Casinos and land-based gaming have always been successful throughout history. However, the Internet has ushered in a revolution in service delivery in the area of gaming, enabling new types of gaming services to be provided remotely on multiple connected device types (mostly PCs, mobile phones and tablets). This has vastly increased the outreach of gaming services, which the ubiquity of Internet connectivity has proliferated even further together with wide range of gaming options that have been made available to appeal for every gamer’s tastes. They include, at the aggregate level, poker, casino, sports betting, bingo, lotteries and in-play gaming. These can be further sub-divided into a vast number of components that keeps evolving on a daily basis and is therefore rather elusive in terms of definition.

Notwithstanding the fast pace of the evolution of the Internet, gaming could never have been as successful without the innovations that have taken place in the financial services sector. In fact, funds transfers have been greatly facilitated by the availability and the wide diffusion of credit cards and digital money.

Remote gaming has grown to become one of the most popular and lucrative business models present on the Internet. In 2007, for instance, according to the UK Gambling Commission, the gaming industry achieved a turnover of over £84 billion (€105 billion).

Even though Malta had been investing heavily in its electronic communications infrastructure and in ICT education throughout the 1990’s, the first steps in the regulation of online gaming in Malta were made in the year 2000 through amendments to the Public Lotto Ordinance. A significant overhaul further occurred in 2004 with the enactment of the Remote Gaming Regulations, which set up a new extensive regulatory regime which was both game-neutral (that is, the legislation itself was applicable, in the same manner, to most types of games) and technology-neutral, (that is, the legislation was applicable to all remote gaming independently of whether it was operated through internet, mobile, telephone and/or other technologies). Thus, Malta became the first European Union (EU) Member State to regulate online gaming operators comprehensively.

The sector in Malta is regulated by the Malta Gaming Authority (’MGA’), established through the Malta Lotteries and Other Games Act (‘LOGA’) in 2001. In its regulation of the online gaming sector, the MGA has, to the fullest extent possible, employed a pragmatic attitude that has certainly contributed to Malta’s reputation as a dependable jurisdiction for the operation of an online gaming business.

Today, Malta is considered to be one of the leading European jurisdictions within the gaming sector, and having issued over 600 licences to remote gaming operators, together with a number of Interactive TV and mobile gaming operators. Malta’s achievements in this respect can be attributed to the affordable availability of the requisite skills, healthy competition with low barriers to entry, an efficient yet meticulous licensing process, low licence fees and a favourable tax regime.

Malta also recognises gaming licences issued by other EEA Member States, so that a holder of such a licence is permitted to offer its games in Malta and also to enter into B2B agreements with Malta-based licensees.

There are four classes of Remote Gaming Licences in Malta. These are as follows:

  • A Class 1 Licence is generally required for operators managing their own risk on repetitive games, such as casino-type games.
  • A Class 2 Licence is required for operators managing their own risk on events based on a matchbook. Under this class operators can offer fixed odds betting.
  • A Class 3 Licence is generally required where players on the network play against each other, and the operator takes a percentage of the rake for organising and promoting the game.
  • A Class 4 Licence is the licence required in order to host and manage remote gaming operators, excluding the licensee itself. Gaming software and platform providers normally fall within this class.

The first step in the application process is a thorough discussion of the applicant’s proposed set-up. This is discussed in detail, and a decision regarding the required class of licence is then taken. Often, the initial stages may also include meetings with MGA officials if and where the client’s proposals do not fit squarely into a particular license category.

When a decision regarding the class of application has been taken, it is time to start putting the application together. Since June 2011, prospective licensees are required to submit all the information pertaining to the application document at one go as the regulator, namely the Malta Gaming Authority (‘MGA’),  pledges to evaluate all the information provided through simultaneous internal processes that are transparent to the applicant, hence making the evaluation process shorter. An applicant is therefore required to complete the application form and to submit it to the MGA, together with all the documentation required. These can be summarised as follows:

  • Know Your Customer (‘KYC’) documentation in respect of each shareholder having more than a 5% controlling interest and key management personnel, together with statutory documentation for the applicant and relevant (related) entities;
  • A business plan and a financing plan showing sources of finance, distinguishing between shareholder funds and other funds;
  • Technical documentation outlining:
    • the company policies and procedures;
    • the application & system architecture of the gaming and control systems;
    • details of the software developer;
    • security and control procedures;
    • back-up, business continuity and disaster recovery procedures;
    • the rules, procedures, terms and conditions of the games;

the online text and the various agreements with business partners, affiliates and / or agents.

Once the application has been submitted, the MGA will commence its examination. The evaluation of an application should be completed within 12 to 16 weeks; however this indicative timeframe is highly dependent on the applicant’s timely provision of the complete feedback and documentation requested by the MGA.

In evaluating an application, the MGA generally assesses the following:

  • The character of the applicant and the persons/entities supporting it;
  • The financial means and expertise of the applicant and ability to carry out the operations in respect of which the application was submitted;
  • The ability of the applicant to fulfil all its obligations under the law.

If the MGA’s evaluation is completed successfully, the applicant must execute the documented system onto a closed system within 60 days. In this time period, the applicant must request an external systems audit to be performed by an independent third party contracted by the MGA. A fee for the external systems audit applies. If the audit is also completed successfully, the MGA will issue a 5-year license in favour of the applicant.

Equinox Advisory provides a ‘one stop shop’ to assist a prospective remote gaming applicant through any of its requirements in the gaming application process. Equinox can also assist a licensee, after the application process, in the day-to-day running of the online gaming operation.

Equinox offers the following services:

  • Advising the prospective applicant in relation to the class of licence required;
  • Provision of registered office and virtual office services;
  • Liaising with the MGA and other third parties on the client’s behalf;
  • ‘Hand holding’ through the process of collection of the KYC Documentation and the completion of the application forms;
  • Assistance in preparation of the business plan;
  • Assistance in preparation of the systems documentation;
  • Drafting of terms and conditions for the applicant’s website;
  • Drafting software licences, affiliate, joint venture and other required agreements;
  • Provision of general legal and regulatory advice in relation to the operation of the remote gaming business in Malta;
  • Provision of tax advice as necessary;
  • Assistance in the event of a merger/acquisition;
  • Investment appraisal services;
  • Accounting and revenue assurance services;
  • Complete HR Outsourcing solution.
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