is, but it is essentially a naughty list of countries believed to be involved in money laundering and crooked behaviour.
[00:21:02] It's now off this “grey list”, after promising to better regulate the financial sector, but as that EU report is evidence of, there are still plenty of people who believe that Maltese online casinos are a vital part of organised criminals’ money laundering operations.
[00:21:21] So, what next?
[00:21:23] The past 15 years or so have been characterised by huge economic growth and increased levels of prosperity in Malta, driven predominantly by its transformation into the Las Vegas of the Med.
[00:21:37] But what does the future hold?
[00:21:40] Well, it seems like the good times are not going to last forever.
[00:21:45] Many of the reasons that made Malta an online casino paradise are no longer, or at least they are not as attractive as they once were.
[00:21:55] Many Northern European countries don’t allow online casinos from Malta to operate in their jurisdiction, or if they do, they are heavily regulated.
[00:22:06] What’s more, the cost of living in Malta has dramatically increased since the early 2000s.
[00:22:13] Whereas even 10 years ago a company might have been able to pay an employee €1,500 a month and that employee would have been very happy, this now no longer affords them the same standard of living.
[00:22:28] Sure, it’s still cheaper than Stockholm, but not so much cheaper.
[00:22:34] What’s more, there is the constant construction, pollution, and traffic, and in many respects the quality of life is a lot lower.
[00:22:44] So it’s harder to attract people to come versus 15 years ago.
[00:22:49] And because there are now so many online gambling companies, competition is much harder, and the heyday is, according to some, over.
[00:23:00] Indeed, several online gambling companies have left the island altogether, because there simply aren’t enough reasons to stay.
[00:23:09] So, if this is a reversing trend, if online gambling has peaked in Malta, what's next for this little rock?
[00:23:19] Well, Malta has always been quite creative in its quest to attract money to the island.
[00:23:26] First there was online gambling, then the country started selling citizenship, selling passports, it experimented with cryptocurrency in 2017, and Maltese politicians have made bold but unsubstantiated claims about becoming a centre for Artificial Intelligence.
[00:23:47] One thing is for sure, and that is that Malta hasn’t yet managed to find another “golden goose”, another industry to attract that will bring as much money into the island as online gambling has.
[00:24:01] For many in Malta, this isn’t such a bad thing.
[00:24:06] After all, the arrival of online casinos fundamentally changed the character of the country and kickstarted a period of development that turned the country into a construction site.
[00:24:18] Sure, it left many people with heavier wallets, with more zeros on their bank balance, but for anyone who wasn’t directly involved, and who didn’t reap the benefits, they were left scratching their heads and asking themselves, “who really won the jackpot?”
[00:24:39] OK then, that is it for today's episode on the rise of online gambling in Malta.
[00:24:45] I hope it's been an interesting one, and that you've learnt something new.
[00:24:49] As always, I would love to know what you thought of this episode.
[00:24:52] Have you been to Malta before? In case you weren’t aware, it’s a big destination for people coming to learn English, although this is now dwarfed by the size of the online gambling industry.
[00:25:04] If you have been, did you know that the country was such a centre for online gambling?
[00:25:09] I would love to know, so let’s get this discussion started.
[00:25:13] You can head right into our community forum, which is at community.leonardoenglish.com and get chatting away to other curious minds.
[00:25:21] You've been listening to English Learning for Curious Minds, by Leonardo English.
[00:25:26] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.
[END OF EPISODE]
[00:00:00] Hello, hello hello, and welcome to English Learning for Curious Minds, by Leonardo English.
[00:00:12] The show where you can listen to fascinating stories, and learn weird and wonderful things about the world at the same time as improving your English.
[00:00:21] I'm Alastair Budge, and today we are going to be talking about a subject that is close to my heart, both emotionally and geographically.
[00:00:31] And that is the question of how Malta, a tiny country in the middle of the Mediterranean Sea, became a, if not the, global centre for online gambling.
[00:00:44] It’s a fascinating story that gets you thinking about the interconnectedness of the global economy, what small countries do to survive, how wealth is created, distributed and shared, or not shared, and how this affects the societies where this all takes place.
[00:01:02] So, I hope you’ll enjoy it.
[00:01:04] OK then, Poker Island, the story of How Malta Became An Online Gambling Hub.
[00:01:14] It was a quarter past seven on a Saturday morning. I was queuing to pay in a local supermarket, holding my young son’s hand.
