Joseph Borg

iGaming History, Episode 6 Transcript

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Narcis Gavrilescu: Hello, everyone. Welcome back to another episode of iGaming History. I have the pleasure of being joined today by Joseph Borg, partner at WH Partners. Joseph, thank you for joining me today.

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Joseph Borg: My pleasure, Narcis, and thanks for inviting me.

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Narcis Gavrilescu: You have been in the industry since when? Since 2007? That's a very long time. Do you remember what you were thinking when you joined? How did you make the decision to join the industry?

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Joseph Borg: Interesting. Well, to be honest, I always say it's about timing and it's also about risk taking. That is the way you can succeed in life. In 2006, I was tired of working in my current job at the time. I was a senior lawyer at Vodafone, which was one of the best employers in Malta, and it was a great experience to work in an international group. We had international practice groups and so on. But after three years working there, I felt I needed a change. I felt stuck. Mobile telephony had grown in a way that I couldn't see much more growth and much more excitement in the industry. So I felt that it was time to move on and find something else.

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I started looking around. There was this vacancy. I was in talks with some other people, particularly a law firm at the time. I was considering joining a law firm. The process with the MGA, or the Lotteries and Gaming Authority at the time, was very slow. It took around three or four months between the first, second, and third interview. I was almost done going to join a particular law firm. Suddenly the offer came from the Lotteries and Gaming Authority, now the MGA. I took the opportunity because I knew that I could see that there was massive potential. It was a very exciting industry to be in. So I didn't think twice.

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In fact, I felt bad with regards to that law firm that I was in touch with because I was afraid that they would take it badly. I'm not the type of person; if I give them my word, I'm usually going to stick to it even if I lose out. But in that case, the offer came just in time before I actually gave my word. So it was a very good opportunity. The industry was still very small, but the potential was very interesting. That's how I decided to join the industry. I spent six years there, so the industry became part of my life.

 

Narcis Gavrilescu: Well and since you're still with us, it means you have no regrets.

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Joseph Borg: Most definitely. Although today, I focus much more on fintech and financial services; it's my new passion. Well, relatively new because I've been in it since 2016. I still advise on gaming and I still see the excitement in the industry. I still feel that the industry has more to give. But again, I'm the type of person that needs a change once in a while, and I felt in 2016 that I needed to look into other industries. That's when crypto came. From crypto, I expanded also into more traditional financial services as well as the wider fintech, which is something extremely exciting.

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Narcis Gavrilescu: You have an exceptionally illustrious legal career. To what do you think you owe your success?

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Joseph Borg: Well, to be honest, I don't feel I have any special illustrious career. I consider myself just being a cautious risk taker. I took certain risks in my life that worked out well. I was one of the first people in the gaming industry, and I was eventually one of the first people in the crypto industry. Being the first mover is always an advantage. Many people when I started in gaming and eventually when I started in fintech were very skeptical about both industries. But maybe I have the advantage that I'm not the type of person who will just do a job for the money. I need motivation. Motivation comes from something exciting. If the industry doesn't excite me, if the projects don't excite me, I'm not the type of person who will perform at his best.

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I was always lucky and courageous enough to get into industries at their inception. That has paid dividends because I was able to get into these industries very early. I gained the expertise in these industries very early before many others joined. Therefore, I was always considered to be a person who has more experience in these industries than other people that join later on. So I think that is the main reason.

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I have a very practical and pragmatic character. I will always try to look for the solution, rather than focus on the problem. Of course, you need to understand the problem to come up with the solution, but my mind immediately starts working on the solution. Maybe that particular trait in my character helped. What also helped is I am a very friendly person. I find it very easy to network. I made a lot of friends in these two industries, both my clients and people working for operators that are not my clients. We still have a great relationship. Sometimes I get work referred to me by senior people in companies that are actually using other law firms. That for me is a massive boost in terms of pride. I'm proud of that because they trust me and because they built this trust relationship over the years.

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Also, something else which is very important, I started with Vodafone. Vodafone was a very important school for me and for all of us that came from that company, because we were taught that the client has to be treated in a certain way. I remember the motto was customer obsessed. So we have to be obsessed with satisfying our customer. I believe that that school of thought has influenced most of the Vodafone employees at the time. They built us not just as professionals, but they built us as human beings that have a certain red line that you never cross, but also that you give your all for the company, for your customer. I think Vodafone formed us in a way that very few other companies could do.

