Over the past years Malta has successfully established itself as a leading, serious and well-regulated European remote gaming jurisdiction and is estimated to host around 10% of the world’s on line gaming companies.
Malta has positioned itself as one of the most attractive financial services centres in the European Union, providing a favourable fiscal regime to iGaming operators.
Malta was the first country within the European Union which regulated igaming, and legislators decided to create a regulated, transparent and efficient mechanism for the industry.
Malta has become a leading remote gaming jurisdiction which provides a stable political atmosphere and a well regulated environment.
(Introduction of the Remote Gaming Regulations (LN. 176 OF 2004))
Gaming taxes differ according to the type of license acquired, that is why Malta offers very attractive fiscal regimes.
A Remote Gaming Council was set up in 2005 which aims at giving the opportunity for all Maltese remote gaming licensees to express their opinions and concerns with regards to the industry.
The foresight and determination of the Maltese authorities to develop the iGaming industry, together with the Malta Gaming Authority’s (MGA) pro-active approach to the inevitable changes in the sector, have created a stable and attractive regulatory environment for this sector.
Advantages:
• reduced rates of income tax on personal income
• exemptions on income derived from patents
• refunds on dividends and double taxation relief
• free movement of goods and services within the EU
The remote gaming sector is the most dynamic and the fastest growing gaming sector in Malta and it is regulated under the provisions of the Remote Gaming Regulations (L.N. 176/04). In 2004, Malta become the first EU member state to regulate Remote Gaming.
The many iGaming company operators have chosen to locate in Malta due to several attractive factors which Malta offers:
• Malta is the only country within the EU which regulates remote gaming
• Online Gaming in Malta has a reputation of being operated out of a well-regulated jurisdiction which safeguards the interests of both operators and players
• a very attractive fiscal regime
• an efficient and relatively inexpensive Malta gaming licensestablished financial services institutions (including payment gateways) for Maltese gambling companies
• support services by pro-active professionals who adopt a ‘can do’ attitude to assist Malta gambling companies
All Maltese gambling operators must be licensed by the Malta Lotteries and Gaming Authority to carry out any of the following activities:
• online gaming
• online betting offices or online betting exchange offices
• the promotion and abetting of gaming from Malta and
• hosting and managing third-party online gaming companies in Malta
A Malta gaming license is valid for a period of five years and can be renewed for further five year periods. An application fee and an annual fee is payable.
Maltese gaming licensees also pay a gaming tax, which is calculated according to the type of gaming/betting operations they carry on in Malta.
Licence Application
Remote Gaming Licenses are issued under the Legal Notice 176 of the Lotteries and Other Games Act, 2001.
Business Plan
A license application must be accompanied by a business plan. Which means that the LGA are more likely to accept the license application.
Some highlights of a business plan are:
Promoters of the Company:Providing information on the shareholders.
3-year Financial Projections: expenses which will be encountered when operationalmake realistic forecasts of revenue establish the capital requirement of the company.
Marketing Plans: The forecasts are shown to be realistic, attainable and based on solid data.
Suitability of the Applicants: Shows that the applicants properly understand the responsibilities and risks associated with the business activity.
There are 4 types of Remote Gaming License:
• Class 1: Online gaming license, defined by operators who partake in unlimited risk on games depending on repetitive occurrences – risk taking on repetitive games generated by random events. (Interactive Games, Casinos, Community Games, Lotteries, Slots, etc.)
Tax:
Maltese gaming licensees also pay a gaming tax, which is calculated according to the type of gaming/betting operations they carry on in Malta.
• TAX SUMMARY
• Class 1: €4.600 per month for the first six months, subsequently €6.900 per month.
• Class 1 under Class 4: The gaming tax payable by casino operator is €1.150 per month.
• Class 2: Online betting office license, defined by operators who manage their risk on a singular event – risk taking by creating a market and backing that market. (Sports Betting, etc.)
TAX SUMMARY
• Fixed-odds betting: 0.5% on the gross amount of the bets accepted.
• On betting exchanges: 0.5% on the sum of all net winnings calculated per player per betting market. (in cases where the exchange is involved in the risk)
• Pool betting: 0.5% on the aggregate of stakes paid.
• Class 3: license to promote and abet gaming from Malta, defined by operators who promote or abet gaming from Malta. (P2P, Betting Exchanges, Bingo, Poker, Tournaments, etc.)