[00:01:24] We'd gone out to buy butter and milk, as making pancakes on a Saturday morning had become somewhat of a ritual for us.
[00:01:34] In front of me in the queue were two tall, blond haired men in their mid-20s.
[00:01:41] They'd clearly not yet gone to sleep, it had been a busy night, and they were buying cigarettes and beers to keep them going. They were both red in the face, and rubbing their noses, telltale signs that all manner of substances were still flowing through their bloodstream.
[00:02:01] The cashier scanned the last item, and told the first man the price.
[00:02:06] “Fourteen Euros twenty seven please”.
[00:02:09] “Sure”, he said, in a Scandinavian accent.
[00:02:13] He reached into his pocket, bringing out a huge wad of 50 euro notes, thousands if not tens of thousands of Euros simply hanging loose in his trouser pocket.
[00:02:26] He tried to take one out and hand it to the cashier, but as he did so he fumbled, with the rest falling to the floor.
[00:02:36] I looked down at the ground, which was covered with what must have been thousands of Euros falling all around his feet. The man didn’t seem to notice me, but bent down and started picking up the dropped fifties, stuffing them into his pocket like he was picking up rubbish.
[00:02:56] “You’ve missed one”, said the cashier kindly, pointing out a fifty Euro note under his foot.
[00:03:02] “Thanks”, said the man, collecting his change, the beer and cigarettes, picking up the remaining fifty, and joining his friend who was waiting outside.
[00:03:13] So, what were these men doing in Malta, why did they have so much money that it was falling out of their pockets, what has this all meant to a tiny island nation and what can we learn from all of this?
[00:03:26] Well, I should start with a brief introduction to the location, the place we are talking about today.
[00:03:33] It’s called Malta, and it’s a tiny island, or technically collection of three islands, in the Mediterranean, just south of Sicily.
[00:03:44] If you picture Sicily, the football at the bottom of Italy, then you go almost exactly 100km south, you will hit Malta.
[00:03:53] But you’ll need to look very carefully, because it’s easy to miss.
[00:03:58] The island of Malta itself is only 246 km squared, and the entire country, which consists of two other smaller islands, is only 316 km squared.
[00:04:13] To put that in perspective, the metropolitan area of London is 8,382 kilometres square, so you could fit almost 27 Maltas inside London.
[00:04:26] And to go on a very quick, a whistlestop, tour of Maltese history, it has been occupied by everyone from the Phoenicians to the Knights of Malta, then briefly the French before being occupied by the British for over 150 years.
[00:04:42] It is, essentially, a tiny rock in the middle of the Mediterranean. It was useful from a strategic point of view, because it has a deep harbour and was a useful place for other powers to hold, but there really isn't anything there, no natural resources, no oil or gas, it’s just a rock in the sea.
[00:05:05] And it has gone through periods of great wealth and abject poverty, with the rulers of the day often enjoying lavish standards of living while the local people, well, didn’t.
[00:05:18] It became independent from the UK technically in 1964, but not fully until 1979, when the British navy left.
[00:05:29] And although it is an independent country, with a fiercely proud people, it still retains many signs of its former occupier: English is one of the two official languages, they drive on the same side of the road as in the UK, the electric plugs are the same, they even have the same distinctive red post boxes as in the UK.
[00:05:52] And after it gained its independence, the Maltese economy did grow relatively healthily, but it started from a very low bar - in 1980 the GDP per capita was around €12,000, less than half of its closest neighbour, Italy.
[00:06:12] To put it another way, it was a very poor country with not much going for it apart from good weather.
[00:06:20] Fast forward to the modern day and Malta is one of the fastest-growing economies in Europe, with Ferraris cruising down the streets and luxury yachts docked in its marinas.
[00:06:33] So, what happened?
[00:06:35] Well, two words: online gambling.
[00:06:39] Over the past almost 20 years Malta has transformed itself from a cheap package holiday destination to the Las Vegas of the Mediterranean, or perhaps more accurately the Las Vegas of the Internet.
[00:06:55] On the first of May, 2004, when along with Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, Malta joined the European Union.
[00:07:09] 15 became 25, and the union now encompassed the majority of the continent’s geographical area.
[00:07:17] Clearly, even if online gambling didn’t exist, joining the EU would have been a huge boom for Malta, as it allowed free movement through other member countries, and made it much more attractive both as a holiday destination and a destination for people to come and learn English, and then travel to other countries in the EU.
