The impact of gambling on the Malawian economy

Since Malawi took the decision to legalise gambling in 1996, with the passing of the Gaming Act, officials within the country have been looking at how the nation can benefit from the associated revenues.

Gambling has shown to be largely beneficial for local and national communities – and their economies – in other African nations. However, but many in Malawi feel the economy isn’t profiting from it as much as it perhaps could be. They believe that their GDP of $6.3 billion, which is heavily reliant on exporting agricultural goods, could be boosted by harnessing the power of gambling revenue.

In this article, we take a look at the current state of gambling in Malawi and the laws that govern the practice. We’ll also explore how this landlocked country could follow the lead of countries like the UK and use gambling as a way to stimulate the economy.

The state of gambling in Malawi

The Gaming Act of 1996 oversaw the establishment of the Malawi Gaming Board. They’re responsible for regulating the industry and issuing licenses to prospective gambling establishments.

However, despite gambling being legal in Malawi for over 20 years, there are just five fully-licensed casinos in the country. Consequently, these are spread across just two cities – Blantyre and the nation’s capital Lilongwe. This means many of the associated revenues that other countries with plenty of land-based casinos enjoy, are stifled by the fact that the country lacks a significant number of establishments.

The majority of Malawian gambling revenues come from national lotteries and sports betting. Around 15 million play the lottery regularly, providing a steady stream of income, but nowhere near the revenue they could be achieving from other gambling sources.

Online gambling in Malawi

The fastest-growing gambling market in the world right now is coming from the online sector, with casinos and sports betting companies offering customers a chance to play anytime, anywhere.

Several countries around the globe have specifically introduced legislation around online gambling in their countries, to ensure that taxation and licensing laws mean their economies benefit from the revenues.

In Malawi, that isn’t the case. The online gambling industry is not regulated in any way, with no laws governing it whatsoever. That means players can gain access to almost any online gambling activity they wish, without fear of breaking the law.

There’s also the problem for the Malawian authorities, as players can choose an overseas-based online service, rather than a domestic one. This has impacted the amount of revenues that the country gains from online gambling, as money generated in the country is leaving it – without any direct or indirect economic benefits.

Should Malawi follow the UK model?

As more countries have become aware of the monetary value of a thriving gambling industry, they’ve adapted their policies and laws to ensure they get a share of the profits when it comes to revenues.

The United Kingdom is widely recognised as a hub of online gambling. The legislation in the country provides a blueprint for other countries looking to make the most of domestic gaming.

In 2018, the British gambling industry brought in revenues of £14.5 billion, with a third of that figure coming from the online sector. Not only did that money provide a direct boost to government funds from taxation, but it also generated tens of thousands of jobs.

How have UK laws on gambling influenced their success?

In the UK, the vast majority of gambling activities are legal to play online. British law requires all online operators that accept British customers to apply for a licence to operate in the country.

This is a crucial piece of legislation that is key to the UK government getting its portion of the revenue of these companies. That’s because it obliges online gambling companies to pay tax on profits they obtain in the UK, meaning they must register to pay Remote Gaming Duty tax if they hold a remote operating licence.

Also, it makes those companies liable for prosecution if they fall short of the UK’s strict laws regarding customer care and safe gambling.

While many might consider these laws to be tough and perhaps restricting of the profits gambling operators make, they’re fair due to the fact that they offer them a freedom to operate, which some countries don’t provide.

This ensures a wider pool of companies can bring online gambling to the UK, ultimately benefitting the consumer. With a greater choice of places to play, the increased competition means providers have to offer better bonuses, bigger rewards and more entertaining games. This ensures that only established casino operators such as 888 – widely considered one of the best, if not the best online casino in the UK – are able to prevail over the competition.

How can Malawi implement a similar policy?

In order to make Malawi into a gambling powerhouse like the UK, the Malawi Gaming Board needs to be given more power by the government to regulate and monitor the country’s gambling operators. This is particularly needed for the online sector, as this holds more scope for growth than building more land-based casinos.

maThe Malawian government needs to address the lack of regulation on online operators. They should be introducing legislation that first taxes overseas companies, encouraging homegrown operators to thrive. Then, once this is in place, look to bring domestic operators in-line with taxation levels on a certain percentage of their profits.

Because the online market is currently un-regulated, this will take time and much thought into how to approach this. However, if done well, Malawi might see a significant increase in tax revenues from the gambling industry as a whole. Like the UK, this could result in more jobs for the population, benefitting the wider economy.

Gambling in Malawi is still relatively in its infancy, which means they’re still coming to terms with the potential impact it could have on the country’s economy and GDP. If there’s a sustained effort by the country to take control over the gaming sector, they could well be on their way to replicating the roaring success that the UK has enjoyed, courtesy of a regulated gambling industry.