Gaming in Malta: overview

Lottery games have probably been played in Malta since the end of the 17th century. However, it was only in 1922 that the Public Lotto Ordinance was enacted to establish the government monopoly on organising lottery activities. The Racecourse Betting Ordinance was subsequently enacted in 1934 to regulate horse and dog racing licences.

The next development came in 1958 when the Kursaal Ordinance, regulating casino activity, was enacted. This statutory instrument was subsequently superseded by the Gaming Act 1998, which set out further controls and reinforced the regulatory framework for casinos.

In 2001 the Lotteries and Other Games Act (Lotteries Act) was passed. This Act established the Malta Gaming Authority, which replaced the Director of Public Lotto, and incorporated most gaming legislation into a single legislative instrument. The only exception is casinos, which continue to be regulated by the Gaming Act (Chapter 400, Laws of Malta).

Regulation of online gaming came into force in 2000 through amendments to the Public Lotto Ordinance. These regulations remained effective until 2004, when the Remote Gaming Regulations came into force. The regulations shifted the focus away from “games” and towards the “means” by which the gaming was offered. The new regulatory regime became both:

General definition

There is no actual definition of “gambling” in Maltese law, although the word is used in some parts of the laws used to regulate gaming. The law does, however, contain definitions for “games” and “gaming”.

Under the Lotteries Act a “game” means a game of chance and a game of chance and skill, but does not include:

A “bet” means “a game in which the player is required to forecast any result or outcome in respect of one event or a set of events”; and “betting” means “the playing of a bet”.

A “game of chance” means a game for money and/or prizes with a monetary value, the results of which are totally accidental. A “game of chance and skill” means a game for money and/or prizes with a monetary value the results of which are not totally accidental but depend, to a certain extent, on the skill of the participant.

A pure “skill game”, which is a game for money or money’s worth the results of which depend mainly on the skill of the participant (other than a sporting event), does not fall within the definition of “game” as described above.

A brief analysis of the difference between a game of skill and a game of chance is useful. When interpreting these terms, the Malta Gaming Authority (MGA) takes the position that the term “skill game” or “game of skill” includes games that are determined by the knowledge, reaction time and/or the dexterity of the player. This does not mean that an element of chance must be absent but that any chance factor is so minimal that the outcome of the game is not affected by it (Digital Games of Skill with Prize, Position Paper, December 2015, Published by the Malta Gaming Authority, see www.mga.org.mt/wp-content/uploads/Digital-Games-of-Skill-with-Prize-Position-Paper-FINAL.pdf). The MGA has also indicated that any other games where the result is determined based, to a significant degree, on any element of chance will fall within the definition of a “game of chance and skill” within the scope of the Lotteries Act and will be a licensable operation.

In the MGA’s opinion, the ideal way to categorise gaming activities is through subjective assessment on a case-by-case basis, which should be conducted by applying a series of objective criteria. The relevant criteria are the following:

The onus of proving that a particular game is, in fact, a skill game is vested in the operators themselves, who must submit any relevant data or certification showing that the game is, in itself, a skill game.

An “amusement game” is a game played using an amusement machine and an “amusement machine” is a machine used for the purpose of playing games exclusively for amusement purposes. It must not be used for gambling and a successful player must not receive or be offered any benefit other than the opportunity by automatic action of the machine to play the game again without inserting more money or tokens.

The Remote Gambling Regulations define “gaming” as “an agreement, scheme, or arrangement between two or more parties to play together at a game of chance in which a prize or reward consisting of money or some other item of value, worth, advantage, or opportunity is offered or can be won and become the property of the winner under defined conditions established for the purpose of the game”.

From the above definitions, any game (except a pure skill game) that offers a monetary prize will fall within the definition of “game” and “gaming” under Maltese law.

Online gambling

The Remote Gaming Regulations define remote gaming as “any form of gaming by means of distance communications”. These Regulations specify that a “means of distance communication” includes any means used to communicate, transmit, convey and receive information (including in the form of data, text, images, sound or speech) or for concluding a contract between two or more persons without them being physically present. The definition continues to state that the means of distance communication can also include:

Land-based gambling

The rules set out above in the general definitions are applicable to land-based gaming (see above, General definition).

The Malta Gaming Authority (MGA) is the primary regulatory body responsible for governing all gaming activities in Malta, both land-based and remote/online games. Its main functions are to issue gaming licences and monitor the conduct of gaming operators.

There is no limitation on the number of land-based licences that can be issued but permission must be obtained from the Minister of Finance. There are currently four licensed casinos operating in Malta:

There is also no limitation on the number of remote/online betting licences that can be granted.

