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How a Tiny Island in Europe Sold Its Soul to Online Gaming

SLIEMA, Malta – It’s a Friday night at one of Malta’s larger upscale hotels in a fishing village turned sprawling town called St. Julian’s, and in the ballroom on the lower ground floor a woman in a silver dress is performing a not-quite-acoustic set, seated beside a guitarist whose long, dark hair is pinned back by a pair of sunglasses. 

“So good, so good,” she sings. “I’ve got you.” Before her are two dozen tables of wine bottles, tuxedos, and dresses. Most of the male guests appear middle-aged and some are mildly intoxicated, while the women present are mostly younger. A large advert at the side of the stage proclaims that a digital consultancy called MYC will ensure that your business images are distinctive, bold and respected. “We can be extraordinary, together,” it adds, helpfully. 

In the foyer outside, another tall display features the name of a group established by the Maltese government and the country’s gambling regulator to promote the island as a destination for businesses that develop, market, operate and profit from online gambling websites and apps. In front of that, a small strip of red carpet has been unrolled, where a photographer waits, lights raised high on stands, to capture the departing guests. 

Four older men in jackets, all clutching awards, surround a woman in a dark top. The event photographer snaps several formal group shots, then grabs a spotlight in one hand and, with the other, rattles off a short series of photos on proffered smartphones. There are high-fives and backslaps, and a young British guy in a grey jacket enters stage right, shouting “I won it” to a possible acquaintance with a beard and a large disc earring, before walking on and quickly pulling out his phone, suddenly oblivious to the surrounding melee of hugs, squeals and whoops. 

The evening’s Malta iGaming Excellence Awards had recognised excellence in a variety of categories, including top software platform provider for web-based betting and online gambling CEO deemed “best” – most effective, friendliest, or whatever, it’s unclear. The Intercontinental St. Julian’s may not quite rival Los Angeles’ Dolby Theatre, the traditional venue for the Academy Awards, but Malta has in recent years become to online gambling what Hollywood has been to the movie industry, drawing entrepreneurs and executives from across the European continent to this sun-blasted island. The EU’s smallest member state is home to one of the world’s greatest gambling booms since 1960s Vegas. 

Someone who has enjoyed a front-row seat to Malta’s blockbuster growth is Emanuel “Eman” Pulis, a club promoter turned conference planner, whose own career transition mirrors the transformation of the St. Julian’s neighbourhood that he describes fondly as a former “mecca for nightlife, clubs, bars.” It’s early afternoon and outside the temperature has just spiked to 30 degrees Celsius, as he offers a fist-bump before heading into his frigid conference room. He takes a seat under the fluorescent lights, his tan contrasting with the white piping on the collar of his dark blue Ralph Lauren polo shirt. 

“I used to be a party organiser,” he says. “I ditched that because I realised the only people who were spending money buying bottles at my parties were the gaming crowd.” His attachment to the dance party life ended conclusively during the summer of 2012, at an enormous house music event inside a venue called Amazonia. About 7,000 tourists and locals were enjoying a set from headliners Dimitri Vegas and Like Mike, the half-Greek, half-Belgian fraternal DJ act that’s collaborated with artists ranging from Wiz Khalifa to Paris Hilton. In the partygoers’ midst an elevated area served as the VIP bubble, which Pulis realised was “full of Swedish, Norwegian, Scandinavian, great-looking people having a great time,” he recalls, smiling. “They were having fun on their own, spending a tonne of cash. And I realised I needed to be in that bubble.” He pauses, tucking his long, well-conditioned hair behind his ears, drawing attention to several small scars on the side of his left eye. “Why waste time bringing 10,000 people to my party when I can just focus on these few 100 people?” he says with a smile. 

The free-spending swarm of Scandinavians and other Northern Europeans had been drawn to Malta by an online gambling law passed several years earlier that provided the fledgling industry with legal protections and operating rules, which did not yet really exist anywhere else. “You can come to Malta,” Pulis says, summarising the official message from local authorities at the time, “and have the peace of mind that we’re not going to arrest you next day because you’re operating illegally.” 

And while gambling revenues have undoubtedly boosted the country’s tax revenues, their consequences are often most visible in concrete. Lots of it. Pulis now runs well-attended annual conferences centred on internet gambling that depend on industry participants from around the world travelling to Malta, but he’s also not blind to the local economy’s extraordinary transformation over the past two decades. “It did change the landscape of the Maltese islands,” he says of the new nexus. “Restaurants don’t struggle anymore, and the real estate market shot up, especially in certain areas.”

