General legal framework

Legal definition of ‘gambling’

What are the legal elements required for an activity to be regarded as gambling?

In terms of the Gaming Act, Chapter 583 of the Laws of Malta, an activity is regarded as ‘gaming’ (which includes but is not limited to what would typically be defined as ‘gambling’) if it consists of participation in a game of chance or a game of skill, offering a gaming service or a gaming supply. Before a substantial overhaul of the local regulatory framework in 2018, an element of chance was mandatory for an activity to be recognised as gaming, and pure skill games were not recognised.

Chance

A game of chance is an activity the outcome of which is determined entirely or predominantly by chance and includes activities the outcome of which is based on the occurrence or outcome of one or more future events. The degree of chance that is sufficient for an activity to be regarded as gaming is not expressly established.

Skill

A game of skill is an activity the outcome of which is determined entirely or predominantly by the use of skill, typically with the exclusion of sports events.

Gaming service

For an activity to be recognised as a gaming service under the Gaming Act, it must constitute an economic activity. The activity must be carried out to make a profit, regardless of whether such profit is for philanthropic or other fundraising activities.

Gaming supply

The supply, directly or indirectly, of a good or service, concerning a gaming service, is considered a gaming supply. Gaming supplies generally fall within one of the following three categories:

 

  • critical gaming supply;
  • material gaming supply; and
  • ancillary gaming supply.

 

The following supplies each constitute a critical gaming supply:

 

  • supply and management of material elements of a game; and
  • 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 or the supply and management of the control system itself on which such software resides.

 

A material gaming supply usually relates to the provision of event odds, fraud management services, customer due diligence services and supply, assembly or distribution of gaming devices, yet this list is by no means exhaustive.

An ancillary gaming supply is one which is not a material gaming supply.

Maltese law does not feature a definition of ‘gambling’. The latter term is solely used when referring to persons of a vulnerable nature who are known to have a gambling problem. In this chapter, we refer to the term ‘gaming’ to maintain consistency with the Gaming Act.

Remote activity

With respect to remote or other cross-border activity, where is the wager deemed to take place?

The Gaming Act and other gaming regulatory instruments do not address the question as to where a wager is deemed to take place in the case of remote or other cross-border activity, nor has the matter been determined by case law to date.

Age restrictions

What is the minimum age for participating in lawful gambling?

The minimum age is generally 18 years. However, under the Gaming Act, the minimum age to play at land-based casinos is 25 years for Maltese citizens. The intention of the legislator in this regard was to provide further protection over and above the established minimums in the interest of Maltese citizens to further protect locals from the effects of gambling addiction. While the pre-2018 gaming rules set a different minimum age of 18 years for foreigners to play at land-based casinos, the law as it stands today is silent on the matter. The Gaming Premises Directive (Directive 2 of 2019), which came into force 1 February 2019, provides a minimum age of 16 years for visitors who do not intend to play during their visit, but who merely limit themselves to professional and, or academic endeavours.

Penalties

What are the penalties for offering unlawful gambling?

The applicable penalty differs depending on which provision of law has been breached. Criminal offences (listed in the Third Schedule to the Gaming Act) will, on conviction, typically be subject to a fine of between €10,000 and €500,000, or imprisonment of up to five years, or both a fine and imprisonment. For instance, if a game that requires authorisation is provided without the necessary authorisation, or if orders issued by the Malta Gaming Authority (MGA) are not adhered to, or if payment is not effected to the MGA or players when this is lawfully due, this gives rise to a criminal offence in terms of the Gaming Act. Administrative fines not exceeding €25,000, or not exceeding €500 for each day in which the breach persists, or both, may be imposed in the case of offences not listed in the said Third Schedule to the Gaming Act. When compared to the position under the pre-2018 gaming regime, the existing penalties are substantially harsher.

Does the law penalise the gambler directly for participating in unlawful gambling?

Unlawful gaming constitutes a contravention affecting public order under article 338(ii) of the Criminal Code (Chapter 9 of the Laws of Malta). Applicable punishments include detention, fines, reprimands and admonitions (article 7(2) of the Criminal Code). Forfeiture of moneys involved in the unlawful gaming activity is also possible (article 344 of the Criminal Code). Moreover, Maltese law provides no action for the recovery of gaming debts (article 1713 of the Civil Code), which is particularly relevant in the context of persons knowingly loaning sums to be used for gaming or the repayment of a sum loaned and lost in the course of gaming.

Social and non-profit gambling

Are there exceptions for social gambling, or charitable or non-profit gambling?

Non-profit gaming, under the Maltese gaming system, also covers social and charitable gaming, and is defined as a game wherein more than 90 per cent of the net proceeds are forwarded to any entity with a charitable, sporting, religious, philanthropic, cultural, educational, social or civil purpose. A non-profit game wherein the value of the stake does not exceed €5 per player will be deemed to be a low-risk game, falling under the broader ‘other games’ category established in article 29 of the Gaming Authorisations Regulations (SL 583.05). A non-profit game classified as a low-risk game will be required to obtain a low-risk games permit.

Non-profit games operators must obtain a low-risk games permit from the MGA under the Gaming Authorisations Regulations. The applicable requirements are less demanding than those of other gaming operators. A low-risk games permit is non-renewable and non-transferable and is valid for a singular event for which it is granted.

