New Gaming Regulations - Current vs Proposed

Dr. Silvana Zammit | Published on 12 Jan 2018 | Updated on 18 Jul 2019

New Gaming Regulations - Current Vs Proposed (Maa) 2

The Malta Gaming Authority aims to overhaul the current Maltese gaming legislation. The consultation paper includes a draft of the proposed new law (“New Gaming Law” or “Draft Law”) which is expected to come into force in mid-2018..

The main aims of the New Gaming Law are the following: 

The New Gaming Law proposes to regulate land-based and online gaming including skill gaming. Outlined below are the major changes proposed and affecting online gaming in comparison to the existing position as regulated by the Remote Gaming Regulations 2004 and the Skills Games Regulations 2016.

Legal Structure

The Current Position

Currently the main act is the Lotteries and Other Games Act (Chapter 438 of the Laws of Malta). The Remote Gaming Regulations of 2004 (RGRs) issued under the main act; regulate the provision of remote games of chance awarding a prize. The Skill Games Regulations of 2016 regulate the provision of remote skill games which currently include fantasy sports. 

The Proposed Position

The New Gaming Law repeals all existing laws and introduces one set of laws to regulate online and land-based gaming. Indeed, within the structure of the New Gaming Law, the provisions regulating one type of activity are spread throughout the main Act and the proposed different regulations. The proposed Gaming Act is theme oriented (definitions, authorisations, taxes, player protection) rather than product/ sector oriented (land-based gaming, online gaming, online controlled skills games etc.) 

Whilst, a remote gaming operator of games of chance, for example, shall not be able to refer to a particular text, such as the RGRs today, wherein the major rules that affect it are provided for the Draft Law’s structure is more coherent than the existing body of laws and indeed brings about possibly technology convergence and integration of the different channel of distribution of games. 

Types/Classes of Licence

The Current Position

The system as regulated by the RGRs is currently game specific- the class of licence to be applied for depends on the type of game or games/service that the applicant intends on offering. Applicants may apply for either or all of the following licenses:

The Proposed Position

The draft law introduces a shift from the multi-licensed system to a straightforward system of two categories of licenses: a business-to-business (B2B) and a business-to-consumer (B2C) license. The requirement of a license in the Draft Law is based on the type of services provided (gaming services and critical gaming supply license) rather than the kind of games offered. This potentially means that under this new system, already licensed BSC operators will be able to add new games to their system without the requirement of further licenses. 

The New Gaming Law also introduces authorisations for material gaming suppliers and key functions providers. 

Gaming Service and Critical Gaming Supply

The B2C and B2B types of licenses in the New Gaming Law are referred to as follows: 

Supply and management of the control system, namely the system on which the software referred to generate, capture, control or otherwise process any essential regulatory record resides

Management for these purposes is deemed to be the provision of ongoing active maintenance and support indispensable for the provision of the gaming service.

The classes of license in the current RGRs are transposed in game types in the Draft Law, providing that gaming services or critical gaming supplies can be of 4 types:

Hence, the New Gaming Law, whilst abolishing the requirement of difference licences for different types of games, retains the necessary distinction of different types of games, which while falling under one B2B or B2C licence, might potentially refer to specific requirements for the addition of that game type to the existing B2B or B2C licence.

Material Gaming Supplies

Material gaming supplies refer to:

The Draft Law provides that any person offering a material gaming supply to an authorised person request a material gaming supply certificate from the MGA.

The current position seems such that licensees can use the services of an unauthorised material gaming supplier. In such a case, however, the New Gaming Law provides that the licensee shall assume full regulatory responsibility for such services.

Key Functions

The Draft Law does away with the concept of the Key Official (resident director) currently provided for in the RGRs whilst providing that the following roles and responsibilities performed in connection with the gaming activity of a licensee shall each constitute a key function:

The New Gaming Law proposes that no person shall provide a key function unless such person is in possession of a key function certificate issued by the MGA. Unlike the situation with material gaming suppliers, in the case of key functions, the authorisation required is mandatory.

License Term - The Current Position

Currently, a remote gaming license is valid for five (5) years, which is renewable for further periods of five (5) years.

The Proposed Position

The new law extends the license term up to ten (10) years.

Additionally, the New Gaming Law introduces limited duration licenses, which can be used up to four (4) times a year by the same person/entity. This is a welcomed introduction which may be useful as a disaster recovery tool to non-Maltese licensed operators, wanting a ‘spare’ license in an EU jurisdiction. 

Corporate Structure

The Current Position 

Regulation 4 of the RGRs currently provides that to qualify for a license, an applicant must be a body corporate established in Malta in terms of the Companies Act. In practice, the MGA applied this rule as referring to a Maltese company or a company duly established in the EU or EEA. 

The Proposed Position 

The Draft Law emphasis this principle applied in practice and provides that a license holder must be any person established in the EEA.  The New Law also introduces the idea of a corporate license i.e. a license holder may hold a license for themselves or for a corporate group. In the case of a license issued for a corporate group, the approved members of the corporate group shall be collectively and respectively considered as the licensed operator. 