The MGA is also responsible for preventing, detecting and combatting criminal activity and ensuring that games are operated and advertised fairly and responsibly.

Poker

Land-based poker games are not regulated per se, but are considered a type of casino game. Poker is generally deemed to be a “game of chance and skill”. The Gaming Act regulates setting up rooms dedicated to card games, which must be approved specifically in the casino licence or at a later stage by the Gaming Board.

For remote gaming, poker networks are primarily regulated under the Remote Gaming Regulations. On peer-to-peer remote poker networks (where participants on the network play against each other), the operator takes a percentage of the rake for organising and promoting the game. For this, an operator needs a Class 3 remote gaming licence, which is a licence “to promote and/or abet remote gaming from Malta”.

Betting

The Lotteries Act defines betting as the placing of a bet. A bet is defined as a game in which the player must forecast any result or outcome in respect of one event or a set of events. Betting can be divided into remote betting and land-based betting.

Remote betting is the “negotiation or receiving of any bet by a means of distance communication”.

Racecourse betting (including betting on horse and greyhound racing) is primarily regulated under the Lotteries Act and the Racecourse Betting Ordinance. A licence is required for on-course racecourse betting and is regulated by the Malta Gaming Authority.

Remote betting is primarily regulated under the Remote Gaming Regulations and requires a Class 2 remote gaming licence.

Sports betting

Sports betting is primarily regulated under the Lotteries Act and the Betting on Result of Football Matches Order. The latter provides a list of sports grounds within Malta where betting on football matches is prohibited.

Casino games

Land-based casinos and their games are regulated under the Gaming Act.

To operate a casino, permission must be obtained from the Minister of Finance and a licence must be provided from Malta Gaming Authority.

Online casino-type games are covered by the Remote Gaming Regulations and require a Class 1 remote gaming licence.

Slot and other machine gaming

Gaming devices are primarily regulated under the Gaming Devices Regulations. There is a distinction between a “gaming device” (which offers the possibility of winning a prize) and an “amusement machine” (which is for entertainment purposes only and offers no possibility of winning a prize). Amusement machines are not considered a gambling product but are regulated and licensed separately under the Amusement Machine Regulations.

A licence is required to manufacture, assemble, service, supply, use, host or operate a gaming device and four different categories of licence are available.

Terminal-based gaming

This is not defined under Maltese legislation.

Bingo

Bingo/tombola games fall under the Lotteries Act and the Commercial Tombola (Bingo) Regulations. A licence is needed to operate commercial tombola games in a tombola hall. There are two licences for this and the differences relate to the size of the tombola hall and the duration of the licence.

Lottery

The National Lottery, which is the main lottery in Malta, is regulated under the Lotteries Act. This provides that the National Lottery can be conducted under ministerial authority or by any other person in whose favour the concession is granted. Only one operator can hold a valid licence to operate the National Lottery at any given time.

Available licences

The various land-based gaming products and applicable licensing regimes are set out in Question 4. As a general rule, there is no limitation on the number of licences that can be issued in relation to a particular product, with the exception of the National Lottery.

Eligibility

See Question 4.

Application procedure

The licensing procedure is (with the exception of the National Lottery) similar to that described in Question 7 in relation to online gaming. It requires Know-Your-Customer documentation, financing information and details of the control and gaming system of the activities being licensed.

If the licensing process includes premises, the following information is required:

Duration of licence and cost

Licences under the Gaming Devices Regulations are granted for one year.

A casino licence remains in force for up to ten years.

The National Lottery licence is issued for a term specified by the Malta Gaming Authority after consultation with the Minister of Finance.

Licences for tombola halls can be issued for six months or a year, depending on the type of licence required.

Prohibitions

The Lotteries Act provides that a game of chance, or a game of chance and skill, cannot be operated, promoted or sold without authorisation.

However, an exception to this rule applies if the game was authorised to operate under any law enacted by an EU or EEA member state or by any jurisdiction or territory approved by the Malta Gaming Authority. Malta employs a recognition regime under which a gaming licence issued by another EEA member state can offer its games in Malta and enter into business-to-business (B2B) agreements with Malta-based licensees.

Restrictions

Players under 18 years of age cannot take part in any games offered by a licensee. Maltese citizens under 25 years cannot enter casinos. A game forming part of the National Lottery cannot be sold to a person less than 16 years of age.

An individual will not be allowed to enter a casino if the casino has banned him from entering, or if the person has requested to be banned on his own admission. Any ban or restriction will last for between six months to a year and cannot be cancelled before it expires. Operators must ensure that persons who may have a problem with pathological gambling are not given access to the gaming area.