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Narcis Gavrilescu: Everybody who I talked to says that you are an excellent networker, and I would have asked you how you managed to cultivate that. I'm not sure if there's anything else you wanna add.

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Joseph Borg: Well, the character, obviously. I get energy from being surrounded by people. I know that there are people that actually prefer being alone, being in solitude. That's where they regenerate, where they charge their batteries. I charge my batteries if I'm in a networking event with people I know or people that I just got to know; that is my element. When I'm on a stage, I feel so comfortable and so in my element that if I had to choose being in front of a camera here today with you or being on a stage, most definitely being on a stage.

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Narcis Gavrilescu: But thank you for being with me today. Joseph, going back a little bit to when you joined the industry, could you describe the spirit of the time for us? What stood out to you back then and maybe some lessons or things that you learned along the way?

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Joseph Borg: We were all young people there in the authority. It was a time where we're all really driven. Our aim was to make Malta the center of gaming in the world rather than Europe. That was the mission. We wanted to bring all gaming companies to Malta.

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Narcis Gavrilescu: But you succeeded.

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Joseph Borg: We did succeed, but there was this obsession. I hate extremism, but the word obsession has cropped up quite a few times in my career. I think we were always obsessed with creating this epicenter, Malta being the epicenter of the gambling industry. It was our obsession. We were really driven. It was a group of young people that were really, really driven. Of course, we made mistakes, strategic mistakes because of our inexperience at the time. There are a few things that looking back, maybe we handled them in a different way. The relevance of the MGA today would be higher maybe, but I think we put Malta on the map in a way that no one ever did.

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I enjoy seeing the MFSA today, particularly their fintech team that seems to be doing exactly the same. In very different times, it's much more difficult today to do that. But also thanks to the professionals involved in those years in the gaming industry, just like today the professionals involved in the fintech industry. Most importantly, the authority makes a big difference. Their passion, their results oriented mentality, the attitude to solve a problem rather than focus on the problem. In industries that are still young and dynamic, you can't stick to a checklist. The moment you stick to a checklist, you have a problem because these industries are still growing, and you'll see different business models, and you need to fit them within the framework. You need to be creative as well as responsible.

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That's what we did at the time. We were creative, responsible at the same time, but also passionate to make this a success. Unfortunately, over the years, that passion has gone down a lot. Today, most people join the MGA, spend a year or two, then they go into the industry because they get better salaries. We were a group of people that stayed at the MGA for those four, five, six, some of us seven, eight years. I was there for six. That group of people, that core that stayed there made this industry the most important industry in Malta because it offered continuity. It offered experience because obviously over years you gain more and more experience. The people that stayed there for that particular period of time did a lot of good for the industry in general, but also for Malta.

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Narcis Gavrilescu: Do you think that this is what changed, the fact that there was a vision and a drive back then?

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Joseph Borg: I don't want to criticize the people that are there today because the times are very different. It was safer at the time to be with the authority than to go with a gaming company that could go bust the day after. So it's not like we were heroes and the people at the authority in the last few years are doing something wrong. Today, if you leave the authority, you go into the industry, you'll probably earn double your salary. And if your company goes bust, which is much rarer today, you'll find a job the day after. At the time, the industry was still growing. So it was a bit of an uncertainty. We were all thinking of building families at the time, between 25 and 30 years old, so we all needed a steady income. That was a factor.

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We saw the industry grow. Our commitment to the industry was much bigger because it was our baby. Today, they found it ready. They don't see the work that went into building this industry. So the passion is very different. We built it from scratch.

 

Narcis Gavrilescu: As a legal practitioner, what do you think have been the most impactful regulations, legislations that you have worked with?

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Joseph Borg: The 2004 regulation that started being implemented in 2006, the Remote Gaming Regulations, were very important. They were defective in a million ways, but we made them work. At the time, there wasn't the willingness from the government to take the risk and change the laws. So the Remote Gaming Regulations stayed the same for many years until 2018 when they were completely changed.