Sandwiched between two small bays named for figures of Catholic devotion, St. Julian’s and nearby St. George’s, the Portomaso marina development includes a subterranean casino that has hosted European poker tournaments and live events for some of the world’s largest gambling operators. It was one of several luxury projects thrown up to cater to Malta’s burgeoning expat population, and the family behind it has ridden the island’s boom to become one of Malta’s wealthiest. That makes sense when high-end real estate agent Trevor Gauci Maistre starts describing the increases to the area’s sale and rental prices, while sitting at the edge of the sprawling Portomaso estate, outside an elegant cafe. It’s all tidy palm trees and high-priced espresso, and it’s named for the two owners, who made appearances in offshore leaks known as the Panama Papers.

Maistre is charming and candid about his success over the past 20 years in the explosive commercial property sector, attributing it to “sometimes hard work, but also the right place, right time.” He closes around six or seven deals a month and “three-quarters of the rental market is iGaming.” He says that in one five-year period, an internet gaming company he worked with went from spending €6,000 (about £5,000) a year on its office lease to €200,000 (about £168,000). In the Sliema neighbourhood, a promontory just down the coast, some prime commercial building rents have almost quadrupled, from €160 (about £135) to €600 (about £500) a square metre. And for those looking to buy high-spec homes, the values of most nearby residential properties have “doubled, even tripled” since 2015, Maistre says. Inside the complex looming over the estate, a large three-bedroom penthouse apartment with a sea view might have been worth €200,000 15 years ago but will now sell for 10 times that amount.

At a new office building nearby, one of his clients – a Swedish-owned gambling firm – rents a floor with dozens of desks in several rows, and large windows at one end. Its Malta-based workforce totals 150, half of them local citizens and 32 other nationalities among the rest. “There are hundreds of millions of rules” in Sweden, says Marie-Louise Theobald, the company’s Maltese head of HR, explaining why so much of the operation is here. “It’s not worth it for a company of our size.” (After this article was published, Theobald messaged to clarify that the company is not opposed to the rules, and seeks to “operate responsibility wherever we offer our services” – but the level of regulation in Sweden makes it “harder for operators like us.”)

She sounds confident her own firm remains committed to the island, but expresses concern about the potential for public corruption in her homeland. “Companies are not as tied down in Malta as they used to be,” she acknowledges, for the reasons that first attracted such firms, like minimal taxes and low wages. She pauses and casts around for other explanations for their continued presence, and comes up with good schools and flight connections. “Besides that, the weather?” 

Robert de Marco is the company’s chief financial officer, a relaxed older man whom Theobald jokes is the office grandfather, since he’s twice the age of many of the younger game designers. Leaning in a doorway between the open-plan space and a well-appointed kitchen area, he laughs at the evolution of the industry. During his first trip to a big internet gambling confab in London many years ago, “it was guys in ponytails and tattoos,” he remembers. “Now it’s all suits.” 

Few participants in the iGaming industry lament that shift, but the easy money in Malta has had a broader impact on its reputation, says Alexandre Tomic, founder and chief executive of a gambling provider called Alea. Raised in France of Serbian heritage, he had planned to travel to Malta for a conference this summer. But COVID-19 kept him at home in Barcelona, where on a video call he runs through several notable instances of malfeasance involving the island’s financial sector. 

In the volatile period that followed Libya’s uprising and the death of Muammar Gaddafi, European investigators reported Maltese authorities had done “very little” to determine the origins of more than a quarter of a billion euros in cash that arrived on the island during 2013, of which they found “substantial amounts” were used to buy yachts and properties. More recently, prosecutors in Sicily and southern Italy have repeatedly linked arrested individuals to gambling-business licences in Malta – several of which were subsequently revoked. 

And then there was the closure in late 2018 of Bulgaria’s Satabank’s Maltese operations. The island’s financial regulator took unprecedented action to shutter the institution, with an extraordinary directive that insisted the bank could no longer welcome new customers, take fresh deposits, or process withdrawals. Assets were seized, paperwork forensically examined, and an independent auditor placed in charge of all operations, after investigators identified that safeguards designed to prevent terrorism financing or criminal financial chicanery at the bank were “lax and at times inexistent.” The European Central Bank eventually withdrew the Bulgarian-owned bank’s licence in mid-2020, and while under the control of auditors it was late last year forced to pay hundreds of thousands of euros in fines to Malta’s financial regulator. 

But perhaps a greater challenge to operators in Malta, Tomic explained, will happen away from the island, with the introduction of gambling regulations in countries like Germany, Sweden and the Netherlands, where until relatively recently Malta-approved firms could legally target customers. The island hosts and licenses dozens of businesses that operate online casinos and sports betting sites marketed to gamblers all over the world, known as B2C (business to consumer) firms. But there are also hundreds of licensed ancillary suppliers like game providers, platform providers and payment providers that are contracted by those operators, known as B2B (business to business) companies. Tomic argues the larger B2C companies won’t stay much longer in Malta, since it no longer offers the low cost of living and correspondingly low wages of a decade ago, and will instead move portions of their workforce closer to their consumers, to newly regulated countries like Germany or Sweden. “Who’s going to stay in Malta?” He asks rhetorically of B2C businesses, before answering his own question. “The dodgy ones who are going to try and address unregulated markets.” 

