Joseph Borg has recently had an article published in eGaming Review Issue 123 about why Malta provides an ideal regulatory environment for live casinos.
Major casino providers are relocating their live casino operations to Malta. Some of them are doing so partially, others have decided to relocate their entire operation to the Mediterranean island. This shouldn’t come as a surprise since Malta is one of the largest and most reputable online gaming jurisdictions worldwide and one of the first to start licensing live casinos.
What made the Maltese jurisdiction more attractive for live casinos in recent months is the ruling given by the Lotteries and Gaming Authority (LGA) that by merely having the live studios in Malta and providing a live feed to third-party B2C gaming operators is not tantamount to hosting and managing gaming operators.
Why is this important? By way of background, Maltese gaming law states that a B2B gaming software platform provider licenced in Malta shall also pay a fixed fee monthly tax, for every B2C operator that it is hosting and managing, which is not in possession of the relevant Malta licence but in possession of an equivalent licence within the EEA or an approved jurisdiction. Therefore, if a B2B Malta licensed platform hosts and manages 30 operators on its platform, 20 of which are licensed in Malta and another 10 licensed in Gibraltar, Italy and Spain respectively, the B2B licensee is required to pay tens of thousands of tax per year in order to be able to host and manage these non-Malta licensed B2C operators.
The question of whether merely having a studio in Malta from which a live casino provider transmits a live feed would in actual fact be tantamount to hosting and managing, was never answered clearly by the LGA which over the years took a ‘wait and see’ approach. This has created uncertainty in licensees and advisers alike.
A few months ago, the LGA ruled that by merely providing a live feed of what is taking place on the tables does not constitute hosting and managing of remote gaming. In fact, the Remote Gaming Regulations define gaming as “an agreement, scheme, or arrangement between two or more parties to play together at a game of chance in which a prize or reward consisting of money or some other item of value, worth, advantage, or opportunity is offered or can be won and become the property of the winner under defined conditions established for the purpose of the game”. Furthermore, remote gaming is defined as “any form of gaming by means of distance communications”.
Therefore, the mere fact that the live studio is generating the result of the game, is not enough to be considered as the hosting and managing of the remote gaming operations of the business to consumer service providers on its platform.
The LGA went further by stating that the hosting and managing is related solely to the servers on which the gaming transactions are actually happening and being recorded. The broadcasting part can be sent to various operators – irrespective of where they are licensed – it all depends on the gaming part of the business. Therefore, the tax is due only if the servers on which the transaction database is being hosted fall under the remit of the Malta licence.
This ruling is also extremely positive since now live casino feed providers can provide their live feed to B2C operators that are licensed outside of the EEA. Furthermore this ruling extends also to other online gaming software platform providers licensed in Malta, in particular to those casino software platforms that are licensed in multiple jurisdictions and which use the same RNG and provide the same games to B2C operators licensed in different jurisdictions.
This was a logical stand taken by the LGA since the tax provisions in Maltese gaming legislation were never intended to impose taxation on platforms for transactions already being taxed by other jurisdictions. The intention was to tax platforms that wished to use a Malta licence to provide platform services to other operators licensed in other EEA or approved jurisdictions, because they do not possess a licence from such other EEA or approved jurisdiction.
Furthermore, this is a step in the right direction to attract further investment towards Malta. It is now clear that it benefits operators wishing to set up a studio in Malta and provide a live feed from such studio to other B2C operators without the risk of incurring massive taxes. It is important to note however, that a licence is still required in order to host roulette tables, since under Malta gaming laws they are considered gaming devices and therefore cannot be hosted in premises without an authorisation by the LGA.