Regulatory authorities

What entity regulates land-based and remote gambling, and what are the regulator’s powers?

The entity that regulates gaming in Malta is the MGA. The major reform to Malta’s gaming legal framework in 2018 involved the significant widening of the MGA’s powers in respect of this sector. Its main powers, emanating from article 7 of the Gaming Act, may be summarised as follows:

 

  • issuing of gaming licences or another authorisation;
  • ensuring that those involved in gaming operations are fit and proper persons;
  • monitoring the conduct of operators;
  • preventing and combating criminal activity in gaming;
  • ensuring that gaming is operated and advertised fairly and responsibly;
  • investigating player complaints and assisting in the resolution of disputes between players, or between players and operators;
  • advising the minister on gaming regulations;
  • advising the government on the formulation of policies connected with the gaming sector;
  • issuing of fines, contributions, administrative fines and other dues;
  • collecting gaming device levy, gaming tax and other money;
  • developing strategies to achieve the objectives set by the MGA or by the government of Malta;
  • collaborating with other local and foreign bodies;
  • imposing the necessary conditions in conformity with EU law and Malta’s international obligations;
  • ensuring international obligations relative to the gaming sector are adhered to;
  • establishing common standards in the gaming sector;
  • monitoring advancements in the educational sector;
  • issuing policies, reports, consultation papers and binding instruments;
  • creating entities whose functions are necessary for the attainment of its objectives; and
  • requesting any kind of information from its authorised persons, applicants or any other person.

 

The MGA is empowered to do such other things that it considers necessary for the attainment of its objectives and the performance of its functions. Its role as a watchdog over the Maltese gaming industry is very much an active one, with the MGA constantly investigating allegations of unauthorised practice. It is not uncommon for the MGA to distance itself from particular gaming entities referencing MGA compliance when this is no longer – or ever has been – the case. The MGA has also approached entities or organisers of games of its merit to query compliance or suspend or revoke authorisations altogether when non-adherence to licensing obligations are clear.

Anti-money-laundering regulations

Are gambling licensees considered financial institutions for purposes of anti-money-laundering and similar financial services regulatory requirements or are they otherwise subject to such requirements?

Gaming licensees are considered subject persons under the Prevention of Money Laundering and Funding of Terrorism Regulations, SL 373.01 of the Laws of Malta, and are thus subject to comply with anti-money laundering obligations. Among others, a licensee must apply customer due diligence measures when carrying out a single transaction or multiple transactions that cumulatively amount to or exceed €2,000 (article 9(1) of the Prevention of Money Laundering and Funding of Terrorism Regulations). Moreover, the MGA conducts extensive due diligence and checks before granting gaming authorisations, including in the context of the ascertainment of money laundering reporting officers and key officials and their respective roles and responsibilities the following:

 

  • fraud management procedures;
  • anti-money-laundering risk-based assessments;
  • customer acceptance policies;
  • customer due diligence procedures;
  • documented enhanced due diligence; and
  • pay-out management procedures.

Land-based gambling

Types

What types of land-based gambling are permitted in your jurisdiction, and is gambling regulated at a national or subnational level?

Gaming is regulated at a national level. The present legal framework is no longer sector-based (land-based gaming, remote gaming, etc) as was previously the case, but rather is principle-based. The simplified two-tier system comprises a business to consumer (B2C) licence and a business-to-business (B2B) licence. B2B licence categories cover different types of gaming activities:

 

Type of game service

Gaming activity

Type 1

Games of chance played against the house, the outcome of which is determined by a random generator, including casino-type games such as roulette, blackjack, baccarat, lotteries and secondary lotteries, virtual sports games and poker against the house.

Type 2

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

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, including player versus player games such as poker, betting exchange, bingo and other commission-based gamed.

Type 4

Controlled skill games.

 

Maltese law also provides for other games, which will not require a B2C or B2B licence, but would require a different form of authorisation from the Malta Gaming Authority (MGA):

 

  • low-risk games; cruise casinos; and
  • amusement machines.

 

Operators may hold a single licence, rather than require multiple licences as was the case under the previous multi-class system, and which previously limited land-based gaming offerings to the following:

 

  • casino games;
  • commercial bingo games;
  • gaming devices;
  • sports betting (racecourse betting and sweepstakes);
  • lotteries; and
  • non-profit games.

 

Because of this, the provisions regulating one kind of activity are spread throughout the regulations rather than contained in one section of the law, and there is no specific provision in the gaming regulations expressly laying down which types of land-based gaming activities are specifically permitted in Malta. However, the Gaming Authorisations Regulations do provide that where a B2C licence is obtained for the purpose of operating casino games, approval of such licence will be conditional on a concession being granted by the government, since Maltese law only allows for a finite amount of land-based casino concessions at any one given time.

Establishment licensing

Please describe the licensing criteria to operate land-based gambling of each type or classification. Does your jurisdiction limit the number of available licences?

B2C and B2B licence

Licensing criteria are determined by whether the offering is a gaming service (B2C) or a gaming supply (B2B), and this is irrespective of whether the offering is land-based or remote. The MGA may require an applicant to present it with any information, documentation or assurances as may be necessary or relevant for the MGA to examine and determine the suitability of the applicant to hold a licence, depending on the licence category or type of game or services that the applicant intends to offer. Where the gaming service falls within more than one of the four-game types referred to above, the MGA will have full discretion to categorise the game in the type it considers best reflects its nature.

