Salient Regulatory Requirements for Carrying Remote Gaming Operations
All online gaming/betting operators must comply with a number of requirements. Generally, companies that are issued a license are expected to operate within the regulations in force at the time, including regulations under the LOGA, anti-money laundering, electronic commerce legislation and other relevant laws.
Location of the Online Gaming System
A basic underlying requirement for operating under a license in Malta is to have the essential part of the online gaming system physically located in Malta. This means that the servers on which gaming transactions take place and ancillary information is stored must be situated in Malta.
No Statutory Restriction on Offering Services in Specific Jurisdictions
The remote gaming license issued by the Gaming Authority is a license to operate in cyberspace. Accordingly, neither the license nor the Remote Gaming Regulations contain any provision restricting offering of remote gaming/betting services to certain jurisdictions or imposing an obligation on remote gaming operators to refrain from taking bets / stakes from particular jurisdiction.
Licensing of Employees
Employees of the licensee must be approved by the Gaming Authority. Every company-licensee must appoint one of its directors as the key official, whose responsibilities include personal supervision of the licensee's operations and ensuring compliance with the law, which stipulates that the key official must be a director of the company-licensee, must be resident in Malta and must be approved by the Gaming Authority. A licensee may employ foreign employees to work in its online gaming office in Malta, subject to obtaining a permit to work in Malta, when applicable.
Player Protection
The law establishes the minimum information that the licensee must make available to players. Such information includes the rules relating to the authorized games offered by the licensee, as well as the relative processing fees, if any, that may be incurred by the player. Moreover, the homepage of the licensee's Web site should state the details of the licensee and that it is licensed in Malta and include a hyperlink to the site of the Gaming Authority.
It is compulsory to register a player prior to allowing him to participate in an authorized game. Information that the licensee obtains from the player should include the player's identity, age and place of residence. It is prohibited to provide any loan or otherwise provide or allow any credit to any person for enabling him to participate in any of the games that an operator offers. As was already mentioned, licensees are prohibited from offering their operations to Maltese residents.
The new regulations place certain restrictions on dealing with players' money and prescribe that players' money must be kept separately from the funds of the licensee in a clients' account held with a credit institution approved by the authority. The licensee must ensure that funds in the clients’ account, including any funds in transit or in the process of clearance, are at least equal to the aggregate of the amount standing to the credit of players' accounts held by the licensee. The licensee should have a possibility for a player to place a limit on the amount that player may wager over a specified period of time or on the amount of losses that the player may incur within a specified period of time. A licensee must be diligent with regards to the means of players' payments. In particular, necessary procedures must be in place for ascertaining players’ credit card details and payment patterns. This also works to protect the operator from fraud.
Anti-Money Laundering Provisions
It has always been a regulatory goal to ensure a safe, stable and serious regulatory environment to both operators and players alike, to ensure that no money laundering occurs with regard to gaming activities and to provide regulatory safeguards to minimize operators’ exposure to clients fraud by establishing strict regulatory monitoring and compliance audits. The law imposes an obligation on any person to inform the supervisory authorities in case he suspects that a transaction is linked to money laundering. This obligation exists both under the Prevention of Money Laundering Act in general and under the Electronic Commerce Act, imposed on information society service providers if they suspect illicit transaction by recipients of their service.
A complete accounting trail should always be available, and a gaming operator must provide the Authority, on a regular basis, with information showing a true and faithful situation of the business. Inspectors appointed by the authority may ask an operator to provide them with information or gaming devices for the purposes of investigation.
Taxation of Remote Gaming Operations
Taxation of an online betting operation in Malta has two aspects:
Corporate Tax
Corporate tax for companies in Malta is 35 percent of profits. If an ITC is used as the corporate vehicle for an online gaming operation from Malta, it is also subject to a corporate tax of 35 percent on profits, just like any other Maltese company. However, in case of an ITC, the shareholders of ITC who are not resident in Malta benefit from a substantial refund of the tax paid by the company, whereby on distribution of dividends to non-resident shareholders, such shareholders have the right to claim tax refunds amounting in aggregate to 30.83 percent of the 35 percent tax paid by the company. This means that the effective rate of tax for an ITC is 4.17 percent on profit.
Gaming Tax
Under the new regulations, the gaming tax is differentiated according to the type of license as follows:
- On casino-type games: Lm2,000 (4,600 euro) per month during the first six months after issue of the license and subsequently Lm3,000 (6,900 euro) per month for the entire duration of the license period. However, in cases in which a casino operator (under Class a 1 license) operates from the host platform (under a Class 4 license), the following taxation rules apply:
- The gaming tax payable by casino operator is Lm500 (1,150 euro) per month.
- The gaming tax payable by the host platform is as follows:
- no tax the first six months of operation;
- Lm1,000 (2,300 euro) per month for the subsequent six months; and
- subsequently Lm2,000 (4,600 euro) per month for the entire duration of the license.
- On betting: 0.5 percent on the gross amount of bets accepted.
- On betting exchanges: 10 percent of the gross earnings (commission).
- On pool betting: 0.5 percent on the aggregate of stakes paid.
- Tax capping:
a. The maximum gaming tax payable annually by one licensee in respect of any one license is Lm200,000 (460,000 euro).
b. However, in cases in which 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 licensees in this ‘cluster’ together. In other words, 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 Lm200,000.
Click here to view a copy of Malta's Remote Gaming Regulations 2004.