Malta’s Good Bet
IMF Blog, May 7, 2018
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- Malta’s Good Bet
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Bibliographic details
- Authors: The Editors
- Published: May 7, 2018
Overview
- Malta has become a hub for gambling and betting companies, with the sector accounting for a larger part of the economy than in any other EU member state.
- The gambling and betting boom has contributed to the country’s trade balance and job creation, while exposing a skills shortage and infrastructure gaps.
Economic performance
- Malta experienced nearly 6.5 percent of average GDP growth between 2013 and 2016.
- The economy has reoriented toward the services sector as it expanded.
Size and growth of the gaming sector
- Gaming industry accounted for almost 12 percent of Malta’s total gross value added in 2016.
- The share of gaming in Malta’s gross value added grew by 9 percentage points between 2004 and 2014.
- By 2016, gaming firms and related businesses provided around 4.4 percent of Malta’s full-time equivalent jobs, with healthy increases in wages.
- The services trade surplus surged to 30 percent of GDP from about 12 percent of GDP in 2004, largely owing to strong gaming exports.
Competitive advantages and origins of the sector
- Malta pioneered regulation of the online gaming industry among EU member states in 2004, attracting firms from countries such as Sweden and Austria.
- Licensing policy favored multiple private enterprises rather than state-owned gaming monopolies.
- Additional advantages cited: English-speaking population, business-friendly tax regimes, and political stability.
Money laundering and regulatory response
- Malta has recently adopted new rules to make online gambling and betting firms fully subject to EU anti-money laundering requirements.
- New measures include transparency in the ownership of companies and cooperation among national financial intelligence units.
Challenges and policy responses
- Digital skills shortage: about 67 percent of employees in online gambling and betting firms are foreigners.
- Consequences of rapid expansion:
- Newly arrived software developers, specialized lawyers, and senior managers face rising housing rents.
- Companies have trouble finding modern office space.
- Transport congestion has worsened.
- Policy measures Malta is pursuing to sustain growth prospects:
- Improving education and training for its workforce.
- Revamping infrastructure.
- Strengthening innovation on the island.
Source: The Editors, May 7, 2018 — Malta’s Good Bet (IMF blog).