A person is not eligible to hold a licence issued by the MGA unless established in the European Economic Area. The MGA shall refuse to grant a licence in any of the following cases:

  • if the application is not submitted in accordance with the established form;
  • if the applicable fees have not been paid;
  • if the MGA, in its reasonable discretion, is not satisfied that the applicant, and all relevant persons, are fit and proper;
  • if the MGA is of the reasonable opinion that the game the applicant intends to offer does not satisfy the minimum requirements of fairness for their respective game types;
  • if any information submitted to the MGA is false, misleading, inaccurate or incomplete in a material respect; or
  • if the MGA, in its reasonable discretion is not satisfied that the applicant:
    • is capable of sustainably financing the gaming service or supply;
    • has the necessary competence, technical know-how and resources to carry out the gaming offering; and
    • has a business model to carry the gaming offering in a viable way that is compliant with applicable regulatory instruments, will comply with all regulatory requirements applicable to licensees of the relevant category and with any additional requirements that the MGA considers, on the basis of a risk-based approach, necessary to impose on the applicant, which requirements may include but are not limited to financial safeguards, protection of players and the implementation of any policies and procedures.
B2C gaming service

Any person in possession of a B2C licence (excluding a limited duration licence) must pay a licence fee to the MGA, comprising:

 

·       a compliance contribution (which varies depending on the type of licence and annual gaming revenue generated), payable for every licence period; and

·       the non-refundable fixed annual fee of €25,000, or €10,000 concerning operators providing solely a Type 4 (controlled skill game) gaming service.

 

B2B gaming service

Any person in possession of a B2B licence constituting the supply and management of material elements of the game (under paragraph 3(a) of the First Schedule of the Gaming Authorisations Regulations) will pay to the MGA, in advance, for 12 running months following the issue of the licence and every anniversary thereof, throughout the duration of the licence, a licence fee that shall range between €25,000 to €35,000, or concerning operators supplying Type 4 gaming supplies, a fee of €10,000.

Any person in possession of a B2B licence constituting the supply and management of software or the control system itself on which such software resides (under paragraph 3(b) of the First Schedule of the Gaming Authorisations Regulations) will pay to the MGA a fee within the range of €3,000 to €5,000.

 

Low-risk games

A low-risk games operator will acquire a low-risk games permit, in the case of:

  • non-profit games wherein the value of the stake does not exceed €5 per player;
  • commercial communication games (games the purpose of which is to promote the sale of goods or services, and the payments required to be made only serve to acquire the promoted goods or services, and not to participate in the game), wherein a single event will not award a prize exceeding €50,000, and also wherein a series of commercial communication games will not cumulatively exceed €100,000 in prizes during any calendar month, and not more than €500,000 during any calendar year; and
  • limited commercial communication games (games the purpose of which is to promote the sale of goods or services and that include a stake) with a stake that does not exceed €2 per player, and the value of the prize does not exceed €250.

A low-risk games permit is non-renewable and non-transferable, and is valid for a singular event for which it is granted.

Cruise casinos

An operator of a cruise casino will acquire a cruise casino permit from the MGA. This permit, which is non-transferable, is only valid for a term not exceeding the time during which the cruise ship is moored at or within Maltese territory, and only regarding registered passengers of the cruise ship.

Amusement machines

An operator may only make an amusement machine available for use if registered with the MGA using the applicable procedure, despite such gaming service holding the status of an exempt game.

Exempt games

When a game qualifies as an exempt game under the Gaming Authorisations Regulations, it will not require a licence or other authorisation; however, the MGA may establish appropriate regulatory conditions where and to the extent it deems fit and appropriate. Exempt games tend to most commonly take the form of games of skill that do not require a stake to enable participation or do not envisage the possibility of a prize – yet this is in no way exhaustive, and careful analysis in terms of the aforementioned subsidiary legislation is required on a case-by-case basis.

There are no provisions under the Maltese gaming regulatory regime that limit the number of available licences.

MGA power to refuse authorisations

In addition to the causes for refusal to grant a licence as specified earlier, the MGA may refuse to grant such authorisations if:

 

  • the MGA believes that the gaming offering is not compliant with the regulatory instruments;
  • the MGA believes such authorisation may pose a risk to the reputation of Malta or the public interest; or
  • insufficient information requested by the MGA has been provided.
Director, officer and owner licensing

Must individual directors, officers or owners of licensees also be licensed or reviewed for suitability?

Directors, officers, direct and indirect owners of licensees and other relevant persons are required to undergo a suitability assessment. The process entails a fit and proper assessment thereof by the MGA carried out based on due diligence documentation and probity assessments with other national and international regulatory bodies and enforcement agencies.

For this assessment, relevant persons will include, but will not be limited to, all persons holding a key function in the authorised person, and those holding a direct or indirect qualified interest in the applicant. A qualifying interest will be deemed established at 10 per cent, or any lower percentage as may be determined by the MGA. The Gaming Authorisations Regulations permits the MGA to utilise its reasonable discretion to establish which persons involved in the applicant have to be assessed.

Location

May a gambling location be part of a resort, restaurant or other multi-purpose location? What limitations apply?

