Fantasy Sports – Skill vs Chance

In terms of Legal Notice 271 of 2016, the Malta Gaming Authority (MGA) has exempted fantasy sports games operators from the requirement to obtain a license.  The new LN was issued on the 1st August 2016, by means of which fantasy sports games operators can now provide their services online through a simple notification to the […]

Written By Stephen Balzan

On October 18, 2016
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In terms of Legal Notice 271 of 2016, the Malta Gaming Authority (MGA) has exempted fantasy sports games operators from the requirement to obtain a license.  The new LN was issued on the 1st August 2016, by means of which fantasy sports games operators can now provide their services online through a simple notification to the MGA, without the need to go through a licensing process.

This follows the position paper on Digital Games of Skill and Prize issued by the MGA in December 2015.  In this paper, the MGA highlighted the distinction between games of skill and games of chance, the latter of which require a licence until the applicable Act and Regulations due to the high risk presented to the consumer. Games of skill still warrant appropriate regulatory intervention, despite having a negligible element of risk for players as opposed to games of chance.

Fantasy sports games come in two main forms: games where the player chooses virtual athletes representing real-life athletes, and games where the player chooses made-up athletes. In the former case, the player’s performance in the game is normally directly dependent on the real-world performance of the athletes chosen as part of the player’s virtual team. In the latter case, the player ‘trains’ the athletes within the game, in one form or another, and the player’s performance in the game is dependent on the team’s performance in the virtual league or other competition. In both cases the element of skill is heavily reliant on the game structure and the number of variables that the game uses to subvert the elements of chance.

The new Regulations define ‘fantasy sports’ and ‘fantasy sports games’ as ‘a contest played for money or money’s worth whereby the winning outcome is determined predominantly through the skill or knowledge of the player, and where the results are determined by the accumulation of statistical results of the performance of a number of individuals in sporting events’.

The definition also specifically excludes the ‘forecast of the score, point spread or any other future occurrence of one or multiple events’ and any reference to ‘bet’ as stipulated in the Act shall not be applicable in the context of fantasy sports. This ensures that the focus remains on the players’ skills rather than chance.

In terms of Maltese legislation, a licence from the MGA is required for games of chance and games of chance and skill that may result in a prize. Therefore, a game is considered licensable depending on how the outcome of the game is determined. For games of chance, the results are accidental since they are based on chance whilst for games of skill and chance, results are also somewhat dependent on the skill of the player.

A game of skill, on the other hand, depends predominantly on the skills of the player as opposed to a game of chance or a game of chance and skill. As underlined in its position paper, the MGA has examined the determining element in producing the game’s result to ascertain whether a game is licensable or not.

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

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 [email protected]. 

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