Earlier on this year, the Government of Malta issued Legal Notice 31 of 2017 entitled Skill Games Regulations, 2017. These new regulations are applicable to skill games which provide that all skill games organised in Malta from the territory of Malta or promoted or offered to persons in Malta shall be regulated with the burden of proving that an activity is a skill game resting on the party operating or promoting such an activity. The new regulations provide for the requirement of a licence from the Malta Gaming Authority (MGA) for prospective operators of controlled skill games, so that these may service end users and/or supply business to business.
What is the definition of a skill game?
A skill game has been defined by the Regulations as a game for money or money’s worth and through means of distance communication, the result of which is determined by the use skill alone or predominantly by the use of skill and is operated as an economic activity, but does not include a sport event.
What are the aims and objectives of the new skill games regulations?
The aims and objectives of the new regulations are to ensure that:
All skill games are subject to risk-based regulatory intervention, where this is necessary in the public interest, and that such regulatory intervention is proportionate, consistent and non-discriminatory; and
All skill games are conducted in a fair and transparent manner and that the sector is kept free from crime;
The interests of all consumers are adequately safeguarded and proper controls are in place to protect minors and other vulnerable persons; and
All other relevant objectives listed in the Act are fulfilled.
What criteria does the MGA take into account in determining whether a game is a skilled game or a controlled skilled game?
The criteria which the Authority shall take into consideration in determining whether a game is a skill game or a controlled skill game are the following:
The presence of random draws and their effect on the outcome;
If the game is played for money and, or prizes with a monetary value;
Whether participation in a game involves any form of monetary commitment, or commitment of a monetary value;
The possibility of a negative social impact of the game;
Whether the activity is closely associated with games of chance and/or gambling;
The duration of each event, competition or match;
If at face value, the skilled player is able to win more than an unskilled player;
If a player’s chance of winning is significantly increased by experience in playing the game;
Whether skill can be acquired through training, experience, reading literature or other educational material;
Whether a rule-set or format that is used further nullifies the effect of any element of chance;
Whether the game is played against other human players, or otherwise;
The level of interaction between the players and between the operator and the players and the level of intervention by the operator during the event, competition or match;
The complexity of the game, including the amount of player choices and their potential effect on the outcome and the strategies involved.
What are the statutory requirements that one needs to fulfill to obtain and maintain a license under the Skill Games Regulations?
The following are the statutory requirements:
The operation must be conducted by a body corporate established in Malta or in any other EU/EEA Member State
The body corporate must have an issued paid up share capital of not less than €40,000
The operator must appoint a Key Official (KO), a Money Laundering Reporting Officer (MLRO) and an Information Security Officer (ISO) who must be readily available to answer any questions asked by the MGA
The operator must keep the players’ funds separate from its own operational funds
All data must be made accessible to the MGA
I am an online gaming operator who already has a license from the MGA. Do I still need to apply for a new license to become a controlled skilled game operator?
Yes a new application has to be submitted to the MGA. However applicants for a skill games license who already hold a Class 3 license, or a corresponding Class 4 license issued by the MGA in terms of the Remote Gaming Regulations, would not require to duplicate the administrative requirements in terms of the regulations that have already been satisfied by the same applicant and furthermore such applicant is exempt from the annual license fee.
Is the appointment of a Key Official required?
A licensee in terms of the Skill Games Regulations is required to appoint and maintain at all times throughout the duration of the license term, at least one Key Official, and such appointment has to be approved by the MGA.
What are the application and annual license fees for skill games?
A non-refundable application fee of €2,300 applies and the annual license fee is of €8,500 per annum payable in advance. Furthermore a renewal fee of €2,300 applies on renewal of the license which is for a term of 5 years.
Are there any other fees?
Other fees include:
A systems review fee of €2,500 paid in advance for the engagement of an approved third party auditor
A compliance review fee of €3,500 paid in advance for the engagement of an approved third party auditor
A fee of €1,500 paid upon request for the approval of a share transfer
A fee of €1,500 paid upon request for the approval for a transfer of a license
A fee of €1,000 paid upon request for the approval for a new game
A fee of €70 paid upon request for the approval of agreements with material suppliers
What is the Gaming Tax that one has to pay?
The rate of Gaming Tax imposed by the Regulations is that of 5% of real income. Real income is defined by the Regulations as total wagers less total monies paid out to players. The maximum tax payable annually by a single controlled skill game operator shall not exceed €466,000.
When should the gaming taxation be paid?
The tax due shall be paid to the MGA on a monthly basis, and by not later than the twentieth day of the following month.
What is the VAT situation regarding Skilled Games?
The Maltese VAT Authorities have not yet issued any statement on how the new Regulations will affect the VAT position of those having obtained a license from the MGA to operate a controlled skilled gaming operation.
The current VAT Act provides for an exemption without credit for supplies related to gambling as may be approved by the Minister. On the other hand, certain gaming activities provided over the internet may also qualify as ‘Electronically Supplied Services’ (ESS). In such cases, the place of supply is established according to the country of residence of the player, where the player is established or where the player has his permanent address. Different rules would apply and operators are advised to contact their vat specialists to ascertain their vat positon.
Through its own in house VAT specialists, ACT is in a position to advise and assist gaming operators on their vat situation.
What are the reporting requirements imposed by the Skill Games Regulations?
The following are the reporting requirements that each operator is subject to in terms of the regulations:
Monthly tax reports
Monthly player liability reports
Annual audited financial statements
Interim financial statements every six months
Any material changes in the documentation submitted to the MGA
Information on any ongoing litigation
Changes to the licensee’s corporate structure such as changes in qualifying shareholding, changes to the type of body corporate which operates the games, changes in the company’s registered address, in the company’s Memorandum and Articles of Association and in the authorized and issued share capital of the company
Changes to the licensee’s operational structure such as where there are changes in the company’s management, when the business is sold or the license transferred, changes in key personnel and in the technical set up.
How can we help?
ACT is in a position to advise, assist and lead our clients throughout the whole process of obtaining a gaming license and setting up a business in Malta. Over the years, we have gained an in-depth experience of what is required to ensure that the process runs smoothly, and has built a methodological approach to the process in order to ensure that clients can effectively apply for and obtain a license within the shortest possible time frame.
We provide the following services amongst others:
Assistance throughout the licensing process and continuous regulatory advice
Company formation services including setting up of bank accounts
Work and residence permit applications
Accounting and back-office support
Tax support and advice
VAT compliance and advice
For further information, please contact Stephen Balzan who is the firm’s tax and corporate services partner. Stephen may be contacted on his email address email@example.com.
Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria. For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on firstname.lastname@example.org.
This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.
13th March 2017
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