Technology of the future?
“Blockchain technology can be adapted for online gambling and offers a robust platform for a transparent gaming economy,” was the credo of MGA CEO Joseph Cuschieri in November 2017. Since then, a lot has happened in this direction: After approval by the Maltese Parliament in November 2018, MGA is currently ushering in the second test phase of the Sandbox Framework project. A first test run took place last January.
As part of the experiment, Maltese licensees will have the opportunity to carry out various tests of blockchain systems in a controlled environment. For this purpose, MGA selects appropriate technology platforms from different providers, which are made available to the test subjects for any experiments.
The experiments are called Innovative Technology Arrangements (ITAs) and are awarded through an application process. Consequently offers the time-limited use of services and technical solutions such as smart contracts and distributed ledger technology (DLT) platforms, which form the basis for blockchain technology.
To understand: In the IT and financial world, blockchains are generally understood to be special databases with which transaction data can be managed without a central control authority or the need for mutual trust, but with complete transparency. Experts refer to databases as, among other things, “a virtual cash book” – as soon as a transaction of data, money or cryptocurrencies occurs between a sender and a recipient, this is noted in the “cash book” and updated on all networked computers.
The bottom line is that it is a decentralized accounting system. Since every new line, i.e. Transaction, remains unchangeable and has to be recognized and authenticated by hundreds, if not thousands, of computers at the same time, the system is considered forgery-proof. Every money transfer is thus made public to all participating users, whereby the respective business partners can remain anonymous unless otherwise requested. External financial managers and controllers, for example banks, do not needigt the system.
The best-known and largest public blockchain to date is the Bitcoin blockchain. More and more experts see blockchains as future-oriented, which is why the gaming industry is now trying to adopt the new technology. One of the first companies to launch a blockchain gaming project in November 2018 is the Bulgarian online casino game developer SBTech.
Strict requirements for participants
However, the technological foundations in the gaming sector are still uncertain, which is why licensed providers must meet a whole range of criteria in order to take part in one of the ITAs in question. The MGA The main aim at this point is to ensure that the operators comply with all regulatory requirements during the test phase.
For this purpose, operators must first undergo an audit, which in turn is carried out by an auditor registered with the Malta Digital Innovation Authority (MDIA). After signing a document confirming knowledge of all guidelinesigt, the testing phase is initiated. During the test phases, which are scheduled to run until the end of 2021, the participating companies will receive further feedback and updates. With regard to the high security conditions, MGA managing director Heathcliff Farrugia explained:
"The strategic mission of the MGA is to promote innovation but also to be at the forefront of gaming regulation. Our program pairs with a rapid increase in interest from gaming operators to integrate blockchains and cryptocurrencies into their operations. These were the main reasons for the authority's proactive approach to develop a sandbox framework project for the use of these technologies in a controlled regulatory environment."
Ever increasing demand
In addition, the managing director emphasized that MGA has now updated its Licensee Relationship Management System (LRMS) so that both existing and potential licensees can apply for approval to integrate ITAs. Within the system, participants must also report all players' spending with any cryptocurrencies and mark failed transactions, which is intended to create optimal transparency.
Another reason for the update, as already indicated, is the increased demand from providers, which is not least due to the enormous presence of the new technology in the media: "The media hype about the potential of blockchains and digital transactions is gigantic. We intend to be at the forefront of this trend," says Farrugia. However, it remains to be seen whether and when the first online casinos based on cryptocurrency will be established.
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