Licence classes
Tax regime
Remote Gaming Regulations amended
Strict licensing requirements
Location of control system
Key official
Information disclosure
Registration
Financial requirements
Jurisdiction
Malta has become one of the most important hubs for internet gaming worldwide, thanks to the strong remote gaming regime which it has adopted over the years, together with its advantageous tax system and membership of the European Union. In addition, technology-neutral legislation adopted in 2004 has ensured that Malta remains at the forefront of the remote gaming industry and can provide a regime suitable for a fast-developing industry.
Licence classes
Under the 2004 Remote Gaming Regulations, there are four licence classes which an operator can choose between. Each class is connected to a different type of remote gaming service with a different level of risk involved:
- Class 1 - remote gaming licence covering games which involve risk taking on repetitive games by random events (eg, casino games, slots, lotteries and scratch cards).
- Class 2 - remote gaming licence covering games which involve risk taking on creating, marketing and backing a market (eg, sports betting, betting exchange).
- Class 3 - remote gaming licence covering games which promote and/or abet gaming (eg, poker, bingo or other P2P games).
- Class 4 - remote gaming licence providing a platform service for other operators. This creates a B2B relationship between operators of other classes and a Class 4 licensee - thus creating a network functioning on the same platform.
Tax regime
Gaming tax varies according to the licence - some are percentage based, while others are fixed. Nevertheless, Malta has an advantageous tax regime, whereby the effective corporate tax rate is 5% for non-resident shareholders.
Remote Gaming Regulations amended
Legal Notice 90/2011 amended the Remote Gaming Regulations, bringing them into line with some new developments in the industry. Legal Notice 90/2011 amended the definition of 'allowable operations' to include the possibility of hosting and managing European Economic Area (EEA) licensees in Malta on a Class 4 platform. This has further opened the possibility of local platform operators to be able to offer their services throughout the EEA.
Strict licensing requirements
What has made Malta an important player in the remote gaming industry is the strict licensing requirements which the Lotteries and Gaming Authority require operators to maintain. These requirements create a safe playing environment for players, as well as a recognised and stable licence for operators to present to business partners and investors.
Location of control system
One of the requirements for operating under a licence in Malta is that the essential part of the control system be physically located in Malta. This means that all servers that register gaming and financial transactions and hold players' databases, as well as 'know your customer' documentation and all logs, must be situated in Malta. However, certain infrastructure parts (eg, static content storage) can be located elsewhere; generally, licensees opt for a jurisdiction where hosting is not very expensive and which is closer to players, to offer a faster service.
Key official
A further requirement is that every licensee must appoint a person as its key official, in order to oversee personally remote gaming operations and take responsibility for the licensee's compliance with the applicable laws. The key official must be resident in Malta and appointed as a director of the licensee. The key official must also be approved for this position by the Lotteries and Gaming Authority, and cannot terminate his or her duties unless authorised to do so by the authority.
Similarly, all employees of a licensee engaged in a Maltese office must be approved by the authority before being employed. Employees must have a clean police record to be approved as fit and proper for employment with a remote gaming company.
Information disclosure
The Remote Gaming Regulations establish the minimum information that the licensee must make available to players, as well as minimum requirements for players and their funds protection. A licensee must include the rules relating to authorised games, players' games and financial transaction histories, as well as the relative processing fees, if any, which may be incurred by the player. The homepage of the licensee's website should further state the details of the licensee and the fact that it is licensed in Malta, and include a hyperlink to the Gaming Authority's site together with the authority's contact details.
Registration
It is compulsory to register a player prior to allowing him or her to participate in an authorised game. Information that the licensee obtains from the player should include his or her identity, age and place of residence. It is prohibited to provide or allow any loan or credit to any person enabling him or her to participate in any of the games on offer.
Financial requirements
The regulations place certain restrictions on dealing with players' money and require that players' funds be kept separately from the licensee's funds in a client account held with a credit institution approved by the authority. The licensee must ensure that funds in the client account, including any funds in transit or in the process of clearance, are at least equal to the aggregate of the amount standing to the credit of players' accounts held by the licensee. A licensee must be diligent with players' payments. In particular, necessary procedures must be in place to ascertain players' credit card details and payment patterns. This also works to protect the operator from fraud and money laundering. The licensee should allow a player to place a limit on the amount that he or she may wager, or the losses he or she may incur, over a specified period.
Jurisdiction
The remote gaming licence issued by the authority is a licence to operate in cyberspace. Accordingly, neither the licence nor the Remote Gaming Regulations contain any provision restricting offering of remote gaming/betting services to certain jurisdictions or imposing an obligation on remote gaming operators to refrain from taking bets/stakes from particular jurisdictions. It is up to the licensee to decide whether to impose such restrictions.
For further information on this topic please contact Olga Finkel at WH Law by telephone (+356 213 32657), fax (+356 213 32490) or email ([email protected]).