Is Malta, the iGaming hub of Europe, risking losing the sector because of rapidly rising rents, a growing banking crisis, crumbling infrastructure and rising animosity?
This article features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited.
Rents rapidly outpacing wages for most sector employees
Yet again an iGaming industry spokesperson has clearly warned that Malta, which has enjoyed massive economic growth thanks to the gaming and emerging tech industries, is shooting itself in the foot, with rent rises fast outstripping pay for most workers in the sectors.
Speaking to Malta Today, Enrico Bradamante, chairperson of iGen, a representative group of the gaming sector that is one of the stakeholders discussing the current Rent Reform Bill, warned that rents rises are rapidly outstripping the pay of customer care staff and copywriters – the kind of roles that make up the bulk of gaming employees.
With rent the biggest single living cost to most people working in the industry, the situation is making Malta rapidly lose its appeal to workers. As we have reported previously, many people are lured to the island by what, initially at least, seems like good pay, only to find out that they would be better off working a lower paid job in another country. Hence, they stay for a short time and then leave – something that is costing companies dearly, and further undermining Malta’s competitiveness.
An industry misunderstood
The problem is further compounded by the fact that Malta has one of the highest property ownership rates in the world (a consequence of political policies in the early days of independence), meaning that much of the local native population – who obviously make up most landlords and voters – have little real idea of the cost of living when paying rent, so misunderstand the growing crisis.
As someone who has first-hand experience, I can also attest that there is indeed a massive misconception, with many local Maltese assuming all iGaming employees are highly paid – something probably not helped by the top tier of sector employees who are extremely highly paid making a point of flaunting their wealth!
But, as my old maths teacher used to say, “when looking at average figures, be careful which type of average you use, because they can give very different impressions.” The simple truth is, most gaming workers are not highly paid by any stretch of the imagination, and when rental costs are taken out, they most likely have far less disposable income than most Maltese realise.
This is aptly illustrated by the flurry of comments underneath the Malta Today story from locals, trying to put the blame firmly on iGaming employees themselves! With some comments suggesting that employees are being out of order for wanting to live within walking distance from their offices! The stupidity of such comments can only be truly appreciated by someone who has attempted to either commute by car or public transport in Malta – the 5th most densely populated country on the planet, suffering from horrendous traffic, parking and pollution problems, and relying on a completely inadequate public transport system. I would argue that it is insane people think that commuting should be encouraged given the realities in Malta!
Twilight of the Maltese success story?
Of course, the rent crisis is just one aspect of the changing nature of Malta. As we have covered before, there is also a banking crisis – with both individuals and companies finding it extremely difficult to access even basic services in the country (read more) – and creaking infrastructure is huge issue.
For years now, tiny little Malta has stood out as an economic success story – achieving truly incredible things for an isolated rock that is smaller than the Isle of Wight. Something every Maltese person, and all those foreigners who contributed, should be immensely proud of.
And, over the past couple of years, the Maltese government has shown great vision with its plan to turn the country into a blockchain and emerging tech hub. But, everyone should remember that the very nature of gaming and tech companies means they can rapidly shift to other jurisdictions, and that there are now many other countries offering better qualities of life, lower living costs and equally as attractive legislation.
Anyone who is in the industry in Malta will have already noticed that, excluding the considerable, but very short term, Brexit-related boost caused by the relocation of some operations by companies like bet365 and William Hill from Gibraltar, the atmosphere is changing. It is still subtle, but more workers, fed up with being treated like cash cows, are upping sticks and leaving, and more companies are opening up offices elsewhere.
Even the fact that SiGMA, Malta’s most significant gaming events organiser, is now putting more focus on Asia, should speak volumes.
And, of course, let’s not forget the United States. Since the repeal of PASPA in May 2018, and the subsequent on-going state-by-state legalisation of sports betting and online casinos, it is clear that the US will be the biggest and most important betting market in the future. Given that, it may be difficult for companies to justify remaining heavily committed to an island in the Mediterranean Sea that doesn’t even offer direct flights to the United States.
In the balance
Despite the clear warnings, and the promises by government that they will address the issue with the Rent Reform Bill, which is currently being discussed, it seems like Malta’s days as an iGaming hub are numbered. Unless attitudes fundamentally change at the grassroots level, its difficult to see how anything will turn things around.
Its tough to see how any legislated rent controls would work, without alienating landlords and investors, and drawing condemnation from locals. What is needed is a genuine change in attitudes to something that values longer-term sustainability over short-term gain.
No doubt some will argue that it doesn’t matter if the gaming sector leaves, because they can be replaced with emerging tech companies like cryptocurrency exchanges. However, this would be a flawed argument because those companies tend to employ far fewer staff than gaming companies. To put this in perspective, Binance is the world’s largest cryptocurrency exchange by volume, and has indeed opened an office in Malta – but globally it employs just a handful of staff.
Of course, things are still in the balance. Malta could turn things around and reinforce its position as the leading gaming hub, while adding blockchain, emerging tech and esports to the mix – developing a truly world-class long-term economy. But, time is running out to address some truly fundamental problems, like rent, attitudes and infrastructure. And, its worth remembering, once the industry is gone, it won’t be coming back.
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