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Malta was the first Member State of the European Union to introduce regulations on online gaming. Malta is the largest online gaming jurisdiction and the most popular location for operators that seek licencing for their online gaming operation.
The Malta Gaming Authority (MGA) is a public single regulatory body that is responsible for the governance of all forms of gaming in Malta and it issues Remote Gaming Licences to gaming operators engaged in the online gaming business offering casino games, poker, sportsbetting, P2P, lottery games, as well as online gaming platforms. Since 2004, over 500 applications have been submitted to the MGA by companies wishing to run remote gaming operations in Malta, including some of the world’s leading online gaming operators.
Remote gaming operators licenced in Malta benefit from a stable legal regime due to the robust and effective Remote Gaming Regulations (Regulations) (L.N. 176/04), as well as very attractive fiscal incentives, such as very competitive corporate and gaming tax. The Regulations came into force on the 20th April, 2004, which implement regulatory best practices and establish a safe environment for both players and online operators. The Regulations are technology neutral, applying to all types of technologies (internet, mobile and telephone), as well as game neutral, applying to all types of games: betting, P2P, online casino, poker games, lotteries, bingo and slot games.
The Maltese jurisdiction allows industry operators the free movement of goods and services within the European market. In 2004 Malta became the first EU Member State to introduce remote gaming regulations bringing forward new concepts to the i-Gaming industry. The Regulations have been harmonised in accordance with the European Union legislation requirements and have been amended from time to time to reflect the requirements of the market.
Malta offers a very attractive fiscal regime with advantageous corporate and gaming tax rates together with an extensive double taxation treaty network and other forms of relief from double taxation. The corporate licensee is subject to income tax in Malta at a flat rate of 35% on its profits. However shareholders (including a Maltese company) are entitled to a refund of tax equivalent to 6/7ths of the tax paid by the company upon receipt of a dividend. Therefore, effectively the tax suffered in Malta would be of 5% after tax refunds. Furthermore, as Malta operates the full imputation system of taxation on distribution of dividends, any tax paid by the company is imputed towards the shareholders’ tax liability, thus ensuring that tax is only paid once at the level of the company, meaning that economic double taxation is avoided. Furthermore, gaming tax is capped at €466,000 (per annum) per gaming licence and it is either a fixed gaming tax for certain classes of remote gaming licences or tax on Real Income generated by operators.
Apart from being regarded as a centre of excellence in the financial services sector, over the last 20 years, Malta also became a reputable ICT jurisdiction. Adopting a state-of-the-art telecommunications and hosting infrastructure with large bandwidth networks providing high capacity connections, Malta’s networks are completely digital and its international connections have been significantly expanded through satellite technology and high capacity fibre-optics linking Malta with Europe. The existence of support services to the industry, such as: online payment processors, data centers, financial services institutions, auditors, software platforms and developers, has indeed contributed towards the rapid development of the remote gaming industry on the island.
The strong regulatory regime and rigorous legislation, qualified Malta in 2007 in the United Kingdom government’s White List of jurisdictions from which online gaming companies are allowed to advertise their services into the UK market.
The availability of highly qualified human resources is another major benefit of establishing a remote gaming operation in Malta. While the remote gaming industry is a relatively young industry, there is a vast availability of professionals specialised in the industry. Malta’s workforce is highly educated, diligent and is generally renowned for its strong work ethic and loyalty.
The Malta Remote Gaming Regulations emphasizes on the adoption of anti-money laundering policies procedures, and responsible gaming and security measures for the protection of online players, as well as, for the gaming operators themselves.
Over the past years many international jurisdictions have been considering the liberalisation of remote gaming and opening and regulating the remote gaming market in their respective jurisdictions. Malta recognises the importance of the online gaming industry and is considering adopting further measures to make it more flexible and thus more competitive in anticipation of the worldwide changes and developments in the gaming industry.
REMOTE GAMING IN MALTA (WHY MALTA?)
· An EU Member State where remote gaming is legally established and regulated through appropriate legislation, allowing industry operators free movement of goods and services.
· Gaming ACT that implement regulatory best practices.
· A very attractive fiscal regime offering advantageous corporate and gaming tax rates.
· Gaming tax rates are enticing for start-ups and highly rewarding for established operators, considering the fact that the maximum amount of tax payable per annum is capped.
· Low Licensing Fees.
· A well-regulated jurisdiction that safeguards the interests of both gaming operators and players.
· High anti-money laundering standards.
