Malta has always been at the forefront of the remote gaming industry and has established itself as one of the prime jurisdictions for remote gaming operators. The Remote Gaming Regulations were the first legislative instrument to effectively regulate the remote gaming industry in the European Union.
Section 1 – The Gaming Licenses
There are four (4) different gaming licenses that a prospective applicant may apply for, being:
- Class 1 Remote Gaming License – a remote gaming license. Operators applying for this license shall manage their own risk by offering players repetitive games which results depend on random generation e.g.: casino type games, slots and other games of chance;
- Class 2 Remote Gaming License – a remote betting office license. Operators operating this license manage their own risk by offering bets on events based on a matchbook e.g.: fixed-odds betting;
- Class 3 Remote Gaming License – a license to promote and, or abet remote gaming from Malta) (e.g.: poker networks, bingo networks, betting exchange and other pool and Player to Player (P2P games)
- Class 4 Remote Gaming License – a license to host and manage remote gaming operators) excluding the licensee himself. Operators with this license are B2B operators that provide management and hosting facilities on their gaming platform to other B2C operators and EEA licensees. When a gaming operator uses the infrastructure of a licensed Class 4 operator, such operator will be deemed to be a Class 1/2/3 on 4 operator.
The distinction between the different classes of licenses is important as the gaming tax differs from one Class to another.
Section 2 – The Application Process
During the application stage, the Malta Gaming Authority (“MGA”) assesses whether an applicant is fit and proper to conduct gaming business and has the operational and statutory requirements to meet the obligations imposed by law.
The MGA conducts the following reviews during the application stage:
a. Due Diligence
All the promoters of the applicant company and those involved in the management and operations will be scrutinized and a thorough due diligence exercise will be conducted. Probity investigations with international regulatory bodies and law enforcement agencies will be conducted.
Documentation required for all shareholders, directors and ultimate beneficial owners include copies of passports, birth certificate, bank reference, police conduct certificate and passport size photos.
b. Business Plan
A business plan must be submitted containing all such information to enable the MGA to conduct an in-depth financial analysis.
c. Operational Requirements
A number of documentation must be prepared in order to describe the games that will be offered, the business model and the processes related to the conducting of the remote gaming operation. These include amongst others the rules of the games, the terms and conditions of the website but also technical documentation such as the application architecture, the system architecture and the control systems.
d. System Review
Once the initial review by the MGA is conducted to its satisfaction, the MGA will conduct a system review in order to (i) test the system in a technical environment and (ii) ensure that the documentation submitted have been in fact implemented in practice. It is thus important that there are no significant deviations from what was submitted previously. Upon successful completion of the system review, the gaming license valid for a 5 year period is issued.
e. Compliance Review
A number of compliance audits must be performed on the occurrence of the following:
- The first anniversary of the issuance of the gaming license
- The third anniversary of the issuance of the gaming license
- On the implementation of gross changes in the gaming system.
Section 3 – Other Requirements
Other basic requirements that a prospective licensee should be aware of include the following:
In accordance with the guidelines issued by the MGA in December 2015 and titled ‘Technical Infrastructure hosting Gaming and Control Systems’, servers may be located in Malta and/or in an EEA Member State and/or in an approved third country. The information security that must be attained by any hosting centre where the infrastructure is hosted is ISO/IEC 27001:2013.
A detailed network infrastructure must be provided in order to ascertain whether the same is compliant with MGA rules and regulations. Please also note that:
- A class 4 operator must have also an alternate site for disaster recovery/redundancy purposes.
- The MGA may require that certain regulatory data (such as player data/game data) must be available and replicated live on a server in Malta.
- The MGA, through its approved auditors verifies the infrastructure prior to the issue of the license and on the first, third and fifth anniversary of the issue of the said license. The MGA also reserves the right to conduct site visits in order to ensure compliance with laws and regulations. Since an audit requires a visit to the location where the equipment is located, the licensee must cover the auditor’s related travel expenses.
b. Value Added Tax
A licensed gaming operator is deemed to be exempt without credit for the purposes of Value Added Tax Act. Accordingly, the recovery of input VAT might not be available.
c. Key Official
Each licensed gaming operator is required to appoint a key official whose main duties are to personally supervise the operations of the gaming operator. The key official must be a director of the company and must be resident in Malta.
d. Share capital
Class 1 and Class 2 licensed gaming operators are required to have a minimum issued and paid up share capital of €100,000 whilst Class 3 and 4 licensed gaming operators are required to have a minimum paid up share capital of €40,000. Companies with multiple operators must comply with the aforementioned share capital requirements up to a maximum capping of €240,000.
e. Players Account
Players’ funds are to be kept in a Clients’ account held with a credit institution approved by the Authority separately from the operator’s own funds. There is no need for a players account for a Class 4 operator.
f. On-going requirements
Some of the on-going requirements that a licensed operator must comply with are the following
- Incident Reporting – any changes to the infrastructure or to any information that was submitted during the application process must be duly notified to the MGA. The same applies in the event of failure to the gaming equipment or the replacement of any hardware.
- Monthly reports must be submitted to the MGA which are to include amongst others the player balances in the gaming system and the players’ bank account statements
- Yearly audited accounts are to be submitted to the MGA
Section 4 – Gaming Tax
Gaming Tax must be paid to the MGA every month in accordance to the following schedule:
|Class||Amount of Tax (payable monthly)|
|Class 1||€4,660 for the first 6 months€7,000 for every month thereafter|
|Class 1 on 4||€1,200 flat fee|
|Class 2||0.5% of the gross amounts of bets accepted in remote betting operations|
|Class 3||5% of real income* [* Real income = Rake less bonus less intermediary commissions less payment gateway processing fees]|
|Class 4||NIL (0) for the first 6 months; €2,330 for the subsequent 6 months€4,660 every month thereafter|