[00:07:39] But we are talking about gambling, so why is this important?
[00:07:44] Well, before the ink was dry on the agreement for Malta to join the EU, politicians in Malta had a plan.
[00:07:53] The plan was to create a regulatory framework to give licences to online gambling operators, which would allow them to what’s called “passport” to other jurisdictions.
[00:08:06] To operate an online casino you need a licence, and casinos could set up shop, they could base themselves in Malta, and then allow gamblers from all over the world to play on their online casinos.
[00:08:20] So, Malta created this favourable regulatory framework, meaning that it was relatively easy and affordable to get a licence to start an online casino, and start accepting customers from everywhere from Stockholm to Berlin.
[00:08:36] Malta also has several other advantages for these online gambling companies.
[00:08:42] The first was a very low corporate tax rate, effectively 5%. When compared to the tax rates in Scandinavia, which is a particularly popular region for online gambling, clearly there were considerable savings to be made.
[00:08:59] Secondly, and again this is related to costs, Malta’s low cost of living and low salaries, at least 20 years ago, meant that online gambling companies could pay what would have been low wages in Stockholm but would have allowed their employees to live lavish lifestyles in Malta.
[00:09:19] Now it’s a completely different story, as I’ll come to explain, but even 10 years ago it was possible to earn a salary of, let’s say, €1,500 a month in Malta and live like a king.
[00:09:34] And a third factor was simply geographical. It’s a tiny Mediterranean island with beaches and sun most of the year.
[00:09:43] Compared to the dark winters of Northern Europe, well, you can see the attraction of 300 days of sun.
[00:09:51] So, what happened?
[00:09:54] Sure enough, the Maltese government's plan worked.
[00:09:58] Slowly but surely, companies upped sticks, they moved south, attracted by favourable legislation, low taxes, and the possibility of paying their staff significantly less than they were paid before.
[00:10:12] The first company came, then the second, the third and the fourth, and now there are literally hundreds of online gambling companies.
[00:10:22] As the Maltese government hoped, employees from these first companies left to start their own companies, employing more people, paying taxes, renting apartments, buying food, doing all the sort of things that people do, all the sort of things that bring money into an economy.
[00:10:40] And on the subject of money, especially in the early days of online gambling in Malta, these companies would make eye-watering amounts of money, often with very small teams.
[00:10:53] It was a complete gold rush, and 18-year-olds working on websites from around their kitchen table ended up making millions of Euros every single month.
[00:11:04] Now, before we get into the impact of this, it’s worth giving you a brief outline of how online gambling works, because after all, the money comes from somewhere.
[00:11:17] So, there is you or me, the person who decides that they want to gamble online.
[00:11:23] Well, not actually me, perhaps not you, but according to some statistics, up to 20% of the world’s population gambles online.
[00:11:33] So, what happens?
[00:11:35] Well, there is a person, let’s call him Jim.
[00:11:39] Jim probably searches on Google for something like “best casino bonuses”, he’ll find a website with a load of reviews, he’ll click on a link to a casino that promises to give him €100 if he deposits €100, let’s say.
[00:11:55] He’ll go to that online casino, he’ll deposit his €100, the casino will give him an extra €100 to play with, but statistically speaking, he’ll probably end up losing it all.
[00:12:06] Or he might win a little bit, then he’ll lose a bit, he might deposit some more money because he thinks “I almost won, let me just have one last try”.
[00:12:15] But he’ll end up losing everything he put in.
[00:12:19] And where does this money go?
[00:12:22] If you’re thinking, “well, it just goes to the online casino”, well let me tell you it’s usually a bit more complicated than that.
[00:12:30] The first recommendation website, called an affiliate, will most likely get a percentage of what Jim lost. The casino will normally license the actual game from a game provider, and they might get a percentage of what Jim deposited, or what he lost. And the company that manages the flow of money might also get something.
[00:12:50] The rest goes to the casino operator.
[00:12:53] And Jim, of course, well, he’s left with nothing.
[00:12:57] If he had deposited enough money, perhaps the casino’s internal systems would have flagged him as a “high potential” player, a “VIP”, and he might get a nice message from someone informing him that they’ll give him more credit to come back.
[00:13:13] So he deposits more money to get the credit, maybe he even wins big. Perhaps he might win tens of thousands of Euros.
