Malta’s MGA’s supervision of operators, modernising the gaming framework,

Malta’s Gaming Act has
existed since 1998, however, in July 2017 the Malta Gaming Authority (MGA)
introduced a white paper which proposed major changes in the regulatory
framework of the Gaming Act. The aim of the newly proposed act is to repeal any
existing legislation regulating gaming and gather them all together in a single
piece of legislation which is to be called the Gaming Act. According to the MGA, the aim of the new Gaming Act is
to streamline the MGA’s supervision of operators, modernising the gaming
framework, simplifying regulatory burdens and adopting a risk-based approach
which is intended to give the MGA a greater level of prescription where

from repealing the old legislative framework related to gaming, the while paper
addresses increased technology convergence between online and land based
gaming, and it promotes technological, channel and game neutrality which would
allow innovation and industry developments. The paper also seeks to adopt a
risk-based approach to render licensing and monitoring processes more
effectively and efficiently.

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to the proposal, the gambling licensing system will be overhauled and
reintroduced to have only two types of licenses, one license covering all B2C
operations and the other would be a separate B2B supplier licence. Due to this, gaming companies and operators would not
need to apply for a number of licences to offer different types of games, or a
number of licences under the same class to offer content from different
providers as this might be done by applying for one single license. Once
passed, the latest proposals would also extend the licensing period from five
to ten years and revise licensing fees.

          The introduction of the two
licence system would also be accompanied by amendments to the taxation system,
including the introduction of a point of consumption tax in order to reduce the
burden on certain operators that are currently subject to double taxation on
offshore business. This usually takes place due to the company being taxed from
the country it is based in (case being Malta), and the country the consumer is
based in, which would result in the operator paying a double tax. B2B entities
would be exempt from paying tax under the new Gaming Act.

Due to this, the MGA suggested that companies should pay 5%
of the gaming revenue which derives from an end customer located in Malta as a
gaming tax, unless the operators are otherwise instructed. This means that if a
foreign consumer is using the land-based games while in Malta, the company
would be taxed as if the consumer was Maltese. On the other hand, if the
consumer were a foreigner, gambling online from another country, the tax
payable would depend on the jurisdiction of the country the individual is
playing from. This change, if brought about by the amendments, would affect
gaming companies based in Malta positively because the gaming tax that
originally had to be paid under two jurisdictions would only be due to the
country where the consumer is located.

The license duration has also been increased from five to ten
years, unless certain games fall under a government concession and might have a
shorter license period as a result. This increase in the licenses term can act
as a guarantee for companies in order to ensure their business’ stability in
the local economy, reducing the risk that the license may not be extended after
the fifth year. The MGA would also be enabled to provide limited duration
licences, with the condition that they cannot be issued more than four times in
any one calendar year, which would be ideal for use in cases of a disaster
recovery scenario. This also goes to prove that the MGA’s powers of compliance
and enforcement will actually be extended.

The key functions within operators will also become
licensable and persons responsible for the overall management and provisions of
gaming services, marketing, finance, compliance and IT would all require a
personal licence. By virtue of such personal licence, the MGA will be able to intervene
directly and hold each of these persons accountable in respect of their
individual area of responsibility. This would rid companies from the burden of
responsibility they currently have over the persons responsible for such
sectors, and might also enhance the employees to do their job more diligently
in order to avoid being held responsible for errors.

The requirement to obtain a licence to operate an amusement
machine shall be also be removed under the proposed framework, however,
amusement machines are still required to be registered with the MGA against a
nominal fee. In cases of land-based gaming companies seeking to grow, this
might encourage a more prominent increase in the amount of machines to be


Included in the white paper was listed another power that
will be granted to the MGA once the act comes into use2, and
this is its extended monitoring and enforcement authority. Through the
compliance review process that has been formally introduced, the MGA’s
regulatory thinking department have to be more transparent to the licensees.
Licensees ought to be informed about any doubts which may be brought up and
shall be given a reasonable time to submit their views on the MGA’s concerns
and suggest ways how it may be resolved.

Following such review, the MGA may take one or more
enforcement measures in relation to the licensee in case where a breach of law
is confirmed. The gaming authority may also revoke, vary or add conditions to
the licence held by licensees, both for enforcement and/or non-punitive
measures. The authority is also going to be given the possibility to nominate
an administrator who will cater for certain exceptional circumstances which
warrant such intervention by an independent third-party.

Another power which will fall in the hands of the authority
is that they would be able to prepare and present a new procedure listing
non-compliant operators. This would put compliant operators at an advantage
because if the list would be available to the public, both consumers and other
gaming companies would know whom to trust and/or work with. In such a scenario,
operators would be allowed to make submissions to the MGA clarifying and
addressing the lack of compliance the authority claimed they had in order to be
removed from the list.

The ground for cancellation and suspension have also been
expanded, which acts as a guarantee that operators will act more diligently in
order not to have their licences repealed. Another new system that has been
mentioned in the white paper is that the authority would start making use of
the ‘mystery shopper’ concept, in which a lay person is sent/used by the
authority in order to make sure that the entity is adhering to the regulatory
framework. This could be done by sending a physical person to a casino with
regards to land-based operators, or hiring users to make use of an operator’s
gaming company whilst pretending to be a normal user. The Regulations will also
provide for cases when the licensee wants to voluntarily suspend its licence, however,
this is subject to conditions connected to the Authority’s satisfaction.



According to the MGA’s legal and international chief officer,
Edwina Licari, the proposed changes are likely to be brought into effect during
the first quarter of 2018. It is most definitely that this change in
legislation related to gaming is going to affect Malta positively as it would
encourage more operators to base their gaming related businesses on the island,
and it increases protection of the ones already operating. Through the newly
proposed changes, the MGA hopes to strengthen and secure “the status of Malta
as an international hub of gaming excellence”.

Benjamin Reedman’s article on the significant changes introduced by the Malta
White Paper on reforms to the gaming legal framework taken from the Gambling
Compliance Website, written on the 21st November 2017.

According to Edwina Licari, chief officer legal and
international affairs at the MGA, the act is presumed to start applying to our
laws sometime during 2018.