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MGA publishes White Paper proposing major reforms to Malta’s Gaming Legal Framework

The Malta Gaming Authority (‘MGA’) has recently published a White Paper proposing major reforms to the existing legal framework governing Malta’s gaming industry. This overhaul seeks to review the current legislation and regulatory practices to ensure that they reflect the exigencies of such a fast-moving industry whilst solidifying Malta’s high reputation and standards in the field.

Consolidation of current laws

At present, the laws governing gaming are somewhat fragmented, consisting of three main pieces of legislation namely the Public Lotto Ordinance (Chapter 70 of the Laws of Malta), the Gaming Act (Chapter 400 of the Laws of Malta) and the Lotteries and Other Games Act (Chapter 438 of the Laws of Malta) with each Act being complemented by sector-specific subsidiary legislation and other instruments, including directives, issued by the MGA.

This has led to inconsistencies and duplications at both the licensing stage and the compliance stage. Moreover, many of these laws do not reflect the present necessities of the industry since the legislator has not as yet catered for certain developments, particularly technological, that are continuously taking place.

In order to address these issues, the MGA has proposed the collective repeal of the current legislation and substituting it with a single primary Act of Parliament entitled the Gaming Act (the ‘Act’). The latter shall regulate the framework legislation regulating gaming services in and from Malta and shall also empower the Minister to publish regulations, and to grant additional powers to the MGA to publish directives and other regulatory instruments.

The proposed Act is structured in various parts and deals with the regulatory objectives and governing principles, the establishment of the MGA, its administration and financial provisions, together with other important subjects such as the protection of players and vulnerable people as well as enforcement.

Simplified Licensing Regime

A major highlight in the overhaul is the replacement of the current multi-licence system with a system having two different licences.

The first type of licence is the business-to-consumer (B2C) licence that shall be required when a gaming operator is offering, providing or operating a gaming service or hosting in public premises a gaming operation, making available for use a gaming device or gaming system therein.

The second type of license is the business-to-business (B2B) licence, which must be obtained if an operator is providing critical gaming supplies to other operators. These include the supply and management of material elements of the game, software for essential regulatory record, a control system or a game to a person.

Games such as non-profit games, tombolas and advertising lotteries shall be classified under this new regulatory framework as Low Risk Games and rather than requiring a licence, these games will need to acquire a Low Risk Games Permit.

Thus, operators opting to set up their gaming business in Malta shall not be required to apply for a multitude of licences to offer different types of games or multiple licences of the same class to offer content from different providers.

Furthermore, the licence term will be extended to 10 years with an exception for certain games offered under Government concession which might have a shorter term. Licence and administrative fees shall also be revised by abolishing the licence fees per activity in favour of a singular fee made up of fixed and variable parts.

Gaming Tax

Such simplification of the licensing regime also means radical changes in the tax being imposed.

In terms of the proposed Gaming Tax Regulations, the gaming tax being proposed is that of 5% and shall be based on the gaming revenue generated by the operators from end-customers located in Malta, whether the customer is playing from a land-based casino, a gaming parlour, a bingo hall or via the Internet.

Those holding a B2B licence and/or operating Low Risk Games shall be exempt from paying gaming tax.

Other noteworthy proposals

Apart from the above-mentioned key highlights, the White Paper also envisages other amendments which shall continue to solidify Malta’s position as a leading gaming jurisdiction:

  • The segmentation of the Key Official role into various key functions within the licensing activity, requiring approval, for direct scrutiny and targeted supervisory controls, thereby raising the standards for persons of responsibility within the gaming sector;
  • Strengthening the player protection framework and ensuring that risk is effectively and dynamically monitored, and hence there would be the adoption of new reporting facilities to cater for improved risk management processes;
  • Introducing a new and more effective process of distinguishing between administrative and criminal offences;
  • Introducing the allocation of appeals from decisions of the MGA to the Administrative Review Tribunal;
  • Introducing the concept of administration to provide protection for an operation in distress, and if necessary to assist the winding down of such an operation, with the ultimate objective of protecting jobs and the funds of involved players.

In view of this Consultation Paper, the MGA has launched a general request for feedback, questions and requests for clarification by interested stakeholders or any other entities requiring further information. Such queries and requests for clarifications may be sent by email to legaloverhaul.mga@mga.org.mt.

For further information on how DF Advocates can assist you in any of your gaming matters, do not hesitate to contact us on info@dfadvocates.com.