What were the changes that occurred in 2016?
On 22nd April 2016, the Remote Gaming Regulations (S.L. 438.04) were amended through the publication of Legal Notice 131 of 2016. The amendment introduces new obligations on entities licensed in terms of the Remote Gaming Regulations.
The new regulation 46A requires that specified casino-type games offered under a remote gaming license issued by the Malta Gaming Authority (MGA) shall abide by a minimum average return to player (RTP) of 92% or any such higher percentage as may be stipulated through the license condition.
In order to further clarify the requirements established by regulation 46A, the Authority is also publishing the Return to Player Directive (Directive 1 of 2016). This Directive specifies the games for which the minimum average return to player obligation is applicable, as well as the methodology which the MGA may use to ensure compliance with such a requirement, for instance periodic checks, and / or certification.
Furthermore the new regulation 49A requires licensees to make available to the players, information related to any fees charged to the players as well as the average winnings paid out to players over a period of time. The intention of these provisions is to enhance the consumer protection measures afforded by the Remote Gaming Regulations, specifically in terms of transparency and fairness of the games.
Legal Notice 131 of 2016 also introduces the new Part XVIII on the power of the MGA to implement a monitoring system. The enactment of this new section follows the public consultation and stakeholder interaction which the MGA carried out in the previous months relating to an Enhanced Automated Reporting Platform (EARP) for Remote Gaming. The intention behind the implementation of such a platform is to, amongst other things, streamline, automate and enhance certain reporting and compliance processes, reduce complexities in investigations, and strengthen the regulatory framework. The new regulations 61 to 63 empower the MGA to operate such a platform and to connect it to the licensees’ systems, and also set out the parameters for which such a platform may be used. The stakeholder feedback received will be taken into consideration when such a system is implemented.
What were the new licensable activities in 2017?
The Skill Games Regulations (S.L. 438.11) came into force on the 24th of January 2017. Under this new framework, the Authority is entrusted with the governance and regulation over the skill games sector, as originally envisaged under article 78 of the Lotteries and Other Games Act (Chapter 438 of the Laws of Malta). Fantasy Sports operators such as Draftkings, Fanteam and Oulala Games were immediately issued with an MGA skill games license to regulate their operations within the European Union.
What are the proposed changes for 2018?
The Malta Gaming Authority (MGA) has published a White Paper in 2017 on widespread changes to remote/online gaming regulation in Malta. The proposed changes include the following:
- Replacing the current multi-license system with a system in which there will be two different types of licenses – a Business-to-Consumer (B2C) license and a Business-to-Business (B2B) license – covering different types of activities across multiple distribution channels;
- Segmenting the Key Official role into various key 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;
- Strengthening the player protection framework by formalising the mediatory role of the MGA’s Player Support Unit, enshrining segregation of player funds at law and moving towards a unified self-exclusion database across both remote and land-based delivery channels;
- Introducing new and more effective processes for criminal and administrative justice, including the allocation of appeals from decisions of the Authority to the Administrative Review Tribunal and the introduction of a distinction between administrative and criminal offences;
- Introducing the concept of administration to protect an operation in distress and, if necessary, to assist the winding down of an operation, thereby protecting jobs and player funds.
How will the new taxation system effect operators?
Taxation shall be streamlined into one flow with two main layers whereby it shall be exempting B2B licensees from gaming tax, thus increasing Malta’s competitiveness as a hub for these services providers. As for B2C operators, the Draft Law provides a shift to the point of consumption model in respect of gaming services offered by remote means. Under the current regime, gaming operators located in Malta and having an international presence have to pay both gaming tax under Maltese law, as well as any gaming tax and additional indirect taxes imposed by the jurisdiction where the customer is located. Transforming such regime into one that imposes taxation at point of consumption resolves this double tax issue.
This new fiscal structure shall become effective as of 1 January 2018. However, a transitory period is envisaged whereby existing licensees shall continue paying in accordance with the current Remote Gaming Regulations until 30 June 2018. As of 1 July 2018, licensees shall start paying gaming license fees under the new regulations (http://www.mga.org.mt/wp-content/uploads/Legal-Notice-409-of-2017-Gaming-Licence-Fees-Regulations.pdf). A reconciliation shall then take place in order to calculate the difference between what was due for the first six months of 2018 (under the current fiscal regime) and the rest of the year under the new regime. Licensees which would have paid more than what was due will receive tax credits equivalent to the excess amount paid and licensees which would have paid less, shall pay the difference accrued by the end of the year 2018. As of 1 January 2019, the new gaming license fees regulations will apply therefrom.
Blockchain Technology including Distributed Ledger Technology (DLT) and Cryptocurrencies
The MGA is currently in the process of establishing a sandboxed environment for crypto currency usage within the Online Gaming Sector whilst also drafting guideline principles for the application of DLT and its various adaptations within the industry. Conscious of the fact that a certain degree of expertise lies within the industry, with a number of innovative projects and concepts already available on the market, the Authority is reaching out to interested parties willing to share information regarding their cryptocurrencies and/or DLT projects.
The Authority will be evaluating all submissions with a view to enrich and render more practical the sandbox environment and DLT guiding principles it intends publishing in Q1 of 2018.
As detailed on the published communication, the MGA is interested in learning how organisations within the industry endeavoured to see that necessary safeguards are in place to:
- protect consumers
- cater for the prevention of crime and money laundering or funding of terrorism (with due regard to the 4th Anti Money Laundering Directive)
- protect the reputation of the Maltese jurisdiction.
Meet Iosif Galea and the Fairwinds Management team at ICE Totally Gaming 2018. Contact us to set up a meeting.