[00:13:22] But if he does, in many cases the casino will give him the money back in smaller tranches, not the entire amount at once. Unless, that is, he wants to use it as credit in the casino, in which case he can have it all back immediately to play at once.
[00:13:39] So, Jim decides to do this, after all, he got lucky last time.
[00:13:44] Then he loses it all again.
[00:13:47] And if Jim was a really big fish, someone gambling tens of thousands of Euros every day, he would probably have someone who would text him at all hours of the day, inviting him to concerts, on holidays, to sporting events, and showering him with gifts, all with the intention of getting him to log back in to the casino and deposit more money.
[00:14:12] There’s a saying in English, “the house always wins”, meaning that the casino always comes out on top, that you can never beat the casino. And it’s a saying for a very good reason; it’s true.
[00:14:24] And although some casinos do go bust, they do lose money, statistically speaking they will always come out on top.
[00:14:33] Now, why am I mentioning this, why am I going into such detail? I’m certainly not advocating that you start gambling online.
[00:14:42] As you probably know, it can be a slippery slope, can be addictive, and leads to the destruction of marriages, homelessness, and suicide.
[00:14:51] So don’t start.
[00:14:53] But I mention it because the important thing to underline is that every single cent that has come into Malta through online gambling has come from someone like Jim, often sitting alone on their mobile phone in a toilet cubicle at their office, typing their bank details into yet another online casino to try to regain the feeling of that first win.
[00:15:16] The adverts for these online casinos show glamorous men and women having fun at poker tables, but the reality is that it’s much more likely to be someone on their own playing a slot machine on their phone.
[00:15:30] And when it comes to quite how much money online gambling has brought to Malta, how much money has been lost by these players, by punters, the sums are enormous.
[00:15:43] Today the online gambling industry directly contributes around 14% of Malta’s GDP, and is worth around €2 billion a year.
[00:15:55] €2 billion might sound like pocket change, a small sum, for a larger country, but remember this is one of the smallest countries in Europe. It’s about €4,000 for every person on the island, every single year.
[00:16:12] It has become a key employer, responsible for tens of thousands of people, and remember this is out of a local population of under half a million people.
[00:16:23] And some of the biggest online gambling companies in the world are now based here, or at least have some of their operations here.
[00:16:32] Indeed, 10% of all online gambling companies have a presence in Malta, in this small country that would be a tiny neighbourhood of London.
[00:16:43] And what has this done to Malta? What has it done to the island?
[00:16:48] Well, for lots of people it has meant that they have made lots of money, with some growing spectacularly wealthy.
[00:16:56] For the casino owners, the people and companies who own the affiliate websites and the game providers, clearly they have been direct beneficiaries of this.
[00:17:07] But this isn’t restricted to the people directly involved in online gambling. There has been a property boom in Malta over the past 10 years, with property prices rising 200% in the space of a decade.
[00:17:21] Indeed, if you come to Malta today, there is barely a single place on the island where you will not be able to hear a large pneumatic drill in the background.
[00:17:32] This is good news for property developers and the construction industry, but for almost everyone else it is destructive, in the literal sense.
[00:17:42] You’ll see beautiful old townhouses being knocked down by wrecking balls, you’ll see the previously unspoilt countryside with huge cranes dotting the landscape. There’s even a joke that Maltese people tell, that the “crane” is now the national bird of Malta.
[00:18:00] With this influx of people and money, it has meant that the cost of living has increased hugely, and young people starting out with their first jobs have very little chance of ever owning their own apartment unless they have help from their parents, or if they join an online gambling company.
[00:18:19] But the effects of Malta becoming an online gambling hub are even further reaching.
[00:18:25] Specifically, it has made it an even more attractive destination for organised criminals to launder their profits.
[00:18:33] Now, real-life physical casinos have long been used by criminals to launder their money. Dirty cash goes in, and it comes out at the end clean as a whistle.
[00:18:46] Online casinos on some levels make this slightly harder, because digital money leaves a trace, but on another level it makes it much easier, because you don’t have to physically take the cash to the casino.
[00:19:02] As a result, organised criminals have used, and still use, Maltese online casinos to launder billions of dollars.
[00:19:11] Indeed, in January of 2023, there was an EU report that described Malta and I’m quoting directly, “a mafia paradise where billions of illegally obtained euros are laundered”, and an “ATM, a cash machine, for the Italian mafia”.
[00:19:31] But, you might be thinking, I thought you said there was a regulator for this industry, that Malta was one of the first countries to create a system to regulate all of this?