Anti-money laundering legislation

When evaluating an application for a gaming licence, the Malta Gaming Authority will take various things into account, for example:

Available licences

Any person operating, promoting, selling or abetting remote gaming in or from Malta must be in possession of a valid licence from the Malta Gaming Authority (MGA), or have an equivalent authorisation from the government or competent authority of an EEA member state, or any other jurisdiction approved by the MGA.

The Remote Gaming Regulations establish four classes of licences:

Eligibility

An applicant must be a body corporate established in Malta under the Companies Act. Know Your Customer information must be submitted as part of the application process.

For individuals involved with a business applicant (particularly shareholders, directors, and key employees) the following information is needed:

This information is generally substantiated by submitting birth certificates, passport copies, passport photos, police conduct certificates and bank and professional references. Where a corporate entity is a shareholder of the applicant, the MGA also requires the memorandum and articles of incorporation, a certificate of good standing, and bank/professional references.

Application procedure

The MGA will conduct probity investigations with other national and international regulatory bodies and law enforcement agencies.

An applicant for a licence must submit evidence that both:

As a matter of MGA policy, a business plan must also be provided.

A licensee may also be asked to obtain (and maintain) a bank guarantee in favour of the MGA to secure players’ funds and winnings, pay fees, taxes and any administrative penalties or other sums due and payable by the licensee. This is done to protect players’ funds and the bank guarantee must be for the amount and time specified by the MGA. Failure to comply with a requested guarantee within three working days entitles the MGA to suspend the licence.

Depending on the type of licence required, other information will be requested by the MGA, such as details of the applicant’s gaming systems and control systems. Examples of such information include:

Duration of licence and cost

If the application is successful, the MGA will issue a licence that will be valid for five years. When it expires, it can be renewed by the MGA for further five-year periods provided there is continued compliance with the provisions of the licence, the Remote Gaming Regulations and any directives issued by the MGA. When granting a licence, the MGA retains the discretion to impose any conditions it deems appropriate and can, from time to time, impose new conditions or vary or revoke the current conditions.

The following fees apply:

Prohibitions

A game of chance or a game of chance and skill cannot be operated, promoted or sold in Malta without authorisation (Article 5, Lotteries Act).

However, an exception to this rule applies if the game was authorised under any law enacted by an EU or EEA member state, or by any jurisdiction or territory approved by the Malta Gaming Authority.

The amendments to the Remote Gaming Regulations, which came into force on the 1 March 2011, reiterate these rules by stating that “no person shall operate or promote or sell or abet remote gaming in or from Malta unless such person is in possession of a valid licence issued by the Authority or is in possession of an equivalent authorisation by the government or competent authority of an EEA member state, or any other jurisdiction approved by the Authority” (Regulation 3).

Restrictions

A gaming system must display any restrictions on play in relation to the unit and total bets permitted.

Anti-money laundering legislation

An applicant for a licence must submit evidence that both:

As a matter of policy, a business plan is generally provided by the applicant as part of the application process, which will normally include a marketing and sales plan, forecast balance sheets and a financing plan showing sources of finance distinguishing between shareholder funds and other funds (such as venture capital and bank guarantees).

A licensee can be asked to obtain (and maintain) a bank guarantee to secure players’ funds and winnings, pay fees, taxes and any administrative penalties or other sums due and payable by it.

When evaluating an application for a gaming licence, the Malta Gaming Authority will take various things into account, for example:

Maltese law creates a distinction between B2B and B2C operations. The licences described in Question 7 apply to B2C operations. Vendors of remote gaming software who also intend to provide management and hosting facilities on their gaming platform to other operators need a Class 4 remote gaming licence.

The licensing or sale in Malta of remote gaming software, by itself, does not create the requirement for a licence unless the vendor also manages the software for the gaming operator.

Under the policy set out by the Malta Gaming Authority (MGA), intermediaries that partner with a licensee for marketing purposes (by referring traffic to the licensee’s website through a link on its own website, also known in the industry as “skins”, “affiliates” or “white labels”) do not need a licence. However, the MGA must be notified of any intermediary operations. An intermediary will be outside the scope of licensing if they merely act as a referrer of player traffic to the licensee, without having a direct relationship with the player. Therefore, a licence is not needed if the intermediary does not register players, manage players’ funds or undertake any gaming risk.

There are no technical measures in place.

Interactive gambling is not regulated by Maltese law.

Gaming legislation is both technology and game neutral (see Question 1). Therefore, the criteria applicable to social gaming applies in the same way as with any other game that is operated, sold or promoted in Malta, provided it falls within the definition of a “game” or a “bet” as described in Question 2.

