When deciding whether to apply for a remote gaming licence many questions come to mind so as to ensure that one is making the most informed choice possible.
The main issues which are to be considered when making such a choice include: (i) the credibility and reputability of the licence; (ii) the knowledge that the regulatory authority is approachable, efficient, serious and professional; (ii) that the licence is based on a tried and sound legal regime; (iv) that the players have faith in the licence; and (v) that value for money is assured.
One can rest assured that these are all at the top of the Lotteries and Gaming Authority's (hereinafter the ‘Authority') priorities and that it continuously strives to remain the pioneer regulator in this ever-developing sector.
Furthermore setting up in Malta is advantageous from many other points of view considering that Malta is a member of the European Union, has adopted the euro as its currency, is at the centre of the Mediterranean Sea blessed with wonderful weather, whilst having a professional and hard-working workforce with a strong work ethic, to mention just a few.
The questions and answers included in this article should help to provide specific answers to questions which are usually posed to the Authority by applicants and licensees.
1) What Classes of Licences are available?
The Remote Gaming Regulations (hereinafter the ‘Regulations') establish four (4) Classes of Remote Gaming Licences, these being:
Class 1 - a remote gaming licence (eg. - casino type games, online lotteries) whereby operators manage their own risk on repetitive games. It is also possible to have a Class 1 on 4 licence whereby the Class 1 licensee operates its games on the software and in certain cases through the equipment of a Class 4 licensee;
Class 2 - a remote betting licence (eg. - fixed-odds betting) whereby operators manage their own risk on events based on a matchbook;
Class 3 - a licence to promote and/or abet remote gaming in or from Malta (eg. - poker networks, peer-to-peer (P2P) gaming, game portals) whereby operators take a commission from promoting and/or abetting games. It is also possible to have a Class 3 on 4 licence whereby the operator uses a licenced Class 4 as its platform;
Class 4 - a licence to host and manage remote gaming operators, excluding the licensee itself, whereby software vendors provide management and hosting facilities on their platform. In essence this is a business to business (B2B) gaming licence.
2) What are the applicable Remote Gaming licence fees?
The fees due to the Authority include:
- application fees;
- yearly licence fees;
- renewal fees;
- approval fees; and
- administrative fees (where applicable).
The amounts of the fees due can be found in the Second Schedule of the Regulations, which may be found in the legislation section of the Authority's website: www.lga.org.mt
3) What is the Gaming Tax imposed on the Remote Gaming licensees?
The imposed Gaming Tax differs from one Class to another and the exact amounts can be found in the Fourth Schedule of the Regulations, which may be found in the legislation section of the Authority's website: www.lga.org.mt
4) What does the application process consist of?
The application process is divided into three (3) stages. These being:
i) fit and proper and business plan review - the Authority:
- analyses all the information related to the persons involved in the financing and management of the applicant;
- verifies the business viability of the operation;
- carries out probity investigations with national and international regulatory bodies and law enforcement agencies;
- submits the business plan to a financial analysis;
ii) business and technical ability assessment - the Authority examines and reviews the instruments required to conduct the business, whereby, amongst other things, an examination is carried out of the:
- incorporation documents;
- business processes related to conducting the remote games;
- rules, terms, conditions and procedures of the games;
- application architecture and system architecture of the gaming and control systems.
If the review is completed successfully, a provisional licence is issued to operate gaming with the intent of obtaining a certification of compliance within a pre-established time frame; and
iii) compliance systems audit - this takes place within the first months subsequent to the provisional licence being issued whereby the licensee is expected to commence its operations and undergo a Systems Audit of its operation.
5) How long does the whole licensing process usually take?
If all the necessary documentation and information is provided to the Authority, the process leading to the provisional licence takes approximately twelve (12) to eighteen (18) weeks.
6) What are the main responsibilities of a Key Official?
The Key Official (KO) is the liaison person between the Authority and the licensee and therefore such person must always be abreast of all the operations of the licensee. The KO must be a director of the licensee and readily available in Malta.
The KO's responsibilities are to:
- personally supervise the operations of the licensee;
- ensure that the licensee complies with all applicable laws and regulations, the conditions of the licence and any directives issued by the Authority to the licensee
7) Does the Authority license Financial Markets' Spread Betting?
The Authority does not license such activities.
8) Does the Authority license Fantasy Sports?
Such games are licensable under a Class 3 Licence, provided that the player can win a prize.
9) What are the requirements for share transfers and licence transfers?
Before any such transfer may take place, the Authority's approval in writing must be obtained. The Authority may request that it is presented with any documents which it deems necessary for it to decide whether to approve or otherwise the request being made by the licensee.
Inter alia, the information and documents required by the Authority in order to process a request for approval of a transfer are:
detailed information on how the shares of the licensee will be allotted including a diagram indicating the proposed shareholding and corporate setup;
when a company is involved in the transfer, the following information about each acquiring company involved in the transfer must be submitted to the Authority:
- who are the acquiring company's shareholders/ultimate beneficiaries and in what percentage;
- certified true copies of its Memorandum & Articles;
- certified true copy of an excerpt from the shareholder's register;
- Personal Declaration Forms (PDF) for all directors, chief executive officer and every ultimate beneficiary owner having 5% or more interest in the company (including copy of passport, passport photo, original birth certificate, police conduct certificate, bank reference);
- copy of licence to offer gaming services in any other jurisdiction (if any);
- audited accounts of the acquiring company;
- where the acquiring company intends to change any relevant structures and/or procedures in the gaming operation submissions must be made to the Authority indicating the proposed changes for review reference should be made to the second stage documentation checklist);
- a copy of the proposed transfer agreement;
- a certificate of good standing of the acquiring company.
when an individual is involved in the transfer, such person is to submit a Personal Declaration Form (PDF), attaching with it all the necessary documents.