· The presence of various established and well regulated financial services institutions, payment gateways, support services and office space.
· An extensive network of treaties and other legislation providing relief from double taxation.
· The possibility to advertise in the UK due to Malta being included in the UK’s White List.
· Availability of professionals and support services specialised in the gaming industry.
· A state-of-the-art telecommunications infrastructure.
As of June 2011, the licensing process has been harmonised into a singular stage. Applicants can submit all the required information at one go and the MGA commits itself to the analysis of all information through multiple internal process streams.
Fit and Proper
The MGA conducts a fit and proper exercise on the applicant by assessing all information related to persons involved in finance and management and on the business viability of the operation. This involves the submission of the Remote Gaming Application Form and the necessary due diligence documents of every ultimate beneficiary who holds 5% or more equity in the Malta registered company. In the case that one or more of the ultimate beneficiaries is a business entity, ownership and incorporation details of the same need to be also submitted and vetted by the MGA. The MGA conducts probity investigations with other national and international regulatory bodies and law enforcement agencies.
Business Plan
The MGA conducts an in-depth financial analysis of the applicants’ business plan. A detailed three-year Business Plan of the proposed operation must also be submitted. The Business Plan must outline the objectives of the operation, the company structure, human resources, games to be offered and technologies application software used to conduct the remote gaming operation, as well as an overview of the proposed three year financial plan of the applicant.
Operation and Statutory Requirements
The applicant is examined on the instruments required to conduct the business. This process includes examining incorporation documents, the games, the business processes related to conducting the remote games, the rules, terms, conditions and procedures of the games, the application architecture and system architecture of the gaming and control systems, as well as other technical and legal documentation submitted.
The above three components constitute the desk-based audit of the application requirements and is completed within 12 to 16 weeks, assuming all information is complete and correct and there is little to no iteration between the MGA and the applicant.
System Audit
Once all three areas are successfully completed the MGA will inform the applicant that the application was successful and will invite the applicant to implement onto a technical environment in preparation for going live. The applicant will be allowed 60 days to complete this operation. At any point within those 60 days the applicant may trigger a request for an external systems audit (performed by an independent 3rd party contracted by the MGA against a fixed market price). The systems audit will audit the live environment against the proposed application.
On successful completion of the certification process, the Authority issues a five-year licence.
Compliance Audit
After going live a Licensee shall undergo a number of compliance audits of its operation, performed by an independent 3rd party contracted by the MGA against a fixed market price.
The MGA will require the audit to take place on the following schedule:
1. After the first year of operation after being licenced by the MGA.
2. On the third year of operation after being licenced by the MGA.
3. On the implementation of gross changes in the gaming system.
4. On the discretion of the MGA normally arising from suspicion of deviation to:
a) the regulations;
b) operational nature of the licence;
c) misconduct.
An online gaming operator can apply
for two types of licences in Malta: a B2B (business-to-business) online gaming
licence in which the services are provided to other businesses within the
industry or a B2C (business-to-customer) gaming licence in which the services
are being provided to the end user (the player):
B2C Licence Types
Type 1
Type 1 gaming services, which shall
mean games of chance played against the house, the outcome of which is
determined by a random generator, and shall include casino type games,
including roulette, blackjack, baccarat, poker played against the house,
lotteries,
secondary lotteries and virtual
sports games;
Type 2
Type 2 gaming services, which shall
mean games of chance played against the house, the outcome of which is not
generated randomly, but is determined by the result of an event or competition
extraneous to a game of chance, and whereby the operator manages his or her own
risk by managing the odds offered to the player;
Type 3
Type 3 gaming services, which shall
mean games of chance not played against the house and wherein the operator is
not exposed to gaming risk, but generates revenue by taking a commission or
other charge based on the stakes or the prize, and shall include player versus
player games such as poker, bingo, betting exchange, and other commission based
games;
Type 4
Type 4 gaming services, which shall
refer to controlled skill games such as fantasy sport.
B2B Licence types
B2B Critical Gaming Supply: supply and management of
material elements of a game;
B2B non Critical Supply: supply and management of software, whether as a
stand-alone or as part of a system, to generate, capture, control or otherwise
process any essential regulatory record and, or the supply and management of
the control system itself on which such software resides.
A gaming licensee is subject to
minimum issued and paid-up share capital requirements:
• Type 1 – Minimum €100,000
• Type 2 – Minimum €100,000
• Type 3 – Minimum €40,000
• Type 4 – Minimum €40,000
B2B – Minimum €40,000
Companies
with multiple type approvals are required to meet the above share capital
requirements cumulatively up to a minimum capping of €240,000.
