On 24 January 2017, the Skill Games Regulations (Subsidiary Legislation 438.11 of the Laws of Malta) (the “SGRs”) came into force. The initiative constitutes part of the ongoing overhaul of the Maltese gaming law framework, which process was kick-started by the Malta Gaming Authority (the “MGA”) in 2014 with the aim of ‘future-proofing’ all gaming sectors. The publication of the SGRs follows a public consultation on the subject issued by the MGA in 2015, and reflects the MGA’s Position Paper on Digital Games of Skill with Prize, published in December of the same year, and by virtue of which the MGA set out its roadmap for the regulation of skill games.
In terms of the new rules, and as originally envisaged under article 78 of the Lotteries and Other Games Act (the “LOGA”) (Cap. 438 of the Laws of Malta), the regulatory governance of skill games now falls within the remit of the MGA. The SGRs define ‘Skill Game’ as:
a game for money or money’s worth and through means of distance communication, the result of which is determined by the use of skill alone or predominantly by the use of skill and is operated as an economic activity, but does not include a sport event.
In turn, the SGRs define a ‘Controlled Skill Game’ as, “a Skill Game subject to a licensing requirement […].” It will be up to the MGA to determine, by means of a public ruling issued under the Skill Games Regulations, whether a game is a Controlled Skill Game. The delivery of such ruling is to be guided by the criteria listed in the First Schedule to the SGRs, as well as any other criteria which are deemed necessary in the public interest. The more salient criteria to be found in the First Schedule include: (a) the presence of random draws and their effect on the outcome; (b) whether the game is played for money and, or prizes with a monetary value; (c) whether the activity is closely associated with gambling; and (d) the complexity of the game, including the amount of player choices and their potential impact on the outcome.
The SGRs mirror the open-market approach taken by the Remote Gaming Regulations (Subsidiary Legislation 438.04 of the Laws of Malta), such that, while a Controlled Skill Game will, as a general rule, require a licence from the MGA if it is to be organised in, or provided from, Malta, an operator may offer Controlled Skill Games in, and, or conduct its Skill Games operations from, Malta, without an MGA-licence if such activities are governed by an equivalent authorisation issued by the competent authority of another EEA member state.
FANTASY SPORTS DEEMED ‘CONTROLLED SKILL GAMES’
In light of the aforesaid, the Fantasy Sports (Exemptions) Regulations (Subsidiary Legislation 438.10 of the Laws of Malta) (the “FSRs”), enacted in August 2016, and effectively exempting daily fantasy sports operators from the requirement of obtaining a gambling licence from the MGA in terms of the LOGA, have been repealed. Indeed, the FSRs were only intended by the MGA to constitute an interim arrangement until the publication of the SGRs. On 27 January 2017, the MGA ruled that fantasy sports are to be classified as Controlled Skill Games in terms of the SGRs (the “Ruling”). The outcome of the Ruling, therefore, together with the repeal of the FSRs, is such that daily fantasy sports operators will be required to obtain a Controlled Skill Games licence from the MGA in terms of the SGRs.
The Ruling defines daily fantasy sports as:
a contest offered by means of distance communications, wherein players commit a consideration of monetary value, whether in the form of a stake, a periodic subscription or the purchase of in-game items which provide an advantage to the player, to compete against other players for the possibility to win a prize of money or money’s worth. The fantasy sports contest shall be one where the outcome is determined by the accumulation of statistical results of the performance of a number of individuals competing in actual sporting events.
THE CONTROLLED SKILL GAMES LICENCE
Salient features of the Controlled Skill Games Licence:
- a Controlled Skill Games licence may be B2C (for operators transacting directly with players) or B2B (for service providers offering the gaming platform to Controlled Skill Games service licensees);
- an applicant must be a body corporate established in an EEA member state;
- in order to grant a Controlled Skill Games licence, the MGA must ascertain that the applicant is fit to, and can properly carry on, its business. The vetting of an application will involve a number of processes, including a procedure to ensure that the persons behind the business are fit and proper, and financial and system auditing to confirm that the operation is fair, sound and secure;
- the licence is granted for a period of five years, and may be renewed for a further five-year term;
- licensees are subject to administrative and licensing fees, and a 5% tax charge over gaming revenue.
A three-month transitory period began running from the date of the Ruling, such that operators have been granted a term of three months, until 27 April 2017, to comply with the requirements of the SGRs.
The Skills Games Regulations, Fantasy Sports (Exemption) Regulations and the MGA’s Ruling may be accessed on the MGA website at http://www.mga.org.mt/skill-games-regulations-fantasy-sports-ruling/.