The Remote Gaming Industry is one of the most dynamic and the fastest growing sectors in Malta. In 2004, Malta emerged as the undisputed front-runner in the regulation and facilitation of the online gaming industry when it was the first EU Member State to establish a stable and comprehensive regulatory framework on remote gaming, enabling any operator licensed by the Authority to offer its services to the European market and making Malta the jurisdiction of choice for remote gaming operators.

There are 2 types of licenses:

1. Gaming Service License: a business to consumer (B2C) license. Share capital from 40 000-100 000 EUR depends on the type of games.

2. Critical Gaming Supply License: a business to business (B2B) license to offer or carry out a critical gaming supply. Share capital 40 000 EUR.

License application process is divided into five stages

1. Fit and Proper and Business Plan Review
   Assessing all information related to persons involved in finance and management and on the business viability of the operation;

2. Business Planning
   Financial analysis of the applicant’s business plan; the applicant’s business plan is required to have a detailed forecast of the operation, inclusive of marketing and distribution strategies, an HR plan and growth targets.

3. Operational and Statutory Requirements
   The applicant is examined on the instruments required to conduct the business. This process includes examining incorporation documents, the games, the business processes related to conducting the games, the rules, terms, conditions, policies, procedures and technical documentation of the gaming and control system.

4. System Audit
   Once all three previous stages are successfully completed, the MGA will inform the applicant that the application was successful and will invite the applicant to implement the operation onto a technical environment in preparation to go live. The applicant will be allowed 60 days to complete this technical roll-out, after which the application will be considered as cancelled and subject to re-application. At any stage within those 60 days, the applicant may appoint a Service Provider approved by the MGA to carry out a system audit. The systems audit will verify the live environment against the proposed application.

   On successful completion of the certification process, the Authority issues a ten-year license.

5. Compliance Audit
   After going live, a Licensee must undergo several compliance audits of its operations performed by an approved Service Provider appointed by the Licensee. Such audits need to be completed by the Service Provider within 90 days from the MGA’s notice.

   Failure of a compliance audit could lead to suspension or termination of a license.

REMOTE GAMING TAXATION & COMPLIANCE CONTRIBUTION

All gaming services are required to pay a gaming tax of 5% of their Gross Gaming Revenue generated where gaming services are offered to any player who is physically present in Malta at the time when the gaming service is provided. Where the gaming service is offered solely be means of distance communications, determination of taxability is whether the player is established, has his permanent address and/or usually resides in Malta.

Where the gaming service is provided by a corporate group holding a license in terms of Gaming Authorizations Regulations, the entire corporate group shall be subject to the tax.

Operators of B2C businesses are also required to adhere to a compliance contribution based on game type and annual revenue, whilst B2B operators will be exempt from gaming tax and only required to pay a fixed license fee, which is dependent on the revenue generated.

DURATION OF LICENSING PROCESS

If all the necessary documentation and information is provided to the Authority, the process leading to the provisional license takes approximately ten (10) to twelve (12) weeks.

REMOTE GAMING KEY FUNCTIONS

Key functions are important functions within a licensed activity, requiring approval, for direct scrutiny and targeted supervisory controls, thereby raising the bar for persons of responsibility within a gaming operation.

The following roles and responsibilities performed in connection with the gaming activity of a B2C licensee shall each constitute a key function:

• The Chief Executive role, or equivalent;

• Management of the day-to-day gaming operations of the licensee, including the processes of making payments to, and receiving payments from, players;

• Compliance with the licensee’s obligations emanating from the license or licenses issued by the Authority;

• The administrative and financial strategies of the licensee, including but not limited to the payment of tax and fees due to the Authority;

• Marketing and advertising, including bonus offers and promotions;

• The legal affairs of the licensee, including but not limited to contractual arrangements and dispute resolution;

• Player support;

• Responsible gaming;

• The prevention of fraud to the detriment of the licensee;

• The risk management strategies of the licensee;

• The prevention of money laundering and the financing of terrorism;

• Adherence to applicable legislation relating to data protection and privacy;

• The technological affairs of the licensee, including but not limited to the management of the back-end and control system holding essential regulatory data;

• The network and information security of the licensee; and

• Internal audit.

For a B2B licensee, the key functions shall be the following:

• The chief executive role, or equivalent;

• The day-to-day gaming operations of the licensee;

• Compliance with the licensee’s obligations emanating from the license or licenses issued by the Authority;

• The administrative, financial and risk management strategies of the licensee, including but not limited to the payment of fees due to the Authority;

• The legal affairs of the licensee, including but not limited to contractual arrangements and dispute resolution;

• Adherence to applicable legislation relating to data protection and privacy, where applicable;

• The technological affairs of the licensee, including but not limited to the management of the back-end and control system holding essential regulatory data;

• The network and information security of the licensee; and

• Internal audit.

Capital Requirements

The Authority requires a company applying for a license to have the following minimum issued paid up share capital when registering the company with the competent authority:

Gaming Service License

• Type 1 - Minimum of one hundred thousand Euro (€100,000)

• Type 2 - Minimum of one hundred thousand Euro (€100,000)

• Type 3 - Minimum of forty thousand Euro (€40,000)

• Type 4 – Minimum of forty thousand Euro (€40,000)

Critical Gaming Supply Licence

• A minimum of forty thousand Euro (€40,000).

• Companies with multiple type approvals are required to meet the above share capital requirements cumulatively up to a minimum capping of two hundred and forty thousand Euro (€240,000).