Remote Gaming in Malta
Various elements and factors contribute to Maltas imminent success in the attraction of remote gaming operations. Ranging from low gaming taxes to the high technological advancements in telecommunications and ICT have placed Malta on the map as one the most lucrative EU jurisdictions to locate your gaming operations.
- Advantages of a Malta gaming license
- Legal Framework
- Legal Vehicle
- Classes of Remote Gaming operators
- License Fees
- Application Process
- Taxation of Gaming Operators
- Our services
- Low gaming licensing fees
- Low gaming taxes and beneficial effective corporate tax rates on gaming operations
- Rapid, efficient and relatively low cost licensing application procedure
- Availability of skilled-force and highly competitive salaries. Relatively easy for EU nationals to be employed with Maltese gaming companies
- Stable and wide regulatory legal framework offering protection both for licensed operators and online players
- High anti-money laundering standards and a comprehensive legal framework for financial services
- Onshore status for Maltese remote gaming companies
- Availability of a wide range of specialised support services including financial services, co-location, hosting, mobile and telecom services, IT Solutions, Web consultants, gaming operators, software provider, specialised media and marketing services and recruitment and training
- The Maltese jurisdiction is included in United Kingdoms White list which allows Maltese operators to advertise in the UK
- As an EU Member Malta offers the possibility of free movement of goods and services
- Availability of high quality office space and real estate services
- Malta’s has sound reputation as an ICT hub for multinational operators such as Oracle, Microsoft, and Cisco Systems
Remote gaming is governed by the Remote Gaming Regulations 2004 and administered by the Lotteries and Gaming Authority (LGA). The regulations provide a comprehensive legal framework to regulate Maltese remote gaming operators and provide a secure on-line environment to on-line players. Amongst other things, these regulations provide a legal back-bone in respect of:
The conditions for obtaining a valid remote gaming license
- Due diligence requirements
- The requirement for a key official to supervise the conformity of the gaming operations with the prescribed regulations
- Specifications of the control systems applied by the operator
- Conformity, certification and technical requirements of the gaming software
- Information required on the registration of players and mandatory account information on each player
- Protection of players
- Financial accounting records to be kept by operators
- Website requirements
- License fees and taxation
The regulation prescribes the requirement of a valid license for Maltese operators. Applications can only be submitted by a limited liability company registered under the laws of Malta. The applicant is obliged to provide the gaming authority with the necessary due diligence documents in respect of the key officials, directors and shareholders of the applicant. The due diligence exercise ensures the suitability of the all persons involved for the conduct of gaming operations in Malta.
A remote gaming license is valid for a period of 5 years after which it may be renewed by the LGA. The regulations prohibit the assignment or the transfer of the license unless this is approved by the LGA.
In applying for a gaming license, the applicant is required to submit to the LGA the specifications of the control system which will be used to conduct gaming operations. Details on the operations which should be submitted to the LGA and include detailed information on:
- The operation of remote gaming
- General procedures to be followed for the operation of remote gaming
- Computer software where applicable
- Procedures for recording and paying prizes won in remote gaming
- Accounting systems and procedures
- Procedures to be followed to play a game
- Procedures and standards for the maintenance, security, storage and transportation of equipment to be used to conduct remote gaming
- Procedures for the setting up and maintenance of security facilities including general compliance and internal controls relating to access to critical systems a disaster recovery plan
- An adequate system of data backup
Certain classes of licenses are precluded from this obligation at the stage of application
Registration of players
The regulations require certain information to be submitted to licensee prior to registering an online player. In fact the regulations prescribe that at least the following details on each player to be obtained by the operator :
- That the player is over eighteen years of age
- The players identity
- The players place of residence
- The players valid e-mail address
Persons who are below the age of 18 years are disallowed to be registered for on-line gaming.
