Consulco business services in Cyprus - Remote gaming in Malta

Remote Gaming in Malta is regulated by the Remote Gaming Regulations 2004 issued under the Lotteries and other Games Act 2001. The regulatory body in Malta supervising remote gaming operations is the Lotteries and Gaming Authority.

To date Malta has processed a large number of applications, with applicants coming from various European countries. Malta has proper regulations in place covering the various types of games hosted on the internet.

Applications are processed efficiently but rigorously. Licensees have to pass all three stages of the application process, before they are granted a full gaming license. A license is initially granted for a period of five years. The stages of the application process are discussed hereunder.

It is common knowledge that Maltese licenses are so popular not so much because of the competitive tax rates or the favourable corporate structures but because of the strong regulation which is a point of differentiation that adds value to the business.

The remote gaming industry has within a very short period of time surpassed the limitations of brick and mortar casinos and high street betting shops, relying ever more on high tech innovations that have increased player interactivity and made it possible to deliver gaming anytime, anywhere and on any telecommunication device.

One of the frequently asked questions is – how long does it take to obtain a remote gaming license in Malta?

This answer largely depends on the level of preparation by the applicant. Normally, if all documentation is presented properly and no irregularities arise during probity, an applicant can start operating within six weeks.

Requirements & Procedure for Application
The Malta Lotteries and Gaming Authority applies a rigorous process prior to granting a remote gaming license. The application process to obtain a license is divided into three stages.

The first stage is to assess the financial ability to carry out business and due diligence. This is done by conducting a fit and proper exercise on the applicant. The Authority analyses all information related to persons involved in financing and management and on the business viability of the operation. The Authority conducts probity investigations with other national and international regulatory bodies and law enforcement agencies. It also carries out a financial analysis of the business plan.

On successful conclusion of the first stage the applicant is examined on the ability to carry out the operation, thus the instruments required to conduct the business are analysed carefully. This process includes examining incorporation documents, the games, the business processes related to conducting the remote games, the rules, terms, conditions and procedures of the games, the application architecture and system architecture of the gaming and control systems. Normally the first stage is completed within 2 weeks and the second stage within 3 weeks, depending on the correctness and completeness of the information submitted to the Authority.

At the end of the second stage the applicant is given a license to operate remote gaming with the intent of obtaining a certification of compliance within three months.

The applicant may then establish the business in Malta, conclude all agreements and carry out testing of the set-up. A formal license is issued when the Authority obtains approval from the compliance certification entity. A normal compliance certification procedure takes a week to be carried out.

In carrying out the above, a number of forms, information and documentation will be required to be submitted to the Authority, together with the relative fees for the obtainment of a remote gaming license in Malta.

The license and application costs briefly include a non-refundable application fee which is to be submitted with the application. The annual fee is then paid within fifteen days from the normal grant of the licence and is to be paid annually. Other costs include the firm or company fee of the firm/company engaged by the applicant together with other costs pertaining to the setting up of the remote gaming operation and company incorporation costs and fees.

In order to provide remote gaming services in Malta one needs to obtain a license of the class appropriate to the operations. Licensees are expected to operate in compliance with the Authority and the Regulations as well as anti-money laundering legislation, electronic commerce legislation and any other relevant law. Other conditions for licensee include being actively operational and adhere to the principles of protection of players. The following four classes of licenses are available in Malta:

Class 1 : For operators managing their own risk on repetitive games. This class covers casino-type games, skill games and online lotteries.

Class 2 : For operators managing their own risk on events based on matchbook, that is non-repetitive games. Under this class falls fixed odds betting, pool betting and spread betting.

Class 3 : For operators taking commission from promoting and/or betting games. This means that licensees promote the gaming from Malta and receive commission but do not partake in risk. This class includes P2P, poker networks, betting exchange and game portals.

Class 4 : To host and manage remote gaming operators, excluding the licensee himself. This means that licensees manage games for operators, whereby they receive a commission but do not partake in the risk. This is intended for software vendors who want to provide management and hosting facilities on their platform.

A license of any type is granted for a period of five years and may be renewed thereafter for periods of five years. A company may apply for more than one class of license, but the applicant must be a Maltese registered company.

A basic tenet of the Regulations is the requirement that the core part of the online gaming operations must be physically located in Malta. Other components of the system, for example, front end games or customer support operations, may be situated outside Malta at the location of choice of the licensee.

Furthermore, the online gaming system (which is defined as a computer system deployed by a licensee and including all its components, the operating system and application software) must be certified for compliance to the satisfaction of the Gaming Authority. Certification is only necessary for those components of the system, the functioning of which directly impacts the operation of the games or the reporting of gaming and financial transactions. However, there is no need to test source code and certified RNGs are not retested, in which case they must have a certificate detailing level of randomness. This is carried out under direct supervision and co-ordination of the Authority’s Remote Gaming Inspector and within 3 months from date of issue of provisional license. The costs of this are charged to the licensee. These fees generally are in the region of two thousand five hundred Euros (E 2,500), for a standard, well documented gaming system.

The system of internal controls, reporting and accounting procedures used by the licensee constitute their Control System which must be approved by the Authority. Any gaming offered by the licensee should only be conducted under the approved control system. The licensee will set up the Control System in the live environment prior to audit and may be permitted to run operations under a provisional license, during this period subject to scrutiny by the Lotteries and Gaming Authority.

Every license must have one key official, whose role is to personally supervise the operations of the licensee and to ensure that the licensee complies with the applicable laws, regulations, license conditions and any directives. The key official must be a director of the licensee and must be resident in Malta.

The applicant for a remote gaming license in Malta must necessarily be a company registered in Malta, having its registered address in Malta and having its key official being a Maltese resident, standing as a director in the company.

Apart from the corporate tax which has to be paid by the company, there is also a gaming tax which is to be paid to the Authority on behalf of the government. This varies depending on the type of gaming operations of the company.

Class 1:
€4,600 per month for the first six months, subsequently €6,900 per month.

Class 1 under Class 4:
The gaming tax payable by casino operator is €1,150 per month. The gaming tax payable by the host platform is NO TAX for the first 6 months of operation, €2,300 per month for the subsequent 6 months and subsequently €4,600 per month for the entire duration of the licence.

Class 2:
Fixed-odds betting: 0.5% on the gross amount of bets accepted. On betting exchanges: 0.5% on the sum of all net winnings calculated per player per betting market.
(In cases where the exchange is involved in the risk) Pool betting: 0.5% on the aggregate of stakes paid.

Class 3:
Tax is a percentage of net takings. Percentage amount depends on nature of operation.

Having said this however, the gaming tax is capped at a maximum rate - again depending on the type of license the company obtains from the Authority.

The above is reviewed by the Authority from time to time and therefore may be subject to change.

	Last Modified: 31/07/2008 @ 12:46 GMT \| Copyright 2003 Consulco \| Info \| Contact \| Disclaimer	International Edition \| Developed by Netymology