Whether a social game requires a licence depends on whether the prize that can be won by playing the game has a monetary or other value. The definitions of “game” and “gaming” require that a monetary prize and/or a prize with a monetary value can be won by playing the game. No monetary value to the prize will be offered when all of the following apply:

The principle here is that, in an online game, if a successful player does not receive any benefit other than the opportunity to play the game again, the game does not bee to be regulated in the same way as a game that can result in winning a prize with monetary value.

Article 1713 of the Maltese Civil Code provides that “the law grants no action for a gaming debt or for the payment of a bet”. However, an action for the recovery of a gaming or betting debt is possible if the gaming/betting activity giving rise to the debt was either licensed by the Malta Gaming Authority or otherwise permitted or exempted from obtaining a licence (Lotteries Act). This means that a gaming/betting debt is recoverable if the gaming/betting activity giving rise to the debt was regulated or exempted under Maltese law.

Land-based gambling

Gaming taxes are paid by casinos to the Malta Gaming Authority (MGA) on a monthly basis and are calculated by the MGA based on the gross earnings of the casino. These can be set off against gross losses over two-month periods. In all cases, the gaming tax must be paid within seven days from the end of the previous month. There is also a tax payable on the income generated from the entrance fees to the casino.

Taxes from gaming parlours depend on the licence. A Class 3 licence must pay either:

The Commercial Tombola (Bingo) Regulations provide that a licensee must pay the MGA 10% of the value of every scoresheet, 30% of the total revenue on entrance fees, or both. Where bingo is offered by a non-profit organisation, a licensee must pay a duty of EUR34.94 for each session.

The licensee of a non-profit lottery must, through the MGA, pay the Ministry of Finance 25% on the aggregate retail value of all prizes that can be won in the game.

Online gambling

The gaming tax applied by the MGA differs according to the licence category:

The maximum gaming tax payable annually by a licensee for any one licence is EUR466,000.

Gaming operators are also subject to corporate taxation at the relevant rates.

Land-based gambling

The Code of Advertising, Promotions and Inducements applies to all types of gaming and sets out the restrictions imposed on a licensee. The Code states that a licensee must not engage in advertising that:

In addition, promotions (except junket gaming and tournaments) must not commit people to gamble for a minimum period of time, or to gamble a minimum amount in order to qualify for player rewards. When a licensee publishes any advertising or conducts a promotion that encourages people to engage in any activity other than gambling, it must not refer, directly or indirectly, to the licensee’s gambling facilities.

The Gaming Act sets out four forms of advertising that are prohibited for casinos:

Online gambling

The Remote Gaming Regulations prohibit a licensee from engaging in advertising that:

Additionally, a licensee must not engage in any activity that involves sending unsolicited e-mail, whether through its own operation or by intervention of third parties.

Land-based gambling

The legal status of land-based gaming has not changed significantly in recent years. However, in April 2015 the Malta Gaming Authority (MGA) introduced the Cruise Casino Regulations, allowing cruise liners to operate their on-board casinos solely for registered passengers while berthing in Malta or Gozo overnight, and within territorial waters.

Towards the end of 2015, the MGA issued a position paper on digital games of skill with prizes, suggesting that games where the outcome is mainly accidental but also influenced significantly by the skill of the player should be subject to a licensing requirement. The requirements must reflect the risk posed by the operation and must be distinguished from games of pure chance.

Online gambling

The regulations for online gambling have not changed significantly in recent years. However, the following have been added to the Remote Gaming Regulations:

Land-based gambling

The Malta Gaming Authority will be proposing an overhaul of gambling legislation to the Maltese government in late 2016/early 2017.

Land-based legislation is fragmented into many different legal instruments, some of which overlap and create a conflict between various laws, so the MGA will seek to increase transparency in the overhaul. The MGA is therefore moving towards a simplified licensing system that will allow operators to provide different services under the same licence. The new regime will have a joint B2C and B2B licensing system rather than being split into multiple classes

Online gambling

The overhaul will aim to make it easier for online gaming software providers to supply their services to land-based operators.

Social gaming

In December 2015, the MGA published a Position Paper called Digital Games of Skill with Prize. The MGA’s position will be taken into account in the context of the legal and regulatory overhaul that is proposed to the government. In particular, the MGA took the view that certain skill games require less regulation than games of chance and games of chance and skill, reflecting their position in the spectrum of chance and skill. The MGA has unequivocally indicated that regulatory intervention must appropriately and proportionately address the level of risk presented to the consumer by the type of operation, so these considerations will form an integral part of the MGA’s policy.

Similarly, other types of games will not require any prior licensing, although other regulatory approaches are being considered such as issuing a set of requirements, standards or codes that providers must adhere to. As part of the overhaul and consolidation of existing gaming law rules, the MGA is proposing rules that might bring social gaming into the regulatory remit.