How to get a Gambling License in Malta?

Why choose the Maltese licence?

Obtaining a Maltese gambling license is often seen as obligatory for any gambling operator who wishes to operate in the European Union. This is because the Maltese license comes with some benefits that most other licenses simply cannot compete with.

Good Malta Licensed options to gamble at:

Benefits

The Maltese gambling license is widely considered to be one of the most respected licences in the world. Holding this license is a vote of confidence towards customers that shows that the operator is transparent, fair, and honest, and operates in compliance with the rules and regulations set by the European Union. If an operator has been granted the Malta gambling license, it is assumed and understood they have satisfied several intensive, tough, and thorough checks and balances.

Online games of chance have been a large part of the Maltese economy for many years now. The online gambling industry currently makes up around 12 per cent of Malta´s yearly gross national product on average, though this number is still slowly growing. The large amount of online gaming companies has led to the Maltese workforce growing and developing along with it. Malta has a large talent pool of both domestic and foreign experts when it comes to the digital development and management of online gambling websites. These experts are often versed in numerous European languages, partly owing to the sizeable percentage of immigrants who make their way to Malta specifically to find work in the online gambling industry. This allows the companies to provide their services across the European Union more easily. Malta is not only home to the necessary knowledge, but also many of the ancillary services needed to manage an online gambling company, such as resources needed for the development and management of software, hardware, marketing, and customer and company data. The country boasts remarkably high internet coverage as well, with high-capacity networks all over the island. The Maltese government is currently working on expanding their new 5g networks through government-subsidized internet providers., around half of the main island currently has access to high-speed internet provided by cutting-edge cable-fibre connections. with around half of the main island currently being covered by high-speed internet provided by cable-fibre connections.

Malta also enjoys the status of one of the most attractive tax havens in the entirety of Europe. A study published in the 2017-issue of the Scientific report even placed Malta among the top ten countries that could be dubbed “sink offshore financial centres”. These countries have earned this name by the fact that they can attract and retain any profits when they are diverted from one country to a different country relatively easily.

Obtained status

The Malta Gaming Authority (MGA) is well-known to be a reputable and strict organization. The MGA was first founded in 2001 with the express goal of regulating the gambling sectors falling under its authority. They do this by ensuring both transparency and legality through their regulation, with the main goal being to prevent any customer from coming to harm, financial or otherwise, through unsafe practices or an unsafe environment.

One of the reasons the MGA is so trusted is that Malta was one of the very first countries to establish any sort of regulation pertaining to online gambling. Their first laws were established back in 2004 when online gambling was still truly in its infancy. Even mainstream internet usage had not really become normalized internationally at the time. The most recent act as of this moment is The Gaming Act which came into force in 2018. This act was meant to consolidate all the relevant gambling activities in a single act of law, as they had previously been dispersed over numerous different laws and regulations due to the different developments over the years. The Gaming Act of 2018 would bring all these activities back to the same segment of the law.

Other factors

Malta has numerous additional factors aside from the licensing itself that make it an attractive location for gaming operators. Malta consistently scores within the top ten among European countries when it comes to technological and digital development. In the 2022 Digital Economy and Society Index (DESI), Malta ranked sixth out of all 27 European Member states. Malta was one of the first countries to anticipate the development of blockchain technology, with its first regulatory framework being proposed in 2018. Part of this early adaptation presumably has to do with the advent of casinos that accept digital currencies such as bitcoin, as these currencies make use of blockchain development. These developments have attracted many software development experts from all over Europe to the country as well. The prospect of meaningful employment has attracted a large number of qualified professionals, making Malta the perfect iGaming environment. Employment opportunities directly related to the gaming industry accounted for over 7000 full-time jobs in 2019, and when accounting for all jobs related to the iGaming industry the number rises to 11,000 — over 4.5% of the country’s workforce.

Good Malta Licensed options to gamble at:

Why not choose a different licensor?

Two other countries provide a gambling license of comparable cost and quality to the Maltese one. These are the licences provided by Curacao and Gibraltar.

Curacao

The Curacao license may be attractive to some gambling providers, as it does come with many benefits compared to other licenses.

• The application process cost far less than in most other European countries, which can make it very attractive to start-ups with a smaller budget, or any other company that wishes to save on costs in the initial application process;

• The application process is quite simple and fast;

• The Curacaoan license is all-inclusive. Once an operator has obtained the license, that will be the only license they need to operate their company. There is no subdivision between different activities, contrary to licenses like the Maltese one;

• The Curacaoan license provides a label of licensing from a Master license holder. This can be shown to customers to verify that the company is fully licensed;

• The Curacaoan license allows betting through a sportsbook platform. Most other licenses do not cover both casino-games as well as sportsbook betting;

• In contrast to Malta, it is not necessary for a significant portion of the company to be located in Curacao.

These factors might make it seem like there are no downsides to the Curacao license, but there are several indeed.

• Due to the lower costs and fewer requirements of this license, it is often considered to be less reputable than the Maltese license;

• The Curacao gaming commission takes no part in any disputes between players and providers. This means players receive very little support if they ever feel they are treated unfairly and will have to provide their own legal counsel if they wish to do anything about this treatment;

• Most Curacaoan licenses are sub-licenses. This means they operate under the authority of the holder of a Master-licence. As such, they cannot sub-license themselves. This makes it unsuitable for large companies who wish to expand to numerous other countries aside from the original one;

• The process of opening a bank account for an online gambling provider licensed in Curacao is quite complex, as banks will require more time for the verification process.