Gaming Tax

The Current Position

Currently, gaming tax is levied as follows:

The maximum gaming tax payable annually by one licensee in respect of any one license is €466,000.
The Proposed Position 
The proposal shifts to a point of consumption model abolishing any gaming tax previously payable as a fixed fee or a percentage of turnovers providing for a system whereby gaming tax is due on the gaming revenue generated by operators from end customers located in Malta.

In relation to gaming tax on the revenue generated from end customers in Malta, it is proposed for gaming tax to be set at 5% of the gaming revenue.  Gaming revenue is generally defined as the aggregate stakes and wagers, inclusive of any bonus or other player incentives which are comprised within any stake or wager, less an amount to be determined by summing up the aggregate player winnings to the aggregate of any bonus or other player incentives which are comprised within the amount of aggregate stakes and wagers, during a tax period.  Where applicable, the term ‘aggregate stakes and wagers’ will include tournament fees and other such as elements of revenue.

Gaming Licence

The Current Position

The RGRs currently impose a yearly license fee of €8,500 for all classes of gaming license.

The Proposed Position

The New Gaming Law provides for different license fees depending on whether the licensee is a B2B or a B2C operator.

Gaming Service Licence (B2C)

For B2C licenses, the Draft Law provides for the payment of gaming tax, composed of two elements:

The variable license fee depends on the type of games provided, as follow:
 

 

Where Gaming Revenue does not exceed €1,000,000

 

€12,000

Where Gaming Revenue does not exceed €5,000,000

 

€54,000

Where Gaming Revenue does not exceed €10,000,000

 

€120,000

Where Gaming Revenue does not exceed €20,000,000

 

€210,000

Where Gaming Revenue does not exceed €45,000,000

 

€330,000

Where Gaming Revenue does not exceed €75,000,000

 

€480,000

Where Gaming Revenue exceeds €75,000,000

 

€660,000

Unlike for type 2, 3 and 4, no minimum or maximum variable license fee is stipulated for Type 1 games.

 

 

  For every euro of the first €3,000,000

 

4%

  For every euro of the next €4,500,000

 

3%

  For every euro of the next €5,000,000

 

2%

  For every euro of the next €7,500,000

 

1%

  For every euro of the next €10,000,000

 

0.8%

  For every euro of the next €10,000,000

 

0.6%

  For every euro of the remainder

 

0.4%

 

Except for the first financial year, the yearly variable license fee component payable in respect of type 2 gaming services is set to be not less than €25,000 and not more than €600,000.

 

  For every euro of the first €2,000,000

 

  4%

  For every euro of the next €3,000,000

 

  3%

  For every euro of the next €5,000,000

 

  2%

  For every euro of the next €5,000,000

 

  2%

  For every euro of the next €5,000,000

 

  1%

  For every euro of the next €5,000,000

 

  0.8%

  For every euro of the next €10,000,000

 

  0.6%

  For every euro of the remainder

 

  0.4%

 

Except for the first financial year, the annual variable license fee payable in respect of type 3 gaming services is set to be not less than €25,000 and not more than €500,000.

 

 

  For every euro of the first €2,000,000

 

  0.5%

  For every euro of the next €3,000,000

 

  0.75%

  For every euro of the next €5,000,000

 

  1%

  For every euro of the next €5,000,000

 

  1.25%

  For every euro of the next €5,000,000

 

  1.5%

  For every euro of the next €10,000,000

 

  1.75%

  For every euro of the remainder

 

  2%

 

Except for the first financial year, the variable license fee payable in respect of type 4 gaming services is set to be not less than €5,000 and shall more than €500,000.

Moratorium on Variable Licence Fees

A moratorium on license fees is being proposed for B2C start-up undertakings (as defined specifically in the New Gaming Law). Start-ups shall pay no variable license fee during the first 6 months of operations computed from the date of issuance of the license.

 

Critical Gaming Supply License (B2B)

For the purposes of B2B licensees, in the context of license fees, a distinction is made between those providing supply and management of material elements of the game and those providing backend services or supply of other parts of the control system whereby significant regulatory data is captured, stored or processed.

 

Supply and Management of Material Elements of a Game

The Draft Law proposes that the annual license fee for a Critical Gaming Supply (B2B) licensee offering shall be the following:

  Where Annual Revenue does not exceed €5,000,000

 

  €25,000

  Where Annual Revenue exceeds €5,000,000 but does not exceed   €10,000,00

 

  €30,000

  Where Annual Revenue for the year exceeds €10,000,000

 

  €35,000

 

 

Back-End Services and Control System Supplies

The Draft Law further proposes that for a Critical Gaming Supply (B2B) licensee offering:

 

but which does not provide supply and management of material elements of a game, the annual license fee shall be the following:

  Where Annual Revenue does not exceed €1,000,000

 

  €3,000

  Where Annual Revenue exceeds €1,000,000

 

  €5,000

 


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