There are no direct restrictions in terms of the location itself. However, controlled gaming premises (defined under Maltese law as premises intended to make available for use, to host or operate one or more gaming device but does not include premises in which gaming is carried out under a concession by the government or premises in which the only gaming activity being carried out is tombola) must be at least 75 metres away from certain locations, such as educational establishments and playgrounds. Furthermore, a minimum walking distance of at least 50 metres from another controlled gaming premise typically applies.

Casino development

What considerations arise in developing a casino resort project that are not typical to other resort development?

Development considerations primarily depend on the tendering process for the award of that casino resort’s concession by the Government of Malta.

Passive/institutional ownership

Are there provisions for passive or institutional ownership that allow for exemption or modification of licensing requirements?

No such provisions or exemptions apply under Maltese law.

Responsible gambling

What responsible gambling obligations apply to licensees?

In terms of responsible gaming, the minimum participation age is 18 years for remote and land-based gaming. However, under the Gaming Act, the minimum age to play at land-based casinos is 25 years in the case of Maltese citizens.

Under the Gaming Player Protection Regulations, operators are obliged to produce sufficient evidence to the MGA indicating that the following objectives have been satisfied:

 

  • ensuring that proper controls, policies and procedures are in place to prevent gaming by minors and to protect vulnerable persons;
  • ensuring that the interests of all players are adequately safeguarded and that players are provided with information on all avenues of recourse they may have if they feel aggrieved by a decision of the authorised person;
  • ensuring that all information relevant to the gaming service, and all information related to responsible gaming is readily available to players;
  • ensuring that tools are readily available for players or any other persons, authorising them to control their use of gaming services, and to safeguard themselves from the effects of problem gaming; and
  • ensuring that the marketing and advertising of the gaming service is fair and in accordance with the Gaming Commercial Communications Regulations, and any other applicable law.

 

In terms of the Gaming Commercial Communications Regulations, it is necessary for educational responsible gaming messages to be prominently displayed on all advertisements and promotions related to the game. Additionally, the web-portal address of an entity devoted to responsible gaming must be displayed on all advertisements and promotions. An alternative means of displaying such information will only be accepted in the event of a spatial restriction, provided such alternative means nonetheless capture the viewer’s attention effectively. Where the alternative means consists of click-throughs, the landing page should not be more than two clicks away.

The abovementioned requirement is not limited to advertising and marketing of games. The Player Protection Directive (Directive 2 of 2018) provides that when gaming services are offered online, licensees must ensure that a link leading to a page including all the relevant responsible gaming information required is permanently visible on the website wherein the services are being offered, and that page must not be more than one click away from any web page or application.

Concerning gaming premises, and controlled gaming premises, licensees are required to make available leaflets or other information regarding at least one organisation that aid persons who have problem gambling issues. Such information must include a responsible gaming message and must be placed in visible locations in the premises, and next to automatic teller machines, if any.

B2C licensees must ensure that a procedure for self-exclusion is made readily available to players who wish to exclude themselves from playing for a definite or indefinite period, therefore denying them access to the respective gaming services during such an exclusion period. The MGA has announced its intention to introduce a unified self-exclusion system for both remote and land-based gaming operations, in furtherance of its objective to implement additional controls to promote responsible gaming.

Taxes

What type of tax and what tax rate applies to each form of lawful land-based gambling activity?

Provisions on gaming tax are consolidated into a single legislative instrument, titled the Gaming Tax Regulations. All B2C operators (irrespective of the gaming vertical) will be subject to a gaming tax of 5 per cent of the gaming revenue derived from end customers located in Malta and a compliance contribution that increases depending on the annual revenue made.

Concerning B2C licensees, compliance contributions vary depending on the type of licence and annual gaming revenue as outlined in the following table. Generally speaking (aside from Type 4 licences), the higher the annual revenue generated, the lower the taxable rate.

 

Type of game service

Compliance contribution to the licence period

Rate (%)

Type 1

For every euro of the first €3 million to €10 million

1.25 to 0.55

 

For every euro over and above

 0.40

Type 2

For every euro of the first €3 million to €10 million

4.00 to 0.60

 

For every euro over and above

0.40

Type 3

For every euro of the first €2 million to €10 million

4.00 to 0.60

 

For every euro over and above

 0.40

Type 4

For every euro of the first €2 million to €10 million

0.50 to 1.75

 

For every euro over and above

 2.00

 

B2B licensees are exempt from gaming taxes, but are subject to a duty to pay an annual licence fee to the MGA, which fee depends on the annual revenue generated during the applicable financial year, as provided hereunder:

 

Revenue

Annual licence fee

Where annual revenue does not exceed €5 million

€25,000

Where annual revenue exceeds €5 million but does not exceed €10 million

€30,000

Where annual revenue exceeds €10 million

€35,000

For providers supplying solely Type 4 gaming supplies

€10,000

Remote gambling

Types

Is remote gambling permitted and, if so, what types?

All types of gaming using distance communications, including online and mobile, are permitted.

The licensing system distinguishes exclusively between whether the gaming offering is a gaming service business to consumer (B2C) or a gaming supply business-to-business (B2B), irrespective of whether the offering is land-based or remote. The same game types apply to games of a remote nature.

