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The role of blockchain in shaping Malta’s casino industry

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Blockchain technology plays a pivotal role in shaping Malta’s casino industry. Malta has positioned itself as a centre for blockchain innovation, taking the lead in setting up a comprehensive regulatory system for blockchain and cryptocurrencies in 2018. The small island country introduced three bills to establish a regulatory framework governing cryptocurrencies, initial coin offerings (ICO), blockchain and services, as exchanges. This step solidified Malta’s status as one of the pioneering countries with the legal structure to govern blockchain and cryptocurrencies, drawing in several blockchain startups and major players to the island.

How blockchain impacts Malta’s casino industry

The decision by the MGA to accept applications from online gaming providers who wish to use blockchain technology and cryptocurrencies in their platforms is a massive development for the crypto-gambling sector:

  • Legal and regulated crypto casinos: With casino operators integrating cryptocurrencies and blockchain, the MGA is paving the way for regulated crypto casinos. Operators of licensed crypto casinos can promote themselves as regulated businesses and enter into legitimate contracts with payment providers. Sergio Zammit from Crypto News explains that players should check whether a crypto casino is licensed and regulated by reputable regulators and should always do their homework regarding a crypto casino by reading cryptocurrency casino reviews and checking which cryptocurrencies are accepted before signing up.
  • Benefits for players: Licensed crypto casinos in Malta offer players assurances of fair play, consumer protection and the legitimacy of using an established regulator like the MGA. Players can enjoy the benefits of transparency and security features when gambling with cryptocurrencies like Bitcoin.
  • Attracting innovative companies: Malta’s progressive stance on blockchain technology and its well-established iGaming industry have made it an appealing destination for crypto gambling operators. 

Malta’s regulatory approach to blockchain in gaming

The Maltese government took a proactive approach to regulate the use of blockchain technology by establishing the following three bills:

  1. Malta Digital Innovation Authority (MDIA): This act regulates innovative technologies like artificial intelligence and blockchain. The MDIA also coordinates communication between national authorities in this space.
  2. Innovative Technology Arrangements and Services Act: The act provides a basis for regulating technology platforms and services built on blockchain. For instance, distributed ledgers are defined as an “Innovative Technology Arrangement” (ITA), which can be audited and certified.
  3. Malta Gaming Authority (MGA) Sandbox: This act allows existing and remote gambling operators in Malta to test their blockchain-based products within controlled parameters before rolling them out to consumers. Sandbox aims to evaluate centralised platforms against regulatory guidelines, which provides a safe space for controlled testing and scrutiny before release.

Additionally, blockchain-based gaming platforms must meet specific criteria to be defined as ITAs and will receive certification by approved auditors under MDIA’s oversight.

How the MGA regulates the use of cryptocurrencies and blockchain technology

The MGA is taking a comprehensive regulatory approach to allow the use of blockchain technology and cryptocurrencies in the online casino industry through several key measures:

  • Technical standards and requirements: The MGA has set out specific technical standards for the use of blockchain technology and crypto in online casino platforms. These standards and requirements include ensuring integrity, fairness of casino games, the security of cryptocurrencies and regulatory data replication if public blockchains are used.
  • Licensing and compliance: While the MGA provides several different licenses like the Virtual Financial Assets (VFA) license for crypto activities, any operator integrating blockchain technology and cryptocurrencies must meet the MGA’s licensing criteria around having sufficient finances, implementing security measures and adhering to Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols and consumer protection measures.
  • Responsible gaming measures: The MGA emphasises that all licensed crypto casinos, including offshore and non-GamStop casinos, must comply with strict responsible gambling requirements, such as age verification, self-exclusion options for players and AML procedures even when dealing with cryptocurrencies. 
  • Player fund protection: Gambling operators will need to demonstrate how they will segregate and protect player funds when accepting cryptocurrencies, which are viewed as volatile, given the potential for price fluctuations.

By implementing the regulatory sandbox and technical standards, the MGA aims to allow innovation while ensuring proper oversight of blockchain-based online gambling platforms operating from Malta.

The benefits of using blockchain technology and cryptocurrencies for Malta casinos

There are several benefits for both crypto casino operators and players:

Benefits for players

  • Safety and legitimacy: Licensed crypto casinos in Malta provide players with the confidence of safety and legitimacy. The MGA licenses act as a stamp of approval that the crypto casino is operating ethically, and legally and ensuring players are treated fairly and they adhere to regulations.
  • Transparency and provably fair gaming: Blockchain’s transparency allows players to verify that all casino games are being offered fairly, reducing reliance solely on testing labs and regulators. The immutable nature of blockchain provides indisputable records.
  • Increased security: Player personal and financial information is more secure on the blockchain. 
  • Better value and lower costs: The lower operating costs of crypto casinos translate to lower house edges and higher returns for players.
  • Fast and secure payouts: Cryptocurrencies like Litecoin, Bitcoin, and Ethereum allow instant cross-border transactions. This means players do not have to wait for days or weeks for payouts, instead, payouts are instantaneous. Transactions are also private, secure and, immutable and are without international fees.

Benefits for operators

  • Legal certainty and promotion: Being licensed by a well-established regulatory body in Malta allows operators to enter legitimate contracts, open bank accounts and promote themselves as an ethical and regulated casino.
  • Lower transaction costs: By providing crypto payments, operators can save a substantial amount on transaction fees compared to traditional fiat currency gateways like banks.
  • Access to new markets: Offering crypto payments allows casino operators to access an international player market, including unbanked populations.
  • Innovative offerings: Licensed casino operators using blockchain technology can offer innovative products like provably fair casino games, the use of non-fungible tokens (NFTs) and decentralised platforms, for example.
  • Malta’s regulatory acceptance: Malta’s proactive stance and regulatory framework allow for blockchain/crypto integration, providing legal certainty lacking elsewhere.

Conclusion

By proactively embracing blockchain technology and cryptocurrencies Malta has positioned itself as a global hub for business innovation in the online gambling sector. Through their progressive and clear regulatory approach, Malta has allowed licensed crypto casinos and blockchain integration into gaming platforms under the oversight of the MGA. Their proactive policies have already started shaping the future of blockchain’s role in the multibillion-dollar casino sector.

Players must be 18 years + to partake in any gambling, betting or casino activity. Players are urged to seek help if they require it. Players play at their own risk.

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