 

All the gaming laws in Malta were changed in 2018. It was a complete overhaul. That was the biggest impact we've seen on gaming regulations. They are very modern and very future looking, very technology neutral as much as possible, very game neutral. I believe that we will keep seeing the benefits of these regulations for many years because they were a concept that is completely new to the gaming industry. Unfortunately, right now, they're not as appreciated as they should be. But looking back in ten years' time, we'll say thankfully we made this change.

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Narcis Gavrilescu: Can you tell us about some parallels about how the new regulation changed things? How was it before and how is it now?

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Joseph Borg: The old regulation did not cover a lot of things. The way we used to regulate was based on our interpretation, and the interpretation was the most convenient interpretation to make them work. If you had to take them literally, a lot of things wouldn't be able to be done. We had to be extremely creative, but being responsible as well, keeping in mind the ultimate aim of the regulator to protect the consumers. I'm not criticizing anyone that wrote the regulations in 2004 because whoever drafted them had a lot of foresight. But once you start working with the regulations, you start seeing the pitfalls.

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The good thing is that today, these problems were completely removed, and the regulator was given a lot of flexibility within certain parameters. We kept that concept where the regulator has to take certain decisions, but it was done within certain limited parameters and also very importantly through legal instruments. Today, if the regulator issues a directive, the directive has the force of law. The regulator has to issue directives only within the parameters granted to it by the regulation. I think that system is the most important part of the regulatory framework: the transparency coupled with the flexibility. In industries like this, you need to give flexibility. Otherwise, it won't grow.

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If a new technology is invented following blockchain and AI, something new comes along and we see that it needs to be integrated in the gaming industry, with the regulations we have, it's very simple. Under the old regulations, it would be a mess. Under the new regulations, at most, what you will need is the authority to draft a directive on how to implement it. For example, under the old regulations to provide gaming through a mobile phone was not contemplated, and we had to be very creative to allow it. Today, if something else is invented following a mobile phone, whether it's 3D projection or metaverse or holograms, it will work seamlessly under the new framework. That is the biggest asset of the new regulations.

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We see it even when we look at regulations in other jurisdictions. They are completely outdated already. Most of them are outdated already. You cannot come up with something innovative under those regulations because they are too limited. I do not think that is positive for the growth of an industry, for the benefit of the users, or for the growth of the ecosystem in general.

 

Narcis Gavrilescu: Do you think that the industry is a better place today compared to what it was eighteen years ago?

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Joseph Borg: It is in a better place on certain things. It is unfortunately in a not so much better place on other things. The industry definitely matured. We have some big players today that are state of the art financial institutions. Super professional, super organized. They take the business very seriously. That is a general comment about the whole industry, not just the larger operators. That is a positive also for the protection of the users.

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However, I believe that we lost one thing and it is a very essential thing. Regulation has become so complicated and fragmented all over the world that it makes it impossible for startups today to compete with larger operators. That is a big pity. I am maybe a romantic because I have been in this industry since the beginning. For me, not having the possibility of starting a new business and competing with the giants is a pity.

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Today, the only thing that a startup can do is either to become really good in a particular jurisdiction or if they are lucky in a particular region, or else they have to grow it as much as possible, be innovative as much as possible, and then sell it to one of the giants. I respect the giants in this industry because they have made the industry extremely serious, and they have done a lot of good things. But I want the possibility for startups to be able to compete. That possibility today is very slim.

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Narcis Gavrilescu: It is one of the things that I wanted to talk to you about. You did say regulation makes it easier for big operators. It is a business model that you take a risk, succeed, attract attention, exit. But why does the regulation make it this way?

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Joseph Borg: Because it is impossible to get a license in every jurisdiction in the world. You need the amount of capital, you need to have the compliance teams from everywhere. You have to have legal experts from everywhere. The costs are massive, and these companies already have massive costs in terms of marketing and infrastructure. How can they also have all those costs? The regulations are very different in certain jurisdictions. So you need to adapt sometimes your games in a different way.

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Unfortunately, today, it makes it next to impossible to have new global players, unless through certain mergers. It is one type of exit. Yes, unfortunately, today, there will be very few operators. There are some that manage because they really get into a particular niche and then grow from there. But it has become very difficult. I actually applaud all those that manage today, but I do not think there are more than a handful over the past ten years that have managed to become global players from scratch.