B2C
B2C Type 1
Gaming Services – Minimum* €15,000; Maximum €375,000
|
Compliance Contribution for the
Financial Year** |
Rate |
|
For every euro of the first
€3,000,000 |
1.25% |
|
For every euro of the next
€4,500,000 |
1.00% |
|
For every euro of the next
€5,000,000 |
0.85% |
|
For every euro of the next
€7,500,000 |
0.70% |
|
For every euro of the next
€10,000,000 |
0.55% |
|
For every euro of the remainder |
0.40% |
B2C Type 2
Gaming Services – Minimum* €25,000; Maximum €600,000
|
Compliance Contribution for the
Financial Year** |
Rate |
|
For every euro of the first
€3,000,000 |
4.00% |
|
For every euro of the next
€4,500,000 |
3.00% |
|
For every euro of the next
€5,000,000 |
2.00% |
|
For every euro of the next
€7,500,000 |
1.00% |
|
For every euro of the next
€10,000,000 |
0.80% |
|
For every euro of the next
€10,000,000 |
0.60% |
|
For every euro of the remainder |
0.40% |
B2C Type 3
Gaming Services – Minimum* €25,000; Maximum €500,000
|
Compliance Contribution for the
Financial Year** |
Rate |
|
For every euro of the first
€2,000,000 |
4.00% |
|
For every euro of the next
€3,000,000 |
3.00% |
|
For every euro of the next
€5,000,000 |
2.00% |
|
For every euro of the next
€5,000,000 |
1.00% |
|
For every euro of the next
€5,000,000 |
0.80% |
|
For every euro of the next
€10,000,000 |
0.60% |
|
For every euro of the remainder |
0.40% |
|
Compliance Contribution for the
Financial Year** |
Rate |
|
For every euro of the first
€2,000,000 |
0.50% |
|
For every euro of the next
€3,000,000 |
0.75% |
|
For every euro of the next
€5,000,000 |
1.00% |
|
For every euro of the next
€5,000,000 |
1.25% |
|
For every euro of the next
€5,000,000 |
1.50% |
|
For every euro of the next
€10,000,000 |
1.75% |
|
For every euro of the remainder |
2.00% |
|
Licence Fees on Annual Revenue |
Fee |
|
Where annual revenue does not exceed €5,000,000 |
€25,000 |
|
Where annual revenue exceeds €5,000,000 but does not exceed
€10,000,000 |
€30,000 |
|
Where annual revenue exceeds €10,000,000 |
€35,000 |
|
Licence Fees on Annual Revenue |
Fee |
|
Annual revenue does not exceed €1,000,000 |
€3,000 |
|
Annual revenue in excess of €10,000,000 |
€5,000 |
5% Gaming Tax is applied on Gaming Revenue generated
from Malta based players. Determination of taxability is whether the player is
established, has his permanent address and/or usually resides in Malta.
*Minimum compliance contribution for new
operators will not apply until the first financial year end of operations
following licence acquisition.
** Start-Ups who qualify under the
Directive on Start-Up Undertakings will benefit from a moratorium period of 12
months in which they are exempt from paying compliance contribution.
Following the grant of a ten-year Remote Gaming Licence by the
MGA, every licensee is under the obligation to appoint a Key Compliance
Officer.
- a director of the company
- a resident in Malta
The responsibilities of the Key Compliance Officer include but are
not limited to:
The new ACT of 2018 introduced further Key Functions Key functions
that are to be provided by natural persons. In accordance with Part V of the
Gaming Authorisations Regulations, persons who provide a key function to a
licensee shall be required to hold a certificate of approval issued by the
Authority and each licensee shall notify the Authority, the key persons who
perform one or more key functions for such licensee.
On successful completion of the remote gaming application process,
the Licensee is awarded with a ten-year Remote Gaming Licence. The following
are the major reports and forms that the Licensee is requested to submit to the
MGA:
Key Compliance Reports
The Key Compliance Officer is under the obligation of submitting
monthly reports that stipulate the gaming tax due for the particular month, the
gaming logs, and the players’ balances in the gaming system. Furthermore,
together with this report, the Key Compliance Officer is under the obligation
to also submit the bank statement of the players’ funds for the month for which
the report is being submitted.
Incident Report
This report includes the process for change requests to the
approved infrastructure, upgrades and maintenance of the sealed gaming
equipment.