Every licensee is obliged to appoint at least one key official who is responsible to supervise his operations and to ensure that the license holder complies with all laws, regulations, conditions and any directives issues by the Lotteries and Gaming Authority. The key official should be resident in Malta and appointed as a director of the gaming company.
Remote gaming operations may only be conducted via a limited liability company registered under the laws of Malta. Limited liability companies incorporated under the laws of Malta are governed by the Companies Act and its subsidiary legislation, the provisions of which are in conformity with EU Law.
Maltese companies used for remote gaming operations are excluded from the requirement of obtaining an advance revenue ruling. Such companies however, must clearly state in their Memorandum of Association that their main object is the conduct of remote gaming operations and that there are excluded from trading with any persons resident in Malta.
Whilst Maltese law does not have a specific requirement on the nationality and residence of directors of a company incorporated under the laws of Malta, gaming companies are required to appoint a director to act as a key official. Such director should resident in Malta.
No specific requirements are imposed on the shareholding of a gaming company. A gaming company may be owned indirectly through a Malta holding company or directly by non-resident shareholders. As long as the due diligence requirements for shareholders are fulfilled, there are no restriction on the percentage of shareholding which may be held by persons not resident in Malta. This implies that a Maltese gaming company may be wholly owned by persons not resident in Malta.
Applicable for operators managing their own risk on repetitive games. This class covers:
- casino-type games
- skill games
- online lotteries
Applicable for operators managing their own risk on events based on a matchbook: Under this class falls:
- Fixed odds betting
- Pool betting
- Spread betting
Applicable for operators taking a commission from promoting and/or betting games. This class includes:
- Poker networks
- Betting exchange
- Game portals.
To host and manage remote gaming operators, excluding the licensee himself. This is intended for software vendors who want to provide management and hosting facilities on their platform.
Applicants may apply either or all of the licenses listed above.
An application fee of EUR 2,330 is payable upon the application of any type of license listed above
Annual License Fee
Upon successful application a license will be issued for a five year period. A license fee of EUR 7,000 is payable on an annual basis.
A fee of EUR 1,165 is payable upon renewal of the license
License fees are payable to the Malta Lotteries and Gaming Authority.
The application for a gaming license is a detailed procedure and split into three stages which requires the submission of specific documentation at each stage.
The detailed application procedure ensures that gaming companies entrusted with a valid license to operate in Malta possess the necessary procedures, standards and certifications enabling them to protect their operations whilst at the same time offer high-quality services and protection to on-line players.
The first stage involves an exercise to establish whether the applicant is fit and proper to conduct remote gaming operations in Malta. During this stage the Regulator analyses all the information related to persons involved in the financing, management and viability of the Maltese operation. A financial analysis based on the business plan submitted by the applicant is carried out by the Regulator to establish the viability of the remote gaming operation.
During the first stage of the application process the following documentation should be submitted to the LGA:
A. For each qualifying shareholder and key management personnel:
- A true copy of the birth certificate
- A true copy of the passport
- Passport size photo
- A conduct certificate, or a relevant document, issued by a law enforcing authority in the country of origin of the applicant
- Statement of Affairs
- Credit and/or financial references
- Bookmaker licences if issued in other countries
- A document issued by a legal entity stating that all documentation submitted is a true copy of the original.
The business plan should outline in detail the following:
- The objectives of the operation
- The proposed company structure including business functions and human resources to be employed (e.g. Risk managers, odds compiler, financial officers, etc.)
- The nature of games to be offered (e.g. betting, pool betting, betting exchange, casino, leagues, etc)
- The technologies to be used to conduct remote gaming (e.g. Internet, telephone, fax, mobile, etc)
- An overview of the application software to be used as gaming and control systems
- A three-year business plan including:
- Marketing and sales plan
- Forecast balance sheets
- A financing plan showing sources of finance distinguishing between shareholder funds and other funds
On successful completion of the first stage the regulator informs the applicant that it shall proceed to the second stage. During the second stage of the application, the applicant is examined on the instruments to conduct business operations from Malta. The process includes examining incorporation documents, the games, the business processes related to conducting the remote games, the rules, terms, conditions and procedures of the games, the application architecture and the system architecture of the gaming and control systems.