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Narcis Gavrilescu: Knowing this, do you think the industry is still going to be a good place to be in ten to twenty years from now?

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Joseph Borg: It depends how we look at it. I believe the industry will still be there. It will still be big, growing. I think it will be restricted to much less operators. So there will be less competition, which is not a good thing. The industry will definitely be here. Will it be better than it was ten years ago or worse? It is perspectives. For me, it was much more interesting and much more exciting when there was free for all competition and when it was still possible for someone starting a business to become one of the top five, top ten operators in the world within the next five years. Today, that is a dream.

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Narcis Gavrilescu: I want to discuss with you several other things that I found you talking about over the years. You said one of the industries that will be disrupted by blockchain is gaming. Has it lived up to that?

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Joseph Borg: It did not. It did not today, until today, at least. I do not know if it will. I have seen amazing models that work and that bring advantages to regulators, operators, and users. Advantages to all the ecosystem, basically. Even affiliates and all the other ancillary services. But unfortunately, there was no major uptake.

The lack of major uptake is, first of all, blockchain technology is a bit complex for the users to understand. We see it also in the crypto industry. Nowadays, most users want to use third party service providers to make use of crypto. When in reality, the whole concept of crypto is to keep control of your funds, not to pass them on to a third party. You are just treating your crypto as fiat money that you deposit in a bank. Instead of depositing in the bank, you are depositing your crypto with a third party. I think that was a factor.

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Another factor is obviously regulation. Most jurisdictions do not allow operators to obtain approval from a regulator to make use of blockchain technology and allow customers to pay in crypto. In order for a blockchain gaming platform to really reap the benefits, you have to allow customers to make use of crypto assets. Otherwise, it is a joke, having the blockchain without having crypto assets moving on top of it.

 

Narcis Gavrilescu: But it has no utility.

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Joseph Borg: It has no utility. You are not reaping the benefits of blockchain like that. The biggest advantage of blockchain is that it allows you to move an asset from one place to another and track the whole process. I believe that there is still a lot of potential. I believe that if at some point in time there will be the necessary uptake, it will be very successful, but we have not seen it to date.

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Those two factors: the slow moving pace of many regulators, and also the slow uptake from customers of this technology. If you ask around, most people have crypto. The problem is they have crypto that they bought from a third party service provider and left it on their account there, rather than reap the benefits of crypto and put it in your own wallet that you control. Until they start understanding the real benefit of crypto, it is not there. The whole point of blockchain is to remove the intermediary.

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We have seen some big operators that have grown a lot because they focused on the crypto industry. When I said you cannot count the startups that started over the past few years who now became giants, I think at least two of them became giants because they leveraged the advantage coming from the use of crypto and blockchain where no one else tried to leverage it. So it is not a big failure. But if you ask me whether the statement that gaming would be disrupted by blockchain has lived up to its full potential, I would say it has not.

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Narcis Gavrilescu: You also said harmonization of regulation is very unlikely. Is it still?

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Joseph Borg: The first attempt for regulation thinking of harmonization happened around 2007, 2008, 2010. There was the famous green paper, which comes before a white paper and before something becomes legislation at EU level. That failed. Then the commission tried to come up with something which could not be problematic at all. They came up with a recommendation, which is the lowest level of legal instrument at EU level. They tried to come up with a recommendation for the minimum standards for player protection.

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If you are simply interested in protecting players, if the commission comes up with a recommendation about minimum standards for player protection across the EU, is there a reason why you vote against it? If people were genuine and really wanted to safeguard the player, it is a no brainer. Just vote with it. You can propose changes. There is no reason not to accept it. There were countries that took the commission to court over this recommendation because they said you are getting into something you have no right to get into. Can you imagine the big interests there were at the time? And there are still these big interests.

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The European countries, instead of doing something for the benefit of the players and the industry, did something for the benefit of what they thought was for their own individual jurisdiction. That is why harmonization did not happen then, and now it is next to impossible, at least within the foreseeable future. Every jurisdiction is making so much money from this industry that no one wants to lose their piece of the cake. I do not see it happening.

 

Narcis Gavrilescu: You said operators should lobby more as associations rather than individually. Have there been any changes, or could there still be more cooperation?

