Winter 2011

Following in the steps of Italy and France, other jurisdictions within the European Union and EEA are gearing up to establish a regulatory regime for online gaming, introducing licensing requirements for B2C providers wishing to capture (or continue to capture) consumers in the newly-regulated market. As many of prospective licensees in these emerging regulated markets are already established in Malta, they often wish to be able to service newly regulated markets from Malta to reduce operating complexity and overall costs, as well as to improve return on investment into infrastructure and other resources.

Thankfully, overall, the regulatory frameworks being put in place in these emerging regulated markets allow, to a large extent, operations from a base in another EU Member State, so from this perspective, Malta-based operators should have no problem. The question that I would like to focus on is whether such an arrangement is allowed under Maltese law. In other words, is it legal for an operator holding a Malta licence to run from Malta, using its Malta-based infrastructure, operations subject to a regulatory licence of another jurisdiction?

In terms of the Remote Gaming Regulations (‘RGR’), a game is authorised to be offered in or from Malta when such game is ‘authorised by the [Lotteries and Gaming] Authority to be operated by a licensee in terms of its licence…’. Regulation 3 of the RGR states: ‘no person shall operate or promote or sell or abet remote gaming in or from Malta unless such person is in possession of a valid licence of the relevant class, as set down in the First Schedule to these regulations, issued by the Authority….’ So, it appears that if a company wishes to operate ‘in or from Malta’ – then it can only be done under a licence issued by the LGA and, therefore, operations that are not covered by a Malta licence are not allowed from Malta, even if such operations are authorized by a competent body in another jurisdiction.

While the RGR is a specific law regulating online gaming, it is only a subsidiary legislation issued under the Lotteries and Other Games Act (‘the Act’). Therefore, before we can reach a conclusion, the provisions of the Act must also be examined. Article 5 of the Act (as amended  by Legal Notice 168/2008) provides: ‘Any game which is not an authorised game … or which is not authorised to be operated under any law enacted by a member state of the European Union or a member state of the European Economic Area or by any other jurisdiction or territory approved by the Authority … is prohibited from being operated, promoted or sold by any person in Malta: Provided that the Authority may impose such proportionate requirements and conditions, in conformity with European Union law, as it may deem necessary … in respect of games authorised under any law enacted by a member state of the European Union or a member state of the European Economic Area or any other jurisdiction or territory approved by the Authority…’ It transpires from the above that, in general, a game is deemed as being authorised in Malta if it is either licensed in Malta by the LGA or licensed in any EU Member State/ EEA jurisdiction / other approved jurisdiction. Consequently, a game which is unlicensed or licensed by a jurisdiction which is outside of EU/EEA and not approved by the LGA is not allowed to be offered or promoted by any person in Malta, but a game licensed by an EU/EEA/other approved jurisdiction (there are none at the moment) is not prohibited from being operated or promoted from Malta.

Since the Act is the primary legislation under which the Regulations are issued, the authorisation under the Regulations cannot circumvent or go contrary to the scope of the Act. Moreover, Art 5 as it reads now (as reproduced above) has been promulgated in 2008, while the RGR has been on the statute book since 2004; and lex posterior derogat priori.

Prior to the implementation of amendments to the Act, the LGA’s position was a clear prohibition of all foreign-licensed games running Malta. Notwithstanding the amendments, LGA is still hesitant to pronounce a position change on the matter. While some discussions are in progress to establish ‘proportionate requirements and conditions’  with respect to EU-licensed games to be run from Malta, the LGA implicitly maintains that its position can only change upon the promulgation of such ‘proportionate requirements and conditions’. It is submitted, however, that whilst the imposition of such requirements and conditions is clearly the Authority’s right, it is not a pre-condition for the legality of operation from Malta of EU-licensed games.

Any other interpretation of the Malta law would render it to be likely in breach of the European Union law, on the basis of an unjustifiable / disproportionate / discriminatory   restriction of freedom enshrined in Article 56 TFEU.

The conclusion, therefore, appears to be that the law should be interpreted as allowing a Malta licensee to offer and operate, on its Malta-based infrastructure, games that are licensed by a competent authority of an EU / EEA jurisdiction.

 

Author:

Olga Finkel(olga.finkel@whpartners.eu)

First Published in:

European Gaming Lawyer, Winter 2011

Link:

http://www.gaminglawmasters.com/magazines/european/EuroGameLawWinter2011.pdf