Gambling Reform in Malta
After conducting a series of consultations with the public and interested persons, technical studies and assessments of the financial and economic consequences, the Government of Malta intends to carry out a full reform of the current legislative framework regulating gaming activities.
The proposed reform implies the abolition of all current legislation regulating gaming, and the introduction of a single law - the Gaming Act. The law will enable the competent minister to publish the rules and also give authority to the relevant regulatory body (Malta Gaming Authority - hereinafter “MGA”) to publish the Directives and other regulations if necessary, thereby ensuring timely and flexible interventions, especially with regard to technical specifications and processes.
Within the framework of optimizing the supervision and modernization of the existing gaming infrastructure, the main state priority in the gambling sphere will be the flexibility of the regulator in the decision-making process and the reduction of the unnecessary regulatory burden, as well as the simultaneous strengthening of supervision in the spheres of the highest risk.
One of the main changes in the course of the reform is the replacement of the current cumbersome system with many types of licenses for a system consisting of only two types of licenses: “business-to-consumer” (B2C) and “business-to-business” (B2B), which will cover different types of activities on several distribution channels. It is expected that this simplification in the licensing system will allow MGA to allocate more of its resources for continuous monitoring of the licensor’s activities for compliance with requirements.
Other changes include:
- acceptance of the objective instead of an excessively prescriptive normative approach which will ensure the development of innovations;
- expansion of the powers of MGA in accordance with changes in the sphere of combating money laundering and financing of terrorism;
- segmentation of officials on key functions within the licensed activities and ensuring the competence of such a person through certification, relevant experience and continuous professional development;
- strengthening the protection of players by formalizing the intermediary role of the MGA player support department, assigning of allocation of players' funds and transfer to a single database;
- introduction of new and more effective criminal and administrative proceedings that allow regulated organizations and individuals to appeal against decisions of MGA in the Chamber on reconsideration of decisions of administrative bodies through a judicial procedure based on the principles of natural law, as well as the introduction of distinction between administrative and criminal offenses;
- introduction of administration system for the operators experiencing difficulties, as well as facilitating the closure of gambling projects (if necessary) to protect workplaces and players’ funds;
- transition to automated reporting which will promote the observance of regulatory obligations and increase of the supervision of authorized bodies;
- strengthening the role of MGA in combating manipulation in sports competitions by introducing new obligations for the operators to monitor and identify suspicious sports bets in accordance with the actions of the National Anti-Corruption Committee, in which MGA also actively participates;
- extension of the license validity period from 5 to 10 years, provided that certain games offered within the framework of state concession are used;
- rationalization of taxation by combining the two main levels into one stream;
- exemption of B2B operators from gambling tax (which makes up to 5% of gambling profits from the players in Malta), which will increase Malta's competitiveness as a center for such operators.
It is also interesting to know the attitude of MGA to the use of cryptocurrencies in gambling. Realizing the need to keep up with the times, the body is committed to allow its licensees to use cryptocurrency in the near future. However, remembering about the risks, MGA has conducted an appropriate study to develop adequate legal frameworks and restrictions, including the appropriate requirements of the 4th EU directive on prevention of money-laundering, which will also be amended on the introduction of provisions on cryptocurrencies in the near future. The main results of the study will be submitted for public discussion, which will be held in the fourth quarter of this year, according to which results the necessary requirements and restrictions will be established.
At this stage, MGA is completing the Gaming Act and the relevant by-laws in accordance with the results of the conducted studies and public consultations. Further, this package of legislation will be submitted to the Government of Malta to initiate a parliamentary process for its approval. In addition, MGA promises to ensure an adequate transition period and to supplement the legislation with the provisions providing a smooth transition to the new regulation rules after the reform enters into force.