New Skill Games Regulations

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.

Under this new framework, the MGA is entrusted with the governance and regulation over the skill games sector.  By virtue of the Skill Games Regulations, the MGA is empowered to regulate the sector in terms of a number of public policy objectives listed down in regulation 3, including consumer protection, fairness of the game, and the prevention of criminality.

Furthermore, skill games which, in the opinion of the MGA, should be subject to additional regulatory supervision because of any additional risk they may pose to consumers, may, by virtue of a public ruling issued by the Authority in terms of regulation 6, be deemed ‘controlled skill games’, and thus become subject to the requirement of a licence and to the rest of the obligations envisaged in the regulations.

Therefore the legislator is making a distinction between skill games which are not subject to such a ruling and therefore not subject to the requirement to acquire a licence, and controlled skill games which require a licence.

A controlled skill games licence is a licence which grants the possibility to an operator to provide a service for the purposes of engaging with end consumers, or a licence to provide a supply, that is, in a business-to-business capacity. The licence is valid for five years, and is subject to a number of requirements:

  • Due diligence checks to ensure that the individuals behind the business are fit and proper;

  • Financial and system auditing to ensure that the operation is fair, sound and secure;

  • Checks to ascertain that there are sufficient measures to prevent fraud and money-laundering;

  • Checks to ensure that the licensee operates a consumer-centric approach to the business, a high level of information security and segregation of player funds.

A skill game is 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 of skill alone or predominantly by the use of skill and is operated as an economic activity, but does not include a sport event’.sk

Although a skill game does not bring about the licensing requirements, the burden to prove that the activity in question is a skill game rests on the party operating or promoting the activity. Skill games with a negligible element of chance did not previously fall within the scope of gaming legislation but within the scope of general consumer protection legislation. The MGA sought to capture this group of games under its competence to provide protection to participants/players in order to ensure a safe and fair gaming environment in all instances and scenarios.

The MGA is vested with the discretion to classify games as skill games, on the basis of the criteria listed in Schedule 1 of the Regulations. These being:

  1. The presence of random draws and their effect on the outcome;

  2. If the game is played for money and, or prizes with a monetary value;

  3. Whether participation in a game involves any form of monetary commitment, or commitment of a monetary value;

  4. The possibility of a negative social impact of the game;

  5. Whether the activity is closely associated with games of chance and/or gambling;

  6. The duration of each event, competition or match;

  7. If at face value, the skilled player is able to win more than an unskilled player;

  8. If a player’s chance of winning is significantly increased by experience in playing the game;

  9. Whether skill can be acquired through training, experience, reading literature or other educational material;

  10. Whether a rule-set or format that is used further nullifies the effect of any element of chance;

  11. Whether the game is played against other human players, or otherwise;

  12. 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;

  13. The complexity of the game, including the amount of player choices and their potential effect on the outcome and the strategies involved.

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 sbalzan@act.com.mt

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 info@act.com.mt.

Disclaimer  

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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