I Gaming in Malta. Classes of Licenses

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1 I Gaming in Malta Malta has been a full member of the European Union since 2004 and is therefore compliant with EU legislation on the acceptance and regulation of remote gaming. Furthermore, Malta is the only EU Member State with a fully functional regulatory framework for remote gaming, catering for all types of games. Malta has a high level, educated work force which is multi lingual, with a number of individuals who are qualified and experienced human resources for the gaming industry. The living costs and human resources costs are reasonable. Malta has an advanced telecommunications infrastructure; the majority fragments of fixed networks are fiber optic with fully digitized transmission systems. There daily flights between Malta and London, Frankfurt, Vienna, Rome, Amsterdam, Düsseldorf etc. Games within the regulatory framework are: Poker Tournaments Bingo Betting Lotteries Casino Games Gaming Platforms Betting Exchanges Classes of Licenses A license of any class is established for 5 years and can be renewed subsequently for periods of 5 years. Annual License Fee for any License is The different classes of licenses available are: Class 1: for games broadly based on repetitive random events (Random Number generators). This class covers casino type games, skill games and online lotteries. Class 2: for games based on a single event, for Operators who manage their own risk on events based on a matchbook. Under this class falls fixed odds betting, pool betting and spread betting. 1

2 Class 3: for betting and promoting gaming against a commission. Usually this includes multiplayer games and betting exchanges. This class includes P2P, poker networks, betting exchange and game portals Class 4: for hosting & managing games offered by other licensees, excluding the licensee himself, for gaming platforms which gaming operators can run. Such operators are not involved in player management functions and this license is intended for software vendors who want to provide management and hosting facilities on their platform. Gaming Tax The maximum gaming tax payable per license is of 466,000 per year. Class 1: license, gaming tax is of per month for the first 6 months, and per month hereafter. Should the Class 1 operate on a platform the tax is of per month Class 2: license holder requires paying 0.5% per month on the gross amounts of bets accepted. Class 3: license holder requires paying 5% on Real Income. Class 4: operators pay no tax on the First 6 months, for the next 6 months and thereafter Corporate tax for companies in Malta is 35% on profit. However, Shareholders of the companylicensee who are not resident in Malta for tax purposes benefit from a substantial refund of the tax paid by the company, effectively reducing corporate tax to 5% on profit. 2

3 Creating a Maltese registered company A Maltese Registered Company is needed to apply of a remote gaming license. There are certain minimum requirements which the company should abide by: At least two shareholders (one share holder can hold 99.9% of the shares and the other just one share); At least one director must be appointed the director can be a non resident; however, once a provisional license is obtained from the Lotteries and Gaming Authority, the Authority requires that the applicant has a director who is resident in Malta and who acts as the Key Official vis a vis the license his role is to personally supervise the operations of the licensee and to ensure that the licensee complies with the applicable laws, regulations, license conditions and any directives. One company secretary; a Maltese registered office; The minimum share capital is 1200 (20% paid up), however once the Authority issues a Class 2 provisional license, the company would be required to increase its share capital to 100,000. Corporate tax for companies in Malta is 35% on revenue. However, shareholders of the company who are not residing in Malta for tax purposes have an advantage of an significant tax refund of the tax paid by the company, effectively reducing corporate tax to 5% on profit Gaming Equipment Location One of the basic requirements for the remote gaming license is that the Gaming Equipment is located in Malta. All the servers on which the gaming transactions take place, player's data and any other ancillary information is stored and/or processed has to be situated in Malta. However licensees offering multi player games will have the possibility to store certain servers outside of Malta under certain circumstances. There are very good server housing services in Malta with very professional technical people available and state of the art server housing facilities. 3

4 Statutory Restrictions on Other Jurisdictions Lotteries and Gaming Authority in Malta issues the Remote Gaming Licences to operate in the cyberspace. Therefore neither the Authority nor Remote Gaming Licence Regulations enclose any kind of restrictions to offer games or betting services or to take bets from any particular jurisdictions. This means it is up to the provider to decide if restrictions should be applied or not. Licensing Process The gaming license application process is in 3 stages. Stage One Due Diligence and Evaluation of Business Activity At this stage the applicant submits several corporate documents including: Due diligence (Birth Certificate, Police Conduct, Copies of Passport etc.) Business Plan Financial Forecast Currently it takes 6 8 weeks for the first stage to be concluded after submission of the documents to the Lotteries and Gaming Authority. Stage Two Evaluation of Technical and Operational Activity The Maltese registered company has to be formed before the second stage documents can be submitted. Upon Lotteries and Gaming Authorities request, the following documents are to be submitted: Policies, procedures and Technical documentation Copies from the company registry Business entity form Bank Declaration regarding to the Players Bank Account Currently it takes 6 8 Weeks for the second stage to be concluded after submission of the documents to the Lotteries and Gaming Authority. Upon conclusion of the second stage the company is issued a provisional remote gaming license, this means the operations can start immediately. During the first 6 months of the provisional license, the licensee needs to successfully perform the certification process. 4