 

Type of game service

Gaming activity

Type 1

Games of chance played against the house, the outcome of which is determined by a random generator, including casino-type games such as roulette, blackjack, baccarat, lotteries and secondary lotteries, virtual sports games and poker against the house.

Type 2

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

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, including player versus player games such as poker, betting exchange, bingo and other commission-based gamed.

Type 4

Controlled skill games.

Licensing

What are the criteria for obtaining a licence to operate remote gambling?

The same criteria that apply to land-based gaming apply to remote gaming since the criteria for obtaining a licence is based on the classification of whether the operation requires a B2C or B2B licence, irrespective of the medium or technology applied.

The MGA may require an applicant to present it with any information, documentation or assurances as may be necessary or relevant for the MGA to examine and determine the suitability of the applicant to hold a licence, depending on the licence category or type of game or services that the applicant intends to offer. Where the gaming service falls within more than one of the four-game types referred to above, the MGA will have full discretion to categorise the game in the type it considers best reflects its nature.

How do the licensing criteria for remote gambling operators differ from those applicable to land-based operators?

The licensing criteria in Malta apply horizontally and generally do not distinguish between land-based or remote gaming services. By comparison, under the pre-2018 regulatory regime, the main difference was that the licensing criteria for remote gaming were set out by law, Malta Gaming Authority (MGA) policy and directives, whereas land-based casinos and the National Lottery required a ministerial concession, and therefore relevant criteria depended primarily on the tendering process for the award of that concession. While the distinction between land-based and remote gaming is minimal under the existing gaming laws, the concession system in regard to land-based casinos has been retained.

Cross-border gambling

May operators located in other countries offer internet gambling to consumers in your jurisdiction without obtaining a licence there?

Yes, if such operators hold a licence issued by another EU or EEA member state, or by any other state that is deemed by the MGA to offer safeguards largely equivalent to those offered by Maltese law. The operator would be required to apply to the MGA for a recognition notice, to provide a gaming service, gaming supply, key function or any other authorisation in or from Malta. A recognition notice is deemed to have the same effect as an authorisation issued by the MGA. The MGA may revoke any such recognition notice and may subject an applicant of a recognition notice to administrative fees were reasonable.

May operators licensed in your jurisdiction offer internet gambling to consumers in other countries?

Whether a Maltese licensee can offer its services to consumers in other countries primarily depends on the legislation and policy in that country. From a Maltese perspective, the Gaming Act and other regulatory instruments do not prevent licensees from offering their services to consumers in other countries.

Taxes

What tax rate applies to each form of remote gambling?

The same tax rates applicable to land-based gaming apply.

All B2C operators (irrespective of the gaming vertical) will be subject to a gaming tax of 5 per cent of the gaming revenue derived from end customers located in Malta and a compliance contribution that increases depending on the annual revenue generated. Compliance contributions vary depending on the type of licence and annual gaming revenue as outlined in the following table. Generally speaking (aside from Type 4 licences), the higher the annual revenue generated, the lower the taxable rate.

 

Type of game service

Compliance contribution to the licence period

Rate (%)

Type 1

For every euro of the first €3 million to €10 million

1.25 to 0.55

 

For every euro over and above

 0.40

Type 2

For every euro of the first €3 million to €10 million

4.00 to 0.60

 

For every euro over and above

0.40

Type 3

For every euro of the first €2 million to €10 million

4.00 to 0.60

 

For every euro over and above

 0.40

Type 4

For every euro of the first €2 million to €10 million

0.50 to 1.75

 

For every euro over and above

 2.00

 

B2B licensees are exempt from gaming taxes, but are subject to a duty to pay an annual licence fee to the MGA, which fee depends on the annual revenue generated during the applicable financial year, as provided hereunder:

 

Revenue

Annual licence fee

Where annual revenue does not exceed €5 million

€25,000

Where annual revenue exceeds €5 million but does not exceed €10 million

€30,000

Where annual revenue exceeds €10 million

€35,000

For providers supplying solely Type 4 gaming supplies

€10,000

Intellectual property

Patents

Are gambling games – land-based or remote – patentable in your jurisdiction?

Patentability of games designed for gaming purposes in Malta depends on the same factors applicable to inventions in general under the Patents and Designs Act (Chapter 417 of the Laws of Malta), namely:

 

  • novelty;
  • non-obviousness; and
  • industrial applicability.

 

However, under Maltese law, software as such is not patentable.

Trademarks

Are there limitations on how brands, logos or other types of marks may be used in promoting gambling games?

There are no direct limitations. However, their use is subject to the general advertising restrictions as contemplated in the Commercial Communications Regulations.

Advertising

Restrictions

What types of restrictions apply to advertising gambling games?

The Commercial Communications Regulations set out limitations to the advertisement for gaming activities. Among other restrictions applicable thereto, advertisements by Malta Gaming Authority licensees must not:

  • feature minors;
  • condone or encourage behaviour that is criminally or socially irresponsible;
  • portray gaming as a means of resolving problems;
  • suggest that gaming is an alternative to employment;
  • suggest that it can enhance personal or professional qualities;
  • portray gaming in the context of toughness;
  • portray gaming as indispensable;
  • suggest that solitary gaming is preferable to social gaming;
  • suggest peer pressure to game;
  • suggest that skill can influence the outcome of a game that is purely a game of chance;
  • provide false information about chances of winning or expected return from gaming;
  • exploit cultural beliefs about gaming or luck;
  • refer to instantly available consumer credit services;
  • tarnish the goodwill or reputation of an authorised person; and
  • target players who are undergoing a period of self-exclusion.