 

Joseph Borg: I think they improved. I am not a big fan of unions, but I am a big fan of associations. I was a regulator, and I know the difficulties of a regulator. One of the biggest problems as a regulator is that you want to pass messages to the industry or have a meeting with the industry. But if you do not find the right person to speak to, you can be seen as advantaging one sector over another. Many times, regulators find it difficult to communicate certain things to the industry that do not need to be public. If it is something internal for the industry, the regulator needs to have these meetings to get feedback before going public.

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We never found the right body that represented the real operators. Today, I think with iGEN, a big chunk of the industry is represented in Malta. At EU level, there are two other big organizations that are representing the biggest part of the industry. So now things have improved. I did the same for the fintech industry because I really believe in it. We created a business section specifically for CASPs and token issuers through the Chamber of Commerce in Malta. Although the section was active, we did not represent enough operators.

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I became chairman this year of this association, and the first thing I did was a drive to bring all the CASPs that are licensed in Malta as members. The benefits are already being seen. We are holding very regular meetings with the MFSA, discussing pertinent things. We hold meetings with government. Ultimately, unless you have an association that is really representing the industry, it is very difficult for the authority to set up these meetings. We are also putting pressure directly on the European authorities, writing to them as an association. These things are essential for the industry to have one voice and to engage better with the authorities.

 

Narcis Gavrilescu: You and WH Partners are an extremely progressive group. Wherever I saw you, you were on top of what is hot at the moment. I have seen you talk recently a lot about the UAE. Can you tell us what is the opportunity there?

 

Joseph Borg: If you spoke to anyone familiar with the GCC region five years ago, eight years ago, and you told that person the UAE is going to start regulating gaming, they would have laughed at you. Today, it is a reality. It is already happening. There is already a national lottery. There is a casino that has obtained a license that will start operations in 2027. There are going to be online gaming licenses issued in the coming months. There have been already a number of B2B licenses issued. So it is a reality. That in itself is incredible.

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Couple it with the fact that we are talking about the richest region in the world right now, undisputed. That region is growing economically like crazy. You can imagine the spending power in that region for people playing online. Add the massive population growth happening in the UAE. I believe that it is an opportunity that is so obvious.

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As a firm, we have opened a corporate service provider entity there. We assist clients to set up companies, assist them with visas, and also assist them with obtaining licenses. So it is in our interest to speak about it. Those are the main reasons. The opportunity is massive because it is like getting into the iGaming industry in Malta in 2007.

 

Narcis Gavrilescu: Is there anything that I have not asked you, but you think it is important to mention for the viewers and for future generations who are going to be watching this?

 

Joseph Borg: A word of advice from someone who managed to get into industries early is do not be afraid to take the risk to get into a new industry and to do something you have never done. That is my advice. Make the jump. There are moments in your life where you cannot, and I appreciate that. There are people that have certain commitments, and they cannot really make the leap at that particular moment. But if you understand that you can take that risk, do it.

 

Narcis Gavrilescu: Joseph, the last question. How would you like to be remembered in iGaming history?

 

Joseph Borg: I would like to be remembered as one of that group of people within the authority that made this possible today. I feel that a lot of credit has been given to certain figures who have done only a very small percentage of work that led to the success. They should be applauded for what they did. But I think there was a core group of three, four, five people within the authority over the span of those ten years that really made it happen. Without them, it would not have happened.

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Unfortunately, those four or five people, which I believe I was part of, were never given the real consideration or appreciation of what we did at the time. That hurts me, to be honest. Everyone looks at a certain level of person in a particular position. But in truth, I think the most important people were others.

 

Narcis Gavrilescu: Do you want to mention who?

 

Joseph Borg: I will not mention all the names. I will not remember all the names exactly, but the people that hear me in this podcast will definitely know who they are. The work done by those four or five people and the legacy that we left within the authority for many years was the main reason. The passion we put and the passion we instilled in our employees was the biggest winning formula for the authority and for the jurisdiction.

 

Narcis Gavrilescu: Thank you, Joseph. And thank you for the great contribution that you have had and continue to have to the industry.

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Joseph Borg: Thank you very much, Narcis.

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Narcis Gavrilescu: Thank you everyone for watching us. We will be back with more episodes in the future.​​

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