5 As for timing, currently it takes approx weeks for the first two stages to be completed and obtain the provisional license. This depends largely on the Authority's work load, and on the completeness of the documentation provided. As for expenses, the Authority's fees are 2330 per license application, and 2750 for each license to start the third stage. Stage Three System Review The provisional license is valid for 6 months and can be extended for a further 3 months by the payment of an extension fee of 1165 (per license). In this time period, the company has to go live with its operations, and have a system review. This is the third stage of the licensing process. During the system review an external auditor is appointed by the Authority to verify that the procedures and policies documented in second stage are being followed and the system is running according to the necessary standards. Once a provisional license is obtained from the Lotteries and Gaming Authority, the Authority requires that the applicant has a director who is resident in Malta and who acts as the Key Official vis a vis the license his role is to personally supervise the operations of the licensee and to ensure that the licensee complies with the applicable laws, regulations, license conditions and any directives. Once the Authority issues a provisional remote gaming license, the company is also required to increase its share to a higher level depending on the class of license and the number of licenses to be held. Class operators are required to have the following fully paid up share capital: Class 1 100,000 Class 2 100,000 Class 3 40,000 Class 4 40,000 A further requirement for a gaming operator to be eligible for a remote gaming license is that the gaming equipment is located in the jurisdiction of Malta. Under the Malta gaming regime, there are 4 main classes of licenses Class 1 license for casino operators, Class 2 license for betting operators, Class 3 license for P2P operators and Class 4 license for Platforms. The Gaming Tax depends on the kind of license one would hold. If the Company will hold a Class 1 license, gaming tax is of per month for the first 6 months, and per month thereafter; should the Class 1 operate on a platform the tax is of per month; a Class 2 license holder requires paying 0.5% per month on the gross amounts of bets accepted; a Class 3 license holder requires paying 5% on Real Income; Class 4 operators pay no tax on the First 6 months, for the next 6 months and thereafter. 5

6 The maximum gaming tax payable per license is of per year. The annual license fee, payable on successfully completing all 3 stages and obtaining the full license is of per license, and paid annually on the anniversary of the issue of the license. Licensing of Employees All employees upon engagement in the offices in Malta have to be approved by the Lotteries and Gaming Authority. Licensing employees is a simple procedure, which consists of informing the LGA of the engaged person, providing police conduct and credentials of the person. However in case of employment of foreign citizens work permit requirements may apply. 6

7 Key Official Function Every licensee is obliged to appoint a Key Official. The Key Official must be resident of Malta and must be also appointed as Director of the company holding the gaming license. The roles of the Key Official are: Primary point of contact with the LGA Director of the licensee company Upholds the values and integrity of the licence Resident in Malta continuous point of contact LGA recognises only the Key Official as the liaison with the licensee Periodic reports need to be presented by the Key Official (monthly reports, signing and presenting of interim and annual accounts, responding to queries and requests from LGA Exception reports need to be presented within the prescribed time limits (incident reports to be delivered within 24 hours, EU and NSO requests, notifying the Data) Responsible for paying the gaming tax within the stipulated time. Commissioner on Personal Data Transfers Responsible for paying the gaming tax on time; Assists the LGA in the certification process and in any investigation; Ensures that all games are fair and correct and that the remote gaming system is well kept and maintained; ensures compliance with Maltese laws and applicable EU directives at all times. Must have access to company financial records and fulfil duties as a Director under the Companies Act Must have access to control system and have player's account; Must be part of change management procedures and have direct access to the co location provider where the licensee's equipment is physically sited. 7

8 For further information, please contact our offices as follows: Steven Galea 37, St. Mary Street, Naxxar NXR 1406, Malta Telephones: (fax) Website: 8