10) Can Live Gaming be licenced by the Authority?
Yes, the Authority may issue and has issued licences to operators having a physical live gaming broadcasting set up within an approved jurisdiction, and within a licenced land-based Casino or a studio, transmitting live feeds online via webcam and integrated into an online gaming system. Such operations are licenced under a Class 1 Licence.
11) How does the Authority deal with player complaints?
When the Authority receives a complaint from a player it either investigates the complaint itself or refers such complaint to the relevant licensee. In the latter scenario, the licensee shall within a period of twenty-one (21) days reply in writing stating the results of the inquiry into such complaint. The player is subsequently informed in writing of the outcome of any inquiry whereby reasons are given for the conclusions drawn in such notification.
If a complaint is addressed to the Authority and it results that the company is not licensed by the Authority, the player is informed of this fact and is guided as to where the complaint may be addressed.
12) What are the limitations on advertising?
One of the main roles of the Authority is to assure the protection of minors and vulnerable persons and therefore, in line with this, the Authority has set certain limits on advertising which inter alia are that advertising cannot:
- encourage anyone to contravene a gaming law;
- show people under eighteen (18) years in the gambling advert;
- encourage or target people under eighteen (18) years old to gamble;
- suggest that gambling is a form of financial investment;
- promote smoking and, or the abuse of the consumption of alcohol while gambling;
- tarnish the goodwill and privilege that is associated or related in any manner whatsoever with being a licensee, or tarnish the image or reputation of another licensee.
The complete restrictions are established in the Code of Conduct on Advertising, Promotions and Inducements issued by the Authority.
Furthermore, in the case of online gaming licensees, irrespective of where they promote their services, advertising cannot:
- imply that remote gaming is a means of social acceptance, personal or financial success or the resolution of any social, economic or personal problems;
- be directed at encouraging individuals under eighteen (18) years old to engage in remote gaming;
- exceed the limit of decency;
- be endorsed by a well-known personality whereby it is suggested that remote gaming contributed to that person's success;
- be conducted through the sending of unsolicited electronic mail.
13) How are player funds protected?
Player funds are protected since:
- a Client's account is set up by the licensee, which account is held with a credit institution approved by the Authority and is separate from the licensee's own funds;
- the Client's account cannot be used to rectify/indemnify any of the licensee's financial problems since such account is distinct from the licensee;
- the Authority may request the licensee to issue a bank guarantee in the Authority's favour in order to protect the players' funds;
- the credit institution is to disclose any information requested by the Authority regarding players' accounts;
- the licensee cannot deal with the amount of money in the player's account except in the circumstances established in the Regulations;
- if a player's account is dormant for thirty (30) months, the licensee is to try to contact the player to refund the remaining balance and if not successful shall transfer the money to the Authority;
- upon the player's request, his funds will be returned to the account from which they were originally withdrawn within five (5) working days or within a period of time which is reasonably necessary to verify certain details and activities of the player's account as established in the Regulations.
14) What is the Systems Audit and why does the Authority perform such an audit?
The Systems Audit is conducted in the period stipulated by the Authority after the provisional licence is issued. Such audit is conducted to verify that what is presented in the business and technical stage of the application process is implemented in the operating system.
15) Do employees of Remote Gaming licensees need to be approved by the Authority?
Employees must be approved by the Authority.
An application form is filled in, attaching all the relevant documentation, and submitted to the Authority whereby such application is processed to confirm that the proposed employee is fit and proper. If all the requirements are satisfied the Authority approves such employee.
16) In the situation where a licensee operates a licensed operation on the same website where a non-Maltese licensed operation operated by a non-Maltese company (sister to licensee) and accessible with the same user account, how should the funds be dealt with?
The licensee who is licensed by the Authority is to set-up a Player's Account as established by the Regulations, with all the necessary safeguards, and subsequently always ensure that the amount in such an account is equal or greater than the licensee's client liabilities.
17) Does the Authority certify software?
The Authority does not license software separately from the gaming operation as the review of such software is an integral part of the licensing process.
18) If changes to processes or the gaming system are required during the term of the license, should the licensee seek approval from the Authority?
Yes. Each deviation from the approved framework needs to be notified to the Authority, and depending on the nature of the change, a process of approval is required. The Licensee is mandated to inform the Authority prior to such changes.
If the change is required to rectify a technical problem, the licensee needs to fill in the appropriate incident report and change management forms.
19) Can games of chance or games of chance with skill be offered through multiple delivery channels, such as mobile?
Yes. The Regulations are technology neutral, thus various delivery channels by means of distance communications can be approved by the Authority.
20) Does the Authority charge any fees to operators who wish to hold a meeting with the Authority?
The Authority does not charge any fees for meetings held with applicants, licensees or service providers.
21) What is the Minimum Issued Paid Up Share Capital required by the Authority?
The Authority requires a company applying for a licence to have the following minimum issued paid up share capital when registering the company with the competent authority:
- Class 1 - one hundred thousand euro (€100,000)
- Class 2 - one hundred thousand euro (€100,000)
- Class 3 - forty thousand euro (€40,000)
- Class 4 - forty thousand euro (€40,000)
Furthermore, companies applying for multiple licences should have the cumulative of the requirements hereby established, up to a maximum of two hundred and forty thousand euro (€240,000).