Malta's economy helped by online gambling

But host governments need to remember that this is a very flexible and mobile industry

One of the more interesting articles published on Internet gambling over the weekend appeared on Sunday in the Malta publication Malta Today.

The newspaper interviewed Aj Thompson, the COO of Malta-based gaming company Tain, who claimed that in addition to being good tax-paying corporate citizens on the Mediterranean island, the online gambling industry contributes significantly to the domestic economy through its staff spending.

Thompson pointed to official government numbers that indicated that the industry's direct contribution in the form of taxes was some Euro 15.6 million. However, the real contribution was more like Euro 30 million or more if the domestic spending of well paid staff was factored in to the equation.

The newspaper appeared to support this, introducing its editorial with the comment: "They’re single, live in flash apartments, and earn thousands of euros every month: iGaming employees live it up!"

Thompson said he arrived at the figure of Euro 30 million by referring to a study his company had recently conducted which showed that the added value left by industry employees in the local economy is generally the same as the amount gained by the exchequer in taxes.

Tain employs 46 people with an average age of 26, Thompson revealed. “A lot of them are single, rent out apartments on their own at higher budgets than usual, spend money on entertainment, clothes and other goods,” he said. Seventy percent of Tain's staff were Maltese - a considerably higher proportion than the average for the island, which is around 40 percent, he claimed.

Employing Maltese staff was preferred because local recruits tended to have stronger loyalty and were less likely to job-hop or leave, he explained, saying: “Maltese people are happier to stay in Malta.”

The online gambling executive warned that there was a risk that the industry could create what he called a 'false economy' on the island.

“When we got here, the average wage in other sectors was of Euro 800 to Euro 950, and we were paying Euro 1 400 to Euro 1 650,” he said. Nowadays, the average salaries at Tain stand at Euro 1 900-Euro 2 000 monthly for the junior staff, with more senior people earning around Euro 10 000 a month.”

Thompson also emphasised the flexible and highly mobile nature of the online gambling industry should local conditions make companies less competitive. “...this industry moves from one place to another, and it can," he said, adding that if the benefits of basing a business in a particular country are removed or changed, enterprises with mobility will inevitably consider other locations that allow them to remain competitive.

He illustrated the point by commenting that the removal of VAT advantages had hurt a number of players "...because it’s 18 percent we’re talking about.”

To give an idea of how fast the industry can move, Thompson recalled how he relocated Tain Operations from Curacao, in the Caribbean, to Costa Rica overnight. He named Albany, Gibraltar, Isle of Man, Costa Rica, Curacao, Antigua and Australia as possible alternative licensing jurisdictions.

The number of iGaming companies registered in Malta has reached 330, employing around 2 500 people, the article revealed. Retailing and property letting experts estimated the added value left by this new population of employees to be very high, it noted.

Federation of Estate Agents President Ian Casolani told the newspaper: “Scarily enough, the rental market very much depends on iGaming employees nowadays, with budgets that range from a minimum of Euro 350 to Euro 6 000 per month." The norm, says Casolani, ranges between Euro 600 and Euro 1 000 monthly.

Philip Fenech, president of the island's tourism sector, told Malta Today that the contribution to the domestic economy of iGaming employees “...is very, very substantial”.

“Much of the money earned by staff in this sector goes through our system – bars, hotels, supermarkets and other retail establishments, Fenech said. "Although the [global financial] crisis hit many sectors, gaming was minimally hit. My reports are that these temporary foreigners are considered to be tourists on a long holiday, when one considers the way they spend in leisure. My reports come from gyms, restaurants, fashion outlets, supermarkets, clubs and other forms of leisure.

"They live it up here. They produce wealth and they enjoy wealth.”

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