Malta

Malta Jurisdiction Overview

Malta has transformed itself from a British colony to an independent EU member state in the last four decades and now emerging as one of the fastest growing financial services center in the world and a front runner in the provision of ICT services. Since 2004 Malta received more than 450 remote gambling applications and boasts a labor force of 2,085 employees who are directly employed in the online gambling industry.

Malta has established itself as a leading jurisdiction issuing online gambling licenses; moreover, the international awareness of Malta’s relevance as a business center of choice is constantly growing. Malta keeps attracting businesses from different sectors of economic activity, for example investment services, internet-based businesses, and captive insurance. Malta provides several legal, tax and general infrastructural advantages that tip the scales in its favor when compared to other business centers in and around Europe. According to Dr. Andrew Zammit, among the main advantages of Malta jurisdiction one can name:

• The availability of various levels of tax refunds, based on Malta’s full imputation system, couples with a network of double taxation treaties with over 40 countries, materially reduces the tax liability in the hands of shareholders;
• The availability of participation exemptions in certain circumstances can be very attractive;
  No Maltese withholding tax is applied on the distribution of dividends to shareholders of Maltese companies;
• The possibility of re-domiciling or continuing companies into and out of Malta, provides the option of preserving the community of a company’s legacy, reputation and financial track-record;
• Accessible and forward-looking regulators having a pragmatic and pro-business approach;
• The possibility of formally ‘passporting’ certain financial services activities into other EU jurisdictions, making Malta an ideal European base for business;
• A banking sector, composed of a combination of solid Maltese banks, provides high standards of service with the support of the latest technologies;
• An educated, English-speaking workforce and dedicated, specialized professionals at competitive rates;
• Presence of all major audit companies;
• A convenient Central European Time zone.

Online Gambling Regulations

Remote gambling in Malta is regulated by the Remote Gaming Regulations, 2004 issued under the Lotteries and Other Games Act 2001 (LOGA). The regulatory body in Malta supervising online gambling operations is the Lotteries and Gaming Authority (LGA).
In order to provide remote gaming services from Malta, one needs to obtain a license covering the specific gaming operations. Licensees are expected to operate in compliance with the LOGA and the Regulations, as well as the anti-money laundering legislation, electronic commerce legislation and many other relevant law.

There are four classes available, for which a license can be obtained to operate under the Maltese jurisdiction as follows:

• Class 1: For operators managing their own risk on repetitive games. This class covers casino-type games.
• Class 2: For operators managing their own risk on events based on a sportsbook. Under this class of licenses operators can offer fixed odds betting.
• Class 3: For operators taking a commission from promoting and/or betting games. This class includes P2P games, poker networks, betting exchange and online lotteries.
• Class 4: To host and manage remote gaming operators, excluding the license himself. This is intended for software vendors who want to provide management and hosting facilities on their gambling platform.

Licenses of all classes are issues for the period of five years and may be renewed thereafter for periods of five years. A basic tenet of the Regulations is the requirement the core part of the online gaming must be physically located in Malta.

Any gaming offered by the licensee should only be conducted within an approved control gaming system. When the LGA approves such gaming operation, the operator is given a six months provision license. During these six months operation must be certified for compliance to the satisfaction of the LGA. Wherever a random number generator is used, the conclusion report of an independent testing entity must also be submitted to the Authority.

On successful completion of the certification process, the LGA issues a full five year license. Once a full license is issued, any significant changes to the control and/or gaming systems require the LGA approval. The LGA may require the licensee to undergo a further review as and when it deems necessary.

Every licensee must have at least one key official whose role is to personally supervise the day-to-day operations of the licensee and to ensure the licensee complies with all the applicable laws, regulations, license conditions and any directives issued by the LGA. The key official must be a director of the licensee’s company and be resident in Malta.

Fees and Taxation

The gaming tax is differentiated in accordance to the type of gaming operation as follows:

Class 1: €4,660 per month for the six months, €7,000 per month subsequent month.
Class 1 on Class 4: The gaming tax payable by Class 1 licensee operating on a Class 4 platform is €1,165 per month.
Class 2: Fixed odds betting: 0.5% on the gross amount of bets accepted.
Class 3: 5% on real income.
Class 4: The gaming tax payable by a hosting platform is no tax for the first 6 months of operation, €2,330 per month for the subsequent 6 months and €4,660 per subsequent month for the entire duration of the license.
Tax Capping: The maximum gaming tax payable annually by one licensee in respect of any license is €466,000.
Application fee: The application fee for a new license of any class is €2,330. This fee is payable together with the submission of an application for the license. The fee for the license renewal is €1,165.
Annual fee: The annual fee for any class of license is €7,000.

Online Gambling License Application Procedure

The LGA applies a rigorous process prior to granting a remote gambling license. The application process is to obtain a license is divided into three stages:

Stage 1. Application Forms Submission and Business Plan Review
To start the process of obtaining an online gambling license the applicant must fill in an Application for remote Gambling License (Form LGA/51/2004–1) and a personal Declaration form (Form LGA/51/2004–2) for each person with 5% or more interest, for all directors and the Chief Executive Officer. The same applies in the case that one, or more of the parties, is another business entity.

The following information and/or documents must be submitted if applicable:

1. For each qualifying shareholder appearing on the ownership structure form, directors and CEO:

• A true copy of birth certificate;
• A true copy of 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 license if issued in other countries;
• A document issued by a legal entity stating that all documentation submitted is true copy of the original.

2. A copy of the business-plan that includes the following:

• Objectives of the operation;
• The proposed company structure including business functions and human resources to be employed;
• The nature of games to be offered;
• The technologies to be used to conduct remote gambling;
• An overview of the application software to be used as gaming and control systems;
• A three-year business plan:

  — Marketing and sales plan;
  — Forecast balance sheets;
  — A financial plan showing sources of finance, distinguishing between shareholder funds and other funds.

Normally the first stage takes 4 weeks.

Stage 2. Business and Technical Ability Assessment
On successful conclusion of the first stage, the GLA informs the applicant to proceed to the next stage. A Guidance Checklist of documents to be submitted at this stage may be downloaded from www. Lga.org.mt. During the second stage the business and technical aspect of the proposed remote gaming operation is assessed by the Compliance Department. The rules and procedures of the games are forwarded to the Inspectorate Department for review. On successful completion of the review, the applicant is issued with a provisional license in the form of a Letter of Intent (LOI).
The second stage usually takes 6–8 weeks.

Stage 3. Compliance System Review
The LOI is a provisional license for a period of 6 months. During such period, the licensee is expected to establish business in Malta, conclude all agreements and undergo a System Review of its operation. On successful completion of such review, a license for a period of five years is issued by the LGA.

A normal compliance certification procedure takes 4–6 weeks to be carried out.