During this stage the following documentation should be submitted by the applicant:
- The company registration certificate
- Business Entity Information Form
- A detailed operational manual outlining the application architecture, the system architecture, the software developer, security and control procedures, back-up and disaster recovery procedures
- The payment methods, the payment system/s and its provider/s
- Agreements with business partners, affiliates, agents
Upon the successful completion of the second stage, the applicant is delivered with a letter of intent to operate remote gaming with the intent of obtaining a certification of compliance within 6 months. The applicant is permitted to establish the business in Malta, conclude agreements and carry out testing on the set-up of the operation.
In the final stage, technical experts at the LGA conduct a detailed compliance audit. The compliance audit is a certification which establishes whether the gaming system is compliant with the requirements of ISO-1799:2000 Information Technology Code of Practise for Information Security. The compliance audit consists of the following elements:
- A Service Provider Authorisation Form (LGA/51/2204- if applicable, including the agreement with the equipment hosting provider in Malta outlining clearly the functions and responsibilities to be carried out by such provider. A site plan of the data floor indicating the location of the equipment must be attached to the agreement. Serial numbers for all equipment installed are to be attached.
- Details or copies of agreements with all third parties which may impact the licensees gaming or control systems are also required by LGA (these are the gaming software provider, all payment service providers, any odds/results provider used, any other software partners)
- Before certification, the Control System submission will be reviewed and tests made on the live data and procedures. Samples reports from the live system will be requested to show how the management of the betting system is conducted.
- An assessment of the information management in the operations will be made; recommendations may be made to improve security of the players data.
- The backup and disaster recovery procedures will be reviewed. Change management procedures will also be reviewed.
- The online website will be reviewed via a test account to see that the site operates in accordance with the Regulations and with the operators declared procedures (including notifying changes). The Player Protection measures required by LGA will be confirmed.
Upon the successful completion of the certification process, the LGA issues a license for a five year period.
Remote gaming companies are subject to the following taxes:
The gaming tax varies according to the type of license as follows:
€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.
The gaming tax payable by the host platform is as follows:
- No tax for the first 6 months of operation
- €2,300 per month for the subsequent 6 months
- €4,600 per month for the rest to the period
- Fixed-odds betting: 0.5% on the gross amount of 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.
Tax is a percentage of net takings. Percentage amount depends on nature of operation.
Gaming companies are subject to an advanced corporation tax of 35%. Shareholders of gaming companies are entitled to benefit from a tax refund when the profits are distributed by way of dividend. The payment of a dividend to the shareholder attracts a tax refund of 86% (6/7ths) of the advanced corporation tax levied in Malta. Furthermore, Malta does not levy a withholding tax on outbound dividend distributions.
We also recommend a tax efficient set-up which eliminates the need to transfer profits outside Malta in order to make claim for the refund of tax.
A limited liability company incorporated under the Laws of Malta is obliged to prepare a full set of financial statements in accordance with International Financial Reporting Standards. The financial statements should also be audited by a registered auditor.
Income Tax is determined on self-assessment basis. In general the accounting profit adjusted for tax purposes is used to determine the chargeable income for the year. A limited liability company is obliged to file a tax return on a annual basis. Tax returns are filed electronically by the tax representative.
We assist gaming companies with a comprehensive set of support services to ensure a smooth set-up and running of your gaming operations in Malta. Our services include the following:
- Company Incorporation
- Assistance with license application and liaison with the Lotteries and Gaming Authority
- Support to key officials
- Financial planning
- IT Audits
- Management accounts
- Preparation of statutory financial statements
- Statutory Audits
- Payroll services and employee recruitment support
- Company secretarial
- Tax planning, tax advisory and tax compliance services
- VAT compliance
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