Suppliers

Licensing

What types of suppliers to gambling operators require licences?

Gaming suppliers are regulated in a horizontal fashion and a distinction is made between gaming suppliers that provide:

  • a critical gaming supply (requiring a licence);
  • a material gaming supply (requiring an approval as opposed to a licence); and
  • an ancillary gaming supply (not requiring any approval or licence).

 

Any person who provides a critical gaming supply from or to Malta must be so authorised by the Malta Gaming Authority (MGA). A critical gaming supply shall constitute one of the four types of games set out in the First Schedule of the Gaming Authorisations Regulations.

 

Type of game service

Gaming activity

Type 1

Games of chance played against the house, the outcome of which is determined by a random generator, including casino-type games such as roulette, blackjack, baccarat, lotteries and secondary lotteries, virtual sports games and poker against the house.

Type 2

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

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, including player versus player games such as poker, betting exchange, bingo and other commission-based gamed.

Type 4

Controlled skill games.

 

 The following supplies each constitute a critical gaming supply:

 

  • supply and management of material elements of a game; and
  • 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 or the supply and management of the control system itself on which such software resides.

 

A material gaming supply usually relates to the provision of event odds, fraud management services, customer due diligence services and supply, assembly or distribution of gaming devices, yet this list is by no means exhaustive.

Registration

If licensing is not required, is there a registration or other process suppliers are subject to, and what triggers that process?

When a supply constitutes a material gaming supply, the business-to-business (B2B) gaming licence will not be necessary. Any person offering a material gaming supply to an authorised person may request a material gaming supply certificate from the MGA. Any authorised person making use of or seeking to make use of a material gaming supply provided by a third party is to ensure either that such a material supplier owns a material gaming supply certificate or that the material gaming supply is otherwise approved on a case-by-case basis by the MGA subject to a risk-based approach. Where any authorised person accepts to receive material gaming supplies from a third party not in possession of a material gaming supply certificate, such authorised person receiving material gaming supplies shall assume full regulatory responsibility for such supplies.

Concerning an ancillary game supply, meaning any other supply that is not classified as a material game supply, a licence or any other form of authorisation from the MGA will not be required.

Labour and employment

Wage and hour rules

Are there particular rules governing hours and wage treatment for casino employees?

There are no specific rules applicable to employees working in casinos.

All employees in Malta are entitled to compensation for overtime, which includes hours worked over and above 40 hours per week, for both full-time and part-time employees. Overtime is compensated at 1.5 times the rate payable for normal working hours. Time spent preparing, such as changing into or out of clothing, is not included as working time; however, pre- and post-shift meetings would be included as part of an employee’s working hours if they are obligatory (the same rule applies to training). Security screening depends on the nature and time spent on security screening – the longer and more exhaustive it is then the more probable it is that it will be considered as a part of working time.

Collective labour

Must casino employees be members of labour unions or similar organisations?

There is no such specific requirement, nor is there a prohibition from doing so.

Acquisitions and changes of control

Change of control

How are licensee changes of control, and substantial changes in shareholdings of licensees, addressed?

Any change in qualifying shareholding must be notified to the Malta Gaming Authority (MGA) no later than three working days after the change has been effected. Unlike under the pre-2018 regulatory regime, transactions involving a change in control are no longer subject to the MGA approving the transaction before closing.

A change in the essential components of the licensee requires prior written approval from the MGA.

Concerning public companies, Maltese law does not establish a process specific to listing on an exchange by a gaming licensee. However, concerning shareholders of listed gaming companies, the MGA typically rests on the checks carried out by the regulated market. In such instances, the MGA’s fit and proper assessment is typically focused on the board of directors.

Bankruptcy

How are gambling licences treated in bankruptcy?

Licensees that are declared insolvent risk losing their gaming licence, especially if gaming tax is not duly paid.

A creditor who seeks to recover its debt through the enforcement of collateral by taking possession of a qualifying shareholding, or gaming assets that are subject to the MGA’s regulatory remit, such as the MGA licence, requires prior approval from the MGA before proceeding with enforcement. The creditor’s enforcement against other assets owned by a licensee would not require the MGA’s prior approval.

An insolvency court order does not remove the need for obtaining the MGA’s prior approval, where such approval is required before proceeding with enforcement.

In terms of options available to a creditor seeking to enforce a debt secured against a licensee’s assets enforcement of rights typically requires court proceedings.

However, under the Financial Collateral Arrangements Regulations (SL 459.01 of the Laws of Malta) (the FCA Regulations), it is possible to structure certain secured loan transactions in a manner in which they are validly enforceable under their terms, and this notwithstanding winding-up proceedings or reorganisation measures in respect of the collateral provider. However, the provisions of the FCA Regulations apply solely to financial collateral that consists of:

 

  • cash;
  • instruments; or
  • credit claims that can be evidenced in writing.

 

In this respect, the general observation made earlier concerning obtaining the MGA’s approval to enforce collateral in the form of a qualifying shareholding in a licenced entity would still be applicable within the context of the FCA Regulations. The applicability of the FCA Regulations also depends on the nature of the collateral taker and the collateral receiver.