Gibraltar

Another popular gambling licence is the one provided by Gibraltar. These licences are granted by the Licencing Authority, which is a specific department of the HM Government of Gibraltar. It controls, regulates, and manages the legal and administrative aspects of licensing a gaming company. The gaming industry made up around 40 per cent of Gibraltar’s gross national product, which was even more than that of Malta. Gibraltar focuses mostly on companies originating in the United Kingdom, owing to its close relationship due to Gibraltar’s history as a British colony. Gibraltar has recently lost some of its advantages concerning the licensing of gambling activities there. The United Kingdom made amendments to the Licensing and Advertising Act in 2014 which said that all bookmakers in Gibraltar and other British territories were required to pay a tax of 15 per cent on all profits received from UK customers. Malta has a similar ruling for all Europese citizens, but their rate is only 5 per cent.

The largest and most significant difference between Malta and Gibraltar is the fact that Gibraltar is a British territory. This is important due to the developments concerning Brexit, with England deciding to leave the European Union. This brings extra uncertainty to the status of the Gibraltese licence, as one of its main advantages was the fact that it allowed the operators to market their services to several countries in Europe. This uncertainty has persuaded many operators to apply for a Maltese licence instead.

The Maltese licence offers stability, reputability, and financial benefits, especially for larger companies. This has made it the most popular choice in licencing for gambling companies throughout Europe. The licence is most suitable for companies who have already established themselves, as the licence carries considerably more costs than most others. Companies will most often operate in their countries of origin for multiple years, before spreading out throughout Europe and applying for the Maltese licence once they have expanded their company sufficiently to make this financially viable.

The licensing process

The Gaming Act of 2018 overhauled the licensing process for all gambling providers. There used to be a system where providers would have to apply for multiple licences. These licences would all apply to different activities. The current system instead enables the license holder to add or remove any different activities at their own discretion, so long as there are no regulations from the MGA that prohibit them from doing so.

Types of licences

There are two types of licences available for providers. The B2C and B2B licences.

B2C licences cover the making of a game where people take part as players, where there is also an operator present that offers gaming services to be consumed by individuals.

The B2B licences cover what is referred to as “critical gaming supplies”. This refers to supplies that are essential in deciding the result of games that are part of a gaming service, or an irreplaceable part when processing essential regulatory data.

Division of recognized games

The MGA recognizes four distinct types of gambling games. There are the following:

• Type 1: Games of chance played against the house with the outcome determined by a random number generator. This includes examples such as slots, where there is no human component present that could decide the outcome aside from the player themselves;
• Type 2: Games of chance played against the house through a Matchbook. This includes fixed-odds betting on sports for example;
• Type 3: Games where players compete against one another. This includes games like poker and bingo;
• Type 4: Games of controlled skill. This is by far the smallest type, and as such it consists only of fantasy sports betting, like fantasy football. The MGA does allow any future games of a similar nature to be categorized under type 4 when these games present themselves.

Applying for a licence

The process of applying for a Maltese gaming license is by no means a simple one. The process can be divided into four distinct parts.

1. First there is the fitness and properness test. The MGA uses this test to assess the risk and likelihood of criminal activities such as fraud or money laundering, according to their due diligence as has been made mandatory by the European Union. Part of this process will usually be a face-to-face interview with the applicant, as well as a full evaluation of each individual´s career, qualifications, and experienced. The applicants will also be screened against the criminal records of both national as well as international law agencies;

2. The technical test. This test is to ensure that both the hardware and software the provider uses are fully compliant with current standards. As such, they must be up to date, secure and in good working order with little to no risk of malfunctions;

3. The administrative test. This test is to ensure the business is legitimate and viable from a financial perspective. The provider will have to show a business plan, a marketing plan, an advertising plan, etc. Any plan that shows that the business is commercially viable with a long-term strategy will have to be shown;

4. The regulatory test. This test is to ensure that the provider has followed all the necessary rules and regulations from a legal perspective.

Aside from these rules set by the MGA, the licenses are beholden to several more laws, both domestic as well as European.

• A person can only apply for a gaming license with the Malta Gaming Authority if they are a citizen of the European Union or the European Economic Area. If they are not citizens, they are not eligible to apply for a license;

• Any and all financial statements of the company that provides the gambling license must be reported in accordance with the International Financial Reporting Standards;

• Any establishment in possession of a gaming license, both remote as well as land-based, is required to have a key number of persons who hold a personal license. This license marks them as `key function holders. The establishment is not allowed to operate if these licenses are not in possession of the assigned persons;

• Key function holders may hold more than one key function, except for when these functions may provide a possible conflict of interest. For example, a person with a key function in security may not have a key function in data protection as well;

• All remote gambling operators must have an appointed alternative dispute resolution entity. This is to ensure customers have somewhere to go with their complaints if they cannot be resolved with the operator themselves;

• All remote gambling operators must have a forensic live copy of their company databases located in Malta.

Consequences of unlicenced activities

Some operators might decide that an online gambling licence is an unnecessary expense for their new company. There are very good reasons why a licence is required, however. Some of the following:

• Most game developers will refuse to cooperate with an unlicensed operator at all. Payment service providers are even more strict in this, as processing money is very heavily regulated. Unlicensed casinos thus have very little to offer in the way of games and useable payment methods.

• Unlicensed casinos almost never develop a positive reputation. This negative reputation can spread quickly among players, as they will often warn one another of untrustworthy providers on online forums.

• Unlicensed casinos can receive large fines depending on where they provide their services. Fines in Malta for first-time offenders can range from 10.000 to 500.000 euros.

• Casinos can be shut down if they are not compliant with the laws and regulations of the country where they provide their services.

• In the worst-case scenario, the gambling provider could be sentenced to spending time in jail. Many countries punish unlicensed providers with sentences of jail time for up to two years.

Operating an unlicensed casino may thus technically be an option, but it is certainly not recommended.