Those unregulated markets include countries like Brazil and Argentina, where there are no laws on the statute books that govern online gambling, at least for now. But at least half a dozen people with a professional interest in Malta’s online gambling sector acknowledged that more and more developing countries will eventually introduce iGaming regulation. This would hamper companies licensed in Malta from targeting their citizens legally, limit the number of accessible players, and thereby reduce the benefits of holding a Malta gaming licence. And that could mean, argues Tomic, that Malta becomes simply a back-office hub for internet gambling, with its low taxes offering some measure of protection for the profits of B2B companies.

His own business, Alea, allows online casinos to access thousands of prefabricated games through its portal, and he insists its location in cosmopolitan Barcelona is an attractive consideration for would-be employees. The workforce he’s previously encountered in Malta was under-motivated – “lazy” was the word he used – with young employees of the larger firms drawn by the beaches, parties and corporate perks. “They move from one company to another without learning anything,” he says, calling it “an industry of spoiled kids who were earning an insane amount of money.” 

His Norwegian friend, Tobias Svensen, turns 30 this year, and as one of the youngest gambling CEOs on the island, he largely agrees with that characterisation of his peer group. Boasting a minor belly and a major beard, he’s often bullish about his own prospects, having left a role running a team of 35 telemarketers near Oslo when he answered an online advert for a job in Malta five years ago. Less than five months after he arrived, he was overseeing all Norwegian gamblers on his employer’s platforms. “I actually got promoted into the management group while I was technically still on my probation,” he says with a laugh. “That’s a cool story.” 

The Bosnian waiter at the steakhouse where Svensen sat greeted him cheerily and, without producing a menu, listed some of the Norwegian’s preferred dishes, including a generous cut of wagyu beef. Svensen explained that his full-time focus, recording video feeds of internet gamblers to usher interested viewers through to online casinos themselves, had once been merely a side project. He began to use YouTube and Twitch to garner traffic and eyeballs, and these efforts won him enough recognition that he began attending conferences from London to Las Vegas, Amsterdam to Asia, often as a speaker. “When I realised that it’s a serious and achievable goal to actually end up in my position within years,” he continues confidently, “I did put a lot of effort into making sure that you network and hang out with the right people.” He went to great lengths to stress that “the networking opportunity in Malta is amazing.”

It’s a network that exists, at least in part, thanks to Olga Finkel. She’s a computer scientist from Kharkiv, Ukraine, who long ago moved to Malta for personal reasons she doesn’t race to divulge. 

Her 60-person law firm was the first to specialise in servicing internet gambling companies in Malta. It has since helped hundreds of businesses apply for, win – and, during several regulatory disputes, retain – their gaming licences. In a bright orange conference room, she explains her role in designing much of the legislation that governs online gambling in Malta, but she doesn’t hesitate to highlight what she considers past deficiencies in its application.

She recalls a time in the mid-2000s when she used to accompany officials from the island’s gambling regulator to buildings that hosted her client’s gaming servers. “There’s all kinds of security cameras everywhere,” she remembers noticing, as the designated functionary went around marking individual servers – each one had to be located in Malta – with numbered stickers, designed to seal them from possible tampering – something that now seems absurd. “Fifteen years ago, the industry was an unruly, impulsive teenager,” she says, suppressing laughter. “Now it’s a responsible adult.” Some firms do see their licences revoked by the island’s regulator, though – are some of the unruly teenagers she mentioned still kicking about? “You can’t guarantee anything 100%, obviously,” Finkel responds. “But by and large, I think it is a very serious regulated industry.” These days, with the use of cloud storage and blockchain, “there is no cash that they give you across the table,” she said of online gaming firms. “It’s not allowed and it’s not possible. Everything is traceable, everything is checked.” Any problems with the island’s international reputation these days are simply “clouds” that will go away at some point. “We just hope,” she says, “it will happen sooner rather than later.”

Outside Finkel’s building, a few yards from the waterfront, a line of boats glints in the heat from a cloudless sky. Across a small dusty park is a kiosk selling chartered water tours around the capital Valletta, visible in the distance on the right. A striking jumble of sandy-coloured buildings on a peninsula, it was constructed in the 16th century by the Knights Hospitaller, a Christian organisation originally established to help sick pilgrims in the Holy Land, which later grew wealthy plundering foreigners’ vessels offshore.