Sources of finance in the igaming industry : the case of Malta

Abstract

Direct gross value added generated by the iGaming Industry in Malta amounted to 12% Gross Domestic Product. Generating €700 million and employing 9,000 people. A growth rate of 11.9% over the activity registered during the same period in 2015. Notwithstanding this growth rate and the importance of this activity for Malta, the industry has limited sources of finance. Most local based banks do not grant loans to this industry and this has made it difficult for them to raise funds. Therefore, in this paper, we lay out the analyses and discussions on the lack of appetite by local Banks for this exposure. In doing this, we analyse and discuss the risk perception of local Banks on RGs and seek to determine the current and possible appetite for sources of finance available to and required by RG companies residing locally. We will also, evaluate and recommend changes in the RG company structure, processes or other to promote more comfort for local banks. This by analysing data collected through self-administered semi-structured interviews with 32 personnel working in RG companies 28 personnel working in 27 locally licenced credit institutions. Finding show that (1) RG companies are cash rich, due to their operations and therefore additional support of financing in the form of bank borrowings is only required for aggressive growth, (2) the lack of risk-appetite is due to reputation with corresponding banks, who do not have an appetite for transacting with RG companies, (3) there is a lack of communication between the two industries.