Incident reporting is also used to report any failure to the
gaming equipment hardware, whereby the MGA seals have to be broken due to
unforeseen circumstances. In such cases, the Incident Report has to be
submitted to the MGA within 24hours from the moment the equipment has been
tampered with.
Decommissioning
of Equipment
Decommissioning of Equipment report is used to acquire an approval
from the MGA to remove or move gaming equipment that has already been approved
and sealed by the MGA.
Management
Accounts and Yearly Audited Accounts
These reports are required by the MGA to analyse the overall
operational and financial performance of the Licensee.
Application Fee for | 5,000 | Paid upon application for a remote gaming licence (non-refundable) |
New Licence |
Recognition Notice fee -€5,000 Payableyearly in advance (non-refundable)
System Audit -€5,000 Payable once
FIXED ANNUAL LICENCE FEE (B2C ONLY)
Non-refundable Fixed Annual Licence Fee €25,000
Non-refundable Fixed Annual Licence Fee for operators providing solely Type 4 gaming services €10,000
FIXED ANNUAL LICENCE FEE (B2B ONLY)
For B2B operators providing the supply and management of material elements of the game (such as platform providers for instance), the non-refundable fixed annual licence fee ranges from €25,000 to €35,000.
In the case of those operators who only supply and manage gaming software, the non-refundable fixed annual licence fee ranges from €3,000 to €5,000 depending on the revenue.
Application Fee for Renewal | 5,000 | Paid upon application for renewal of licence |
of licence. | | |
The Remote Gaming Regulations (S.L.
438.04) issued in April 2004 were published, making Malta the
first EU member state to regulate remote gaming. In August 2018,
the new Gaming Act and the relevant subsidiary legislation came
into force. The new Framework broadened the regulatory scope
to increase the MGA's oversight.
The regulatory body in Malta supervising remote gaming operations
is the Malta Gaming Authority (MGA).
In order to provide remote gaming services from Malta, one needs
to obtain a licence of the type applicable to the proposed operation. Licensees
are expected to operate in compliance with the Gaming Act, as well as,
anti-money laundering legislation, electronic commerce legislation and any
other relevant law.
A basic requirement is that the core part of the online gaming
operations must be physically located in Malta. Other components of the system,
such as, front end of the games or customer support operations, may be situated
outside Malta at a location of choice of the Licensee.
The online gaming system (which is defined as a computer system
including all its components, the operating system and application software)
must be duly certified for compliance to the satisfaction of the MGA.
Certification is necessary for those components of the system, the
functionality of which directly impacts the operation of the games or the
reporting of the gaming and financial transactions.
Licenced operators are issued with a Seal of Approval that must be
displayed on their website, giving them a point of differentiation. The Seal is
linked to a site controlled by the MGA to provide independent, official
information to players.
A Code of Conduct on Advertising and Promotions establishes the
rules under which licensed online operators can advertise their activities.
Summary
Co-Location Services
We assist our clients in choosing co-location services for their gaming operation. Our clients can privately host a server within a secure and well-established data centre.
Such data centres provide dedicated connectivity to the internet via multiple network carriers. As a result, gaming operators benefit from better value and lower costs, while still being guaranteed the utmost levels of quality and service.
Payment Providers
We assist our clients in identifying the most suitable payment provider for their gaming operation, offering alternative payment methods and flexibility.
Business Plan
We draft a comprehensive three-year Business Plan for our clients as per the gaming authorities’ requirements, which includes: details of the games, marketing campaigns to be adopted, technology to be used, jurisdictions where the game is to be offered and three-year financial projections.
Regulatory Compliance
We ensure that our clients are compliant with all regulatory requirements, applicable policies and procedures imposed by the gaming authorities in the particular gaming jurisdiction where our client holds a remote gaming licence. We also inform our clients of any amendments to the gaming and other laws in the respective jurisdictions.
International i-Gaming Jurisdictions
We provide advice on different jurisdictions where remote gaming is regulated and the applicable gaming laws in the respective jurisdiction, as well as assist clients in acquiring a gaming licence in such jurisdictions.
Certification and Testing of Software
We provide our clients with a list of the approved European and international Labs that are certified by the respective gambling authorities, as well as a list of the certified RNGs by the respective authorities.
Introduction to Business Partners
Our extensive network of professionals in the gaming industry, allows us to introduce business partners, software developers and investors for the creation on new ventures or the development of the already existing ones.
