MALTA
Gambling License

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 harmonized 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 5% after-tax refunds. Furthermore, as Malta operates the full imputation system of taxation on the 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 the economic double taxation is avoided. Furthermore, gaming tax is capped at €466,000 (per annum) per gaming license and it is either a fixed gaming tax for certain classes of remote gaming licenses or tax on Real Income generated by operators.

Apart from being regarded as a center 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 fiber-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 specialized 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 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 liberalization of remote gaming and opening and regulating the remote gaming market in their respective jurisdictions. Malta recognizes 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.

Advantages of applying for a Remote Gaming Licence in Malta

Why applying for a remote gaming license in 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.
• Remote Gaming Regulations (2004) 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 specialized in the gaming industry.
• A state-of-the-art telecommunications infrastructure.

Key Official

Following the grant of a five-year Remote Gaming Licence by the MGA, in accordance to the Remote Gaming Regulations, 2004, every licensee is under the obligation to appoint a Key Official.

• The Key Official supervises and is also responsible for the remote gaming operation of the company.
• The Key Official must be:

– a director of the company

– a resident in Malta

• Ensures that the Licensee complies with all applicable laws and regulations.
• Acts as a single point of contact between the MGA and the Licensee.

The responsibilities of the Key Official include but are not limited to:

• Submission of Key Official reports on a monthly basis.
• Payment of monthly gaming tax and annual gaming license fee.
• Tendering of gaming tax to the MGA on a monthly basis.
• Sealing of equipment and reporting of broken seals to the MGA.
• Filing in and signing of incident reports relative to the gaming equipment of the Licensee.
• Participation in System and Compliance Audits.
• Ensuring players’ funds are held by the Licensee at all times.
• Data protection.
• Legal advice and consultancy in relation to the Licensee’s gaming operation in Malta.

Classes of Licences

An operator may apply for one or more of the following classes of Remote Gaming Licences:

• Class 1 – operators managing their own risk on repetitive events with a random outcome (casino type games, lotteries, bingo, and slot games).
• Class 2 – operators managing their own risk on a singular event (sports betting).
• Class 3 – operators promoting and abetting gaming from Malta whereby operator receives only a commission (P2P, poker networks, betting exchange, and game portals).
• Class 4 – Hosting and managing other remote gaming operators, excluding the licensee itself (operating as a platform).
• Class 1 on 4 – operators managing their own risk on repetitive events, however, being hosted on a third-party platform Class 4, licensed by the MGA.
• Class 3 on 4 – operators promoting and abetting gaming from Malta whereby the operator receives only a commission, being hosted on a third-party platform Class 4, licensed by the MGA.

A Remote Gaming Licence is granted for a period of five years and may be renewed for periods of five years.

The required share capital in relation to the different gaming licenses is as follows:

• Class 1                    €100,000
• Class 2                    €100,000
• Class 3                    €40,000
• Class 4                    €40,000
• Class 1 on 4         €100,000
• Class 3 on 4         €40,000

Licensing Process

As of June 2011, the licensing process has been harmonized 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 plans. 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 are 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 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 license.

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 licensed by the MGA.
2. In the third year of operation after being licensed 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 license;

c) misconduct.

Operational and Financial Activity Reporting

On successful completion of the remote gaming application process, the Licensee is awarded a five-year Remote Gaming Licence. The Licensee has to submit a “Go-Live” form and prior to the Go-Live date stipulated in this form, the gaming equipment has to be sealed by the MGA representatives in the presence of the Licensee’s Key Official.

The following are the major reports and forms that the Licensee is requested to submit to the MGA:

Key Official Reports

The Key Official 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 Official 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

The decommissioning of the Equipment report is used to acquire 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 analyze the overall operational and financial performance of the Licensee.

Remote Gaming Regulations

Remote gaming in Malta is regulated by the Remote Gaming Regulations (Regulations) (2004) issued under the Lotteries and Other Games Act (2001). The Regulation is a comprehensive legislative instrument that aims to provide a secure online environment to players and to guarantee remote gaming operators a safe and competitive environment. The regulatory body in Malta supervising remote gaming operations is the Malta Gaming Authority (MGA).

The Regulations were published after consultation with the licensed operators. High-tech innovations have increased player interactivity and made gaming more accessible.

In order to provide remote gaming services from Malta, one needs to obtain a license of the class applicable to the proposed operation. Licensees are expected to operate in compliance with the Regulations and the Lotteries and Other Games Act, as well as anti-money laundering legislation, electronic commerce legislation, and any other relevant law.

A basic requirement of the Regulations is that the core part of the online gaming operations must be physically located in Malta. Other components of the system, such as the 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.

According to the Regulations, every Licensee must have a Key Official, whose role is to personally supervise the operation of the Licensee and to ensure that the Licensee complies with the applicable laws, regulations, and Licence conditions. The Key Official must be a director of the company and be a resident in Malta.

Licensed 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

• A benchmark in gaming regulation.
• Technology neutral – apply to all types of technologies: internet, mobile, telephone, and game devices.
• Game neutral – apply to all types of games: betting, P2P, online casino, poker games, lotteries, bingo, and slot games.
• Established a safe environment for both players and online operators.
• Detailed procedures relating to the control system and the financial protection of players that contribute to players’ trust.