[00:19:41] Well, yes, but the regulators aren’t always very good at regulating.
[00:19:46] Indeed, two of the most senior executives at the Malta Gaming Authority, the government authority that regulates the online gambling industry, have been charged with corruption.
[00:19:59] In the case of the former CEO, literally the boss of the regulator, he was charged with selling insider information to a man named Yorgen Fenech. If you recognise that name, he is also the man accused of masterminding the assassination of the journalist Daphne Caruana Galizia.
[00:20:19] So, although Malta is very keen to portray itself as a clean and respectable place to do business, when the man responsible for regulating an industry is accused of doing deals with the country’s most famous murder suspect, well it doesn’t exactly ooze confidence.
[00:20:37] And indeed, not only because of this, but because of a wide range of financial scandals, Malta was actually placed on something called the “grey list” by the “FATF”, the Financial Action Task Force. We don’t need to go into detail of exactly what this is, but it is essentially a naughty list of countries believed to be involved in money laundering and crooked behaviour.
[00:21:02] It's now off this “grey list”, after promising to better regulate the financial sector, but as that EU report is evidence of, there are still plenty of people who believe that Maltese online casinos are a vital part of organised criminals’ money laundering operations.
[00:21:21] So, what next?
[00:21:23] The past 15 years or so have been characterised by huge economic growth and increased levels of prosperity in Malta, driven predominantly by its transformation into the Las Vegas of the Med.
[00:21:37] But what does the future hold?
[00:21:40] Well, it seems like the good times are not going to last forever.
[00:21:45] Many of the reasons that made Malta an online casino paradise are no longer, or at least they are not as attractive as they once were.
[00:21:55] Many Northern European countries don’t allow online casinos from Malta to operate in their jurisdiction, or if they do, they are heavily regulated.
[00:22:06] What’s more, the cost of living in Malta has dramatically increased since the early 2000s.
[00:22:13] Whereas even 10 years ago a company might have been able to pay an employee €1,500 a month and that employee would have been very happy, this now no longer affords them the same standard of living.
[00:22:28] Sure, it’s still cheaper than Stockholm, but not so much cheaper.
[00:22:34] What’s more, there is the constant construction, pollution, and traffic, and in many respects the quality of life is a lot lower.
[00:22:44] So it’s harder to attract people to come versus 15 years ago.
[00:22:49] And because there are now so many online gambling companies, competition is much harder, and the heyday is, according to some, over.
[00:23:00] Indeed, several online gambling companies have left the island altogether, because there simply aren’t enough reasons to stay.
[00:23:09] So, if this is a reversing trend, if online gambling has peaked in Malta, what's next for this little rock?
[00:23:19] Well, Malta has always been quite creative in its quest to attract money to the island.
[00:23:26] First there was online gambling, then the country started selling citizenship, selling passports, it experimented with cryptocurrency in 2017, and Maltese politicians have made bold but unsubstantiated claims about becoming a centre for Artificial Intelligence.
[00:23:47] One thing is for sure, and that is that Malta hasn’t yet managed to find another “golden goose”, another industry to attract that will bring as much money into the island as online gambling has.
[00:24:01] For many in Malta, this isn’t such a bad thing.
[00:24:06] After all, the arrival of online casinos fundamentally changed the character of the country and kickstarted a period of development that turned the country into a construction site.
[00:24:18] Sure, it left many people with heavier wallets, with more zeros on their bank balance, but for anyone who wasn’t directly involved, and who didn’t reap the benefits, they were left scratching their heads and asking themselves, “who really won the jackpot?”
[00:24:39] OK then, that is it for today's episode on the rise of online gambling in Malta.
[00:24:45] I hope it's been an interesting one, and that you've learnt something new.
[00:24:49] As always, I would love to know what you thought of this episode.
[00:24:52] Have you been to Malta before? In case you weren’t aware, it’s a big destination for people coming to learn English, although this is now dwarfed by the size of the online gambling industry.
[00:25:04] If you have been, did you know that the country was such a centre for online gambling?
[00:25:09] I would love to know, so let’s get this discussion started.
[00:25:13] You can head right into our community forum, which is at community.leonardoenglish.com and get chatting away to other curious minds.
[00:25:21] You've been listening to English Learning for Curious Minds, by Leonardo English.
[00:25:26] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.
[END OF EPISODE]