A creditor cannot enforce his or her debt against funds held by the licensee on behalf of its customers.

Quasi-gambling

Regulation

How are forms of ‘quasi-gambling’ regulated? Are any treated as ‘gambling’, and what triggers such treatment?

Any gaming that falls within the requirements of the Gaming Act, Chapter 583 of the Laws of Malta, is regarded as a gaming activity (which includes but is not limited to what would typically be defined as ‘gambling’) if it consists of participation in a game of chance or a game of skill, offering a gaming service or a gaming supply, and would thus require a licence. Games qualifying under the category of ‘low-risk games’, requiring a low-risk games permit, may be considered forms of quasi-gaming. The same applies concerning cruise casinos, requiring a cruise casino permit from the Malta Gaming Authority (MGA), and amusement machines that must be registered with the MGA before use. Concerning skill gaming, the MGA is empowered to issue a ruling whereby a skill game is deemed a controlled skill game and thus require a licence.

Licensing

Does your jurisdiction license quasi-gambling operators?

Malta does not license quasi-gambling operators per se. Instead, gaming activities either require an MGA license where the activity is deemed to fall within the definition of gaming, or the appropriate permit or registration where the activity is not deemed to require a license but still falls within the scope of ‘low-risk games’, cruise casinos or amusement machines.

Other restrictions

Does your jurisdiction impose other restrictions on the conduct of quasi-gambling activity, including restrictions on advertising, age of participation, limitations on prizes, etc?

Applicable restrictions depend on the quasi-gaming activity in question. Concerning low-risk games, specifically commercial communications games – the Gaming Authorisations Regulations set out prize limitations that may be won, namely:

 

  • commercial communication games (games the purpose of which is to promote the sale of goods or services, and the payments required to be made only serve to acquire the promoted goods or services, and not to participate in the game), wherein a single event will not award a prize exceeding €50,000, and also wherein a series of commercial communication games will not cumulatively exceed €100,000 in prizes during any calendar month, and not more than €500,000 during any calendar year; and
  • limited commercial communication games (games the purpose of which is to promote the sale of goods or services and that include a stake) with a stake that does not exceed €2 per player, and the value of the prize does not exceed €250.

 

However, all activities falling within the definition of ‘gaming’ under Maltese law, including quasi-gambling activities, are subject to the advertising requirements and participation restrictions as laid down in the Gaming Act and its supplementary instruments.

Litigation

Recent cases

What, if any, significant litigation involving the gambling or quasi-gambling sectors has your jurisdiction seen in recent years?

On 30 March 2017, in the case of Police v Christaan Alexander Van Dalen, the court of magistrates (criminal judicature) sentenced a licensee’s employee to jail for six years and a fine of €15,000 for defrauding his employer out of €153,000 through commissions arising from artificially generated traffic on the employer’s gambling websites.

In the case of Adv Stephen Muscat as mandatory of Hugo Jose v EveryMatrix Limited, decided on 24 October 2018, the defendant company, a Malta Gaming Authority (MGA) licensee offering online casino services refused to pay the applicant player the sum of €25,820, upon identifying signs of player collusion. The First Hall, Civil Court declared that unlawful activity by way of collusion was evident, and therefore the defendant company had every right to refuse payment.

Otherwise, there was little litigation of significance to gaming other than claims for fees due or employment claims that have been initiated before the local courts (as opposed to arbitration or out of court settlements not necessarily in the public domain). One prime example of the latter is the settlement made between Blackrock Media Limited with the MGA in 2020 for the operation of a gaming service without the necessary authorisation. This settlement amounted to €2.34 million according to article 25 of the Gaming Act.

Update and trends

Key developments of the past year

Highlight any noteworthy developments or trends in the gambling or quasi-gambling sectors (legal or business) and their potential implications.

The 2018 reforms to the Maltese gaming legal system have enhanced Malta’s position, from a regulatory perspective, as a leading jurisdiction of choice for gaming industry operators. Since then, the Malta Gaming Authority (MGA) has been seen to act on its heightened supervisory and decision-making role, aligning the regulation of gaming with anti-money laundering requirements and placing added focus on player protection. The regulations strengthen consumer protection, providing greater obligations on the part of the gaming licensee to implement responsible gaming measures.

Work on a unified self-exclusion system for the gaming industry in Malta is also underway following a preliminary market consultation published by the MGA. The system is intended to empower players who wish to self-exclude themselves from any gaming services licensees, allowing players to self-exclude through a self-exclusion website or through the websites of operators (in the case of operators providing gaming services through the internet), or facilitated by the operator itself or MGA staff.

Having concluded the first phase of its Sandbox Framework for the acceptance of virtual financial assets and the use of distributed ledger technology (DLT) within the gaming industry, wherein the MGA accepted applications for the use of DLT assets, directly or through third-party service providers, by its respective licensees – the MGA has now moved on to the second planned phase. The second phase will see the MGA accept applications for the use of innovative technology arrangements, including DLT platforms and smart contracts. The MGA has therefore extended the Sandbox Regulatory Framework to 31 December 2021.

