Malta To Protect MGA Casinos from Forum Shopping Legal Disputes

New laws in Malta set out to pretect operators from companies filing laws suits using forum shopping to favour their cases! (Photo by Polina Kovaleva on Pexels)

The Maltese government is set to bring in new legislation to quell the rising number of lawsuits being filed against online casino operators via foreign courts.

New laws will protect the operators from liability that comes as a result of legal proceedings that have been filed in courts not situated within Malta. However, the move has been met with criticism from the Eurozone. Bigwigs are accusing the country of attempting to bypass the EU justice system.

Via the Malta Gaming Authority (MGA), the aim is for the country to provide regulatory certainty to operators. By doing so the country can attract more operators by giving them scope to expand their businesses while also ensuring safe and responsible gaming services are provided.

One of the issues here is that the new changes in the law could mean that operators serving Europe’s non or partially-regulated grey markets. It would mean operators are often able to avoid local restrictions and offer citizens their online gambling entertainment platforms as an alternative to those regulated in the country.

South African online casinos are a perfect example whereby local regulators are in competition with casinos under licensing by the Malta Gaming Authority (MGA).

New Laws Could Open the Flood Gates to Bypassing Local Laws

Some European officials feel that the change in law will encourage casinos under the Maltese Gambling Authority to extend their efforts to undermine efforts made by local regulatory bodies to offer citizens gambling entertainment platforms under the protection of domestic laws.

As operators would typically face fewer limitations, which will likely put them at odds with local regulators who often club together to file lawsuits against the casinos in local courts. However, overseas these lawsuits would be rendered frivolous if approved in the Maltese courts thus granting MGA online gambling companies increased leeway.

What is an MGA Casino? You can find online casinos operating under the MGA via our secure online gambling sites guide. The page covers just how the MGA is one of the best licensing frameworks out there regulating online casinos and protecting players through a strict gambling framework.

Why is Malta Changing its Laws Now?

There are several reasons behind the move. Firstly, casinos operating under MGA licensing are under threat of being pushed out of multiple online gambling markets through the introduction of domestic licensing.

Reason 1: Loss of tax revenues as domestic online gambling regulatory bodies trends

For example, the Republic of Ireland has long had plans to introduce a new regulatory body and also India. These are two key markets for MGA casinos, and new regulations may require those casinos to apply for licensing in these countries in order to legally offer services to country residents. The problem here is cost. The casinos would need to bear the cost of application fees, local company setups, and taxes. Many will opt out and as a result lose market access. In turn that means less revenue, which then means less tax revenue for Malta which has long been an online gambling and tech-friendly country.

Reason 2: Lawsuits are being filed against Maltese companies in jurisdictions that sway the balance of power

The proposed new laws aim to tackle the issue of ‘ legal forum shopping’. This is where the claimant chooses where and when to file their claim. Often, they do so in a jurisdiction where local laws are likely to favour their claims. It also has a total disregard for the operator’s main licensing jurisdiction. Malta hopes to deter this practice by setting explicit criteria for enforcing foreign jurisdictions and promoting a fair and balanced legal landscape for operators regulated under its framework. In other words, the balance of power is being swayed back into the favour of Maltese businesses, which when you think about it, is fair enough.

Is there Potential Interference with EU Courts

Malta’s decision to move forward with the law has had immediate implications abroad. Lawyers from Austria and Germany have raised concerns with the European Commission, accusing Malta of trying to hinder European courts. If approved, the amendment could interfere with the enforcement of past and present violations, possibly invalidating several rulings against Maltese operators.

Lawyers Karim Weber and Benedikt Quarch, representing clients in legal disputes against Maltese operators who they say violate local regulations, argue that the proposed changes could infringe on EU citizens’ fundamental right to legal protection.

In my opinion, if a company has a legal dispute versus a Maltese operation, then it should take the matter to the Maltese courts or the EU should have the matter settled in courts where there is no bias. This would be a simple case of risk management.

How will this affect casino players? The laws mainly affect company Vs operator legal disputes. Player versus casino disputes is dealt with by legal mediation fairly with the players favoured over casinos. However, in serious cases where legal is required, players would need to file claims in the EU and the new laws could affect the way the case is handled.