• TAX SUMMARY
• Tax is a percentage of net takings. Percentage amount depends on nature of operation.
• Class 4: license to host and manage online other gaming operators, excluding the licensee himself. (Platform operators, Software Vendors)
• TAX SUMMARY
• The gaming tax payable by the host platform is NO TAX for the first six months of operation, €2.300 per month for the subsequent 6 months and subsequently €4.600 per month for the entire duration of the license.
• TAX CAPPING
• a. The maximum gaming tax payable by one licensee in respect of any one license is €460.000.
• b. However, in case where casino operators (under Class 1) operate from the host platform (under Class 4 license), the tax cap is applicable to the total tax payable by all licenses together. In this case, the tax cap is reached when the sum of tax payable by all casino operators licensed under Class 1 and their common host platform reaches €460.000.
The license application process is divided into 3 stages as follows:
First Stage: Fit and Proper
• Application for Remote Gaming License (Form LGA/51/2004-1)
• Personal Declaration Form (Form LGA/51/2004-2)
• Personal Declaration Form (to be filled by the key official)
Second Stage: Business and Technical Ability Assessment
• Business Entity Information Form (LGA/51/2004-3)
Third Stage: Compliance Audit
• A Service Provider Authorization Form (LGA/51/2004-4)
Control System:
The Control System is often confused with technical documentation. The Control System is about running of the business, of which IT forms an important part in a remote gaming operation.
Control System is the control or the running of the Business. It covers all the aspects of the operation including support, registration of clients, risk management, anti-money laundering, rules of the games, Random Number generating systems, payments and of course IT.
Our service:
• providing training and advise on how operational procedures can be setup to carry out the various functions related to finance, support etc.
• prepare the control system documentation
• ensuring that the operation is in compliance with the Lotteries and other Games Act and implements the various requirements to meet responsible gaming.
Player’s Money: A licensee typically will be holding in escrow money deposited by players which they can then use for placing bets. No games on credit are allowed.
Contingency Plan: licensee has an obligation to keep the operation working smoothly during normal hours of business for the licensee. For example, websites must be up and running, customer support must be functional. Licensees must have a business continuity plan to deal with any possible contingencies that may interrupt the proper running of the business.
Terms & Conditions: The Terms and Conditions must be published on the website of the operator. These cover the rules of the games as well as the conditions governing registration, payouts and general conduct of the business by the gaming operator.
Random number Generator: Some events such as football games are outside the control of the bookmaker. Other types of licenses, such as Casino or Poker rely on a well shuffled deck of cards or a random selection of a number within a range for their fair operation. Random numbers can be created by software or hardware. Algorithms also exist which are pseudo random where the sequence of numbers is random but the sequence is always the same and therefore predictable (and unacceptable).
Key Official
Key Official is a role defined by the LGA. A licensee must appoint a Key official, who is a person resident in Malta. The Key official represents the licensee with the LGA and performs a number of responsibilities, some of which are:
• Fit and Proper Person approved by the LGA.
• Knowledgeable of gaming operations.
• Resident in Malta, Maltese citizen preferably.
• Familiar with IT systems.
• Familiar with Anti-Money Laundering, Risk management and Security Issues.
• Familiar with laws and regulations governing remote gaming.
• Director of the company.
Access to operation: The Key Official must have access to all aspects of the operation, though this access is typically restricted to view rights only. Access to the control system/s and view rights on players’ bank account are typical of this access.
Fairness of operation: The Key Official must ensure that all games are carried out fairly and the interest of the players is protected at all times.
Complaints: Players have the right to resort to the LGA when they have a complaint about the conduct of a licensee. The Key Official is the point of contact for the LGA and must be familiar with the complaint. It is the role of the Key Official to bring such disputes to a quick and satisfactory conclusion.
Reporting to the LGA: The Key Official must make monthly reports to the LGA and ad-hoc reports on any changes to the operations, not limited to changes to Terms & Conditions, downtime of IT systems, Installation of new hardware, Affiliates, change of personnel.
Our services:
• company formation
• local and international taxation, accounting
• drafting and review of documentation, payroll services, work permit applications
• recruitment, employment matters, corporate management and administration
• opening of bank accounts for all Malta gambling companies
• special financial service system for the IGaming company: i-Wallet
• IT service (plan, develop, support)
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