As of October 2019, the MGA has also published guidelines concerning Brexit to indicate the potential impact on the gaming industry operating in or from Malta, and the transitory measures that may be availed of to ensure minimal impact on regulatory efficiency and ongoing business. The United Kingdom’s exit from the European Union means that persons or entities established in the United Kingdom will no longer meet the criterion of establishment within the European Economic Area, and thus are required to adapt accordingly. This may require the transferring of the licence to another company within the same corporate group in terms of regulation 17 of the Gaming Authorisations Regulations, which requires the MGA’s prior approval, re-domiciliation, and MGA notification within 30 days. A transitory period of 12 months becomes applicable, beginning from the effective date. Regulation 22 of the Gaming Authorisations Regulations prescribes an obligation on entities providing a gaming service, or a critical gaming supply in or from Malta, with a licence issued by another EU or EEA member state, to apply for a recognition notice with the MGA. Operators availing themselves of regulation 22 concerning licences issued in the UK will be impacted in several ways following Brexit, including respecting the validity of existing recognition notices and a potential breach of regulation 3 of the Gaming Authorisation’s Regulations. Entities operating in or from Malta, on the strength of an authorisation issued to them by the competent UK authorities, will no longer be able to make use of the procedure laid down in regulation 22. This might be rectified by either applying for a licence with the MGA, or applying for a recognition notice concerning any other EU or EEA licence they may have.

Finally, it is also pertinent to mention the changes brought about by the covid-19 pandemic. Land-based operators have been heavily impacted. Under Legal Notice 76 of 2020 titled ‘Closure of Places Open to the Public Order, 2020’, the Superintendent of Public Health ordered that as from the 17 March 2020 all bars, restaurants, cafeterias, snack bars, cinemas, gyms, museums, exhibitions, clubs, discotheques, night clubs, open-air markets, indoor swimming pools, the national swimming pool, gaming premises – including controlled gaming premises, bingo halls, casinos, gaming parlours, lotto booths and betting shops be closed until further notice.

From the perspective of oversight, it may be said that the MGA has not implemented any extraordinary changes to standard procedures. More so, because the MGA has utilised an online portal for submissions well before the spread of the pandemic. On this basis, it is clear that compliance obligations are to continue being adhered to. It is also important to note that the MGA, like the majority of other governmental authorities, are dealing with each incident on a case-by-case basis, encouraging licensees to contact the MGA where it is felt that the current national predicament may hinder compliance obligations. The MGA has, however, through a notice published on 25 March 2020, extended deadlines for submission of audited financial statements, which obligation emanates from clause 41 of the Gaming Authorisations and Compliance Directive. In normal circumstances, these would be required by no later than 180 days after the end of the financial year. Thus, for those licensees whose concluded financial year ended or ends between December 2019 and March 2020, the deadline for submission of audited financial statements has been extended to end of October 2020. Licensees are nevertheless expected to submit unaudited accounts within normal time frames (ie, within 180 days after the end of the respective financial year).

Moreover, on 26 March 2020, the MGA also published guidelines for socially responsible commercial communications in relation to covid-19. Owing to the distress caused to players during this turbulent time, the MGA reiterates that any direct or indirect reference to covid-19 would be tantamount to a breach of the Commercial Communications Regulations. In essence, licensees should never portray gaming as follows:

 

  • as a resolution to social, educational, personal or professional problems;
  • as an alternative to employment;
  • as a solution to financial problems or as an alternative to investment;
  • as an acceptable social behaviour; or
  • as being particularly desirable when done in solitude.

 

On 6 April 2020, the MGA also elaborated on the inevitable scenario of betting operators looking into offering different markets as opposed to those traditionally offered as a result of the stalling of most live sporting events. These may include amateur- or minor-level sports events, or even e-sports. The latter is gaining particular traction at this time, and even extends to the hosting of simulated versions of usual events. The level of professionalism concerning the aforementioned may vary significantly and may be tedious to distinguish. As a result, the MGA has provided particular guidelines to protect against abuses that may arise, namely that:

 

  • operators should appreciate that events run online lack the standard integrity checks organised at live events;
  • operators should ensure e-sports events are not pre-recorded and make it clear that they may not be broadcast in real time, often having pre-set delays between the match and the broadcast;
  • operators clarify the difference between e-sports and virtual sports wherein the latter is dependent on random number generator engines;
  • operators should look into whether the event they are offering betting odds on has any integrity controls in place and the level of professionalism of the parties involved;
  • operators seek information relating to participants and organisers involved in the e-sports events either from online searches or more reputable sources where possible;
  • operators should maintain their betting integrity and fraud checks, particularly confirming that event participants are also not placing bets on the outcome of said events;
  • organisers, sports governing bodies and operators revise their policies relating to misuse of insider information to also include participants or organisers of said events where this is not already the case;
  • suspicious betting activity is always reported to the appropriate authorities; and
  • suspicious activity not related to betting per se but vital to the e-sport event is also reported to appropriate sports governing bodies or organisers.

 

In light of the current predicament, perhaps the silver lining of the covid-19 outbreak shall be the stress-testing of disaster recovery plans implemented by MGA licensees, as a pre-requisite to obtaining their authorisation. Moreover, it may be regarded as an opportunity to continue to digitise an already quite digital industry, utilising the government subsidies made available for updating IT infrastructure to facilitate remote employment.