Gaming in Malta

Gaming in Malta

Different jurisdictions have, since time immemorial, treated gaming in diverse ways. Gaming was either interwoven in the culture of a jurisdiction, or it was viewed as a vice that was incompatible with public policy and morality and that had to be stamped out. However, this dichotomy all changed with the advent of internet gaming. This 'upgrade' to the traditional notion of gambling increased the complexity of it all and therefore, resulted in the necessity for increased regulation. The general laws of old, most notably the Criminal Code and the Civil Code, did not, and could not, cater for internet gaming since they had been drafted during a time where gambling used to take place physically. Therefore, special laws had to be proposed by the government and passed through Parliament whose provisions kicked in whenever the general provisions of the codes could not.

Malta reacted to this phenomenon in a prudent yet pragmatic manner, by providing a legal framework for gaming operators, whilst maintaining high levels of player protection. This has turned Malta into the foremost gaming legal and operational infrastructure that is synonymous with innovation, professionalism, regulation and trust. Malta was also one of the first European Union member states to legislate in order to regulate gaming. 

What is Gaming Law?

Different jurisdictions have, since time immemorial, treated gaming in diverse ways. The term gaming law connotes a set of rules and regulations which apply to the gaming or gambling industry. It is not a branch of law in the traditional sense, as it is a collection of several other areas of laws, such as criminal law, regulatory law, constitutional law, administrative law, company law, contract law and competition law. Inevitably, gaming law is enormously complex. 

Gaming in Malta: Europe’s Leading Regulated Jurisdiction 

Gaming in Malta has flourished in just a decade, making the islands the top European jurisdiction for operators. Gaming contributes over 11% of Malta’s overall GDP and industry stakeholders, as well as decision makers, appreciate the significance and prominence of this sector to the economy. Indeed, several reports exhibit that employment in the Maltese gaming industry rose by 31% during the first half of 2016. 

Malta has now become the foremost legal and operational infrastructure in the gaming industry, a success also synonymous with innovation, professionalism, regulation and trust. By providing a legal framework for gaming operators and simultaneously maintain a high level of player protection, speaks volumes to Malta’s pragmatic response to the phenomenon.  

Upon the advent of iGaming and online gambling, Malta has been able to capitalise on its EU first mover advantage. The islands have prompted a proactive advancement in the regulatory framework, in turn going on to enhance Malta’s competitive edge in the industry. In 2017, Malta hosted around 270 gaming operators and enjoys a workforce of over 9,000 multinational industry professionals. 

As of 2018, the Malta Gaming Act will continue to elevate the jurisdictional profile of the Maltese islands. The Malta Gaming Authority’s (MGA) role is now endowed with further discretion in its compliance and enforcement functions, to better achieve regulatory objectives. In turn, such objectives would be in line with concurrent anti-money laundering and combating the funding of terrorism regulation developments.  

The new Act envisages an innovative and more effective process for criminal and administrative justice. Nonetheless, other important areas of focus inevitably include consumer protection standards, responsible gaming measures, as well as the reporting of suspicious sports betting transactions in the fight against the manipulation of sports competitions and the objective-orientated standards to, in turn, encourage and promote innovation and development. 

The MGA has also recently launched a Sandbox Framework, pertaining to the use of Virtual Financial Assets (VFAs) and virtual tokens, as well as Innovative Technology Arrangements (ITAs) within the gaming industry. As of January 1st 2019, VFAs and virtual tokens will go on to be accepted by the MGA as a means of payment. 

How Can We Help

Overview of the Gaming Law in Malta

Malta has matured into a top jurisdiction for regulated online betting and gaming worldwide. Malta offers exciting opportunities for new market entrants and established operators seeking a well-regulated and tax-friendly environment. The main features of gaming in Malta include:

• Licences for casino-type games, betting, betting exchanges, gaming platforms, and lotteries which are technology neutral;
• Competitive licence fees and attractive corporate tax regime;
• Economic and political stability include full membership in EU;
• Serious, credible, industry-specific regulation, ensuring players' trust in an operator licensed in Malta and reducing operators' exposure to fraud and money-laundering risks; and
• High levels of professional services and reasonable professional fees and other costs.

Going through these one by one, one finds that the authority set up by statute is the Malta Gaming Authority, known as the MGA, for short. The MGA vets applications by gaming undertakings and then, according to its findings in relation to a set of objective criteria, issues the appropriate licence to that undertaking so that it may commence operations under that licence in terms of the law. The licence fees charged by the MGA are very competitive which are compatible with Malta's attractive corporate tax regime that offers a number of incentives in the form of tax exemptions for foreign gaming operators wishing to achieve a license to invest in Malta. Malta's tax regime continues to be approved by the European Commission.

Malta, despite being an EU member state for a little over a decade, has cemented itself as one of the top-most jurisdictions in this bloc in a number of sectors. It continues to experience one of the highest rates of economic growth, relative to its size, and public opinion and support for EU membership remains positively high. All these factors give Malta economic and political stability that few other member states of the EU offer to gaming operators. The Maltese Parliament has passed a record of more than 100 laws from 2017 and 2018; most of these laws have been aimed to reduce the business and financial risks that both local and foreign gaming operators used to be exposed to during their operations. Among these laws are the so-called 'Three Laws' dealing with digital ledger technologies, such as blockchain, that made Malta one of the first jurisdiction in the world to regulate this phenomenon. Blockchain technology is very relevant to the gaming industry as gaming transactions can be safely but publicly encrypted in a blockchain.

Malta also offers many different streams of professional services ranging from financial experts to specialised lawyers and professional administrative service providers.

Our Practice: Gaming in Malta

The gaming experts within Chetcuti Cauchi use their wealth of experience to provide solutions and advice to clients wishing to set-up gaming operations in Malta or set-up backup operations within any EU jurisdiction. Understanding the complexity of the industry, the team will work hand-in-hand with other experts within the firm, who will offer advice relating to Corporate and Tax, to ensure any issues which may arise will be duly dealt with. 

The firm’s hands-on experience within the Gaming industry has allowed it to offer high-quality services which cover all aspects of iGaming. Our experts have also used this knowledge to provide their two-cents worth on what the future of such technologies can bring about. In fact, numerous thought-provoking articles have been published, outlining what the future can hold when such developments are embraced, rather than restricted.