Samuel Gauci, Senior Associate at WH Partners speaks to EGR about the regulation of fantasy sports games and skill games in Malta

Malta is in the process of reviewing and taking its legal framework to the next level following the success of the last ten years. This overhaul is being done to ensure that the legislative framework available to operators in Malta caters for the needs of this innovative and fast paced industry while retaining the key objectives of keeping the industry free from crime, ensuring the fairness of games and the protection of players at the centre of the legal set-up.

While work is progressing on the legal overhaul, Malta has already taken positive steps to regulate skill games with prize commencing with the introduction of an exemption for fantasy sports operators which will be followed with specifc regulations for skill games.

 

Exemption for fantasy sports operators

With the introduction of the Fantasy Sports (Exemption) Regulations (FSER) any person who offers a fantasy sports game which falls within the defnition as described below may, as from 1 August 2016, legally do so in and from Malta without the requirement of a licence. The defining elements of the game are:


1. It must be a contest played for money or money’s worth


2. The winning outcome is predominantly determined through the skill or knowledge of the player


3. The result is determined by the accumulation of statistical results of the performance of a number of individuals in sporting events.

 

Any flavour of sports betting does not fall within this definition and hence still requires licensing from the Malta Gaming Authority (MGA) under the relevant regime. Fantasy sports businesses also have the option of obtaining the MGA’s seal of recognition of the fantasy sports games under the FSER. This can be achieved by means of a voluntary notifcation procedure wherein the operator may opt to be ofcially recognised by the MGA upon compliance with certain requirements.

The FSER exemption is a temporary arrangement which will be replaced by a new regulatory framework, entitled the Skill Games Regulations (SGR), which was notifed to the European Commission and should come into force towards the end of 2016.

 

Regulation of skill games with prize

Businesses operating in the sphere of skill games with prize, including fantasy sports, offered by means of distance communication will fnd that the SGR are drafted in a manner which is established on a riskbased approach to licensing compatible with the nature of such games. A licence under the SGR will enable a body corporate to offer skill games with prize in, and, from Malta, in a regulated manner which gives players enjoying such services the peace of mind that they are playing with a regulated and serious entity.

The licensing process shall ensure that the people involved in the operation are untainted with illegality and have the reputation and expertise to ensure that the business is operated successfully and in a compliant manner. Furthermore, the MGA shall also review and establish whether the proposed games are skill games or games of chance taking into consideration certain characteristics of the game. An operator needs to ensure that player protection mechanisms are implemented to safeguard all consumers and must comply with the minimum requirements established in the SGR, which include segregation of players’ funds, possibility of player exclusions and a player complaint system. A key ofcial must be appointed, whose regulatory role will be to personally supervise and have access to the licensed operation, ensure the licensee’s compliance and act as a liaison between the licensee and the MGA. A skill games licence is granted for a term of five years which may be subsequently renewed.

 

Innovation and incentives

The scope of gaming legislation in Malta has always been to be technology neutral in order to give operators the space they require to be innovative and differentiate themselves from other operators. Although we have not witnessed signifcant innovation to the games available to players, the SGR should have a positive impact on this situation whereby operators may now also dedicate their resources to creating new, licensable skill games which will give players a varied gaming experience. Innovation is not only a driving factor for gaming legislation in Malta but is also promoted by means of various incentives and schemes offered by Malta Enterprise to assist businesses with fnancing new ideas.

Such incentives and schemes come in the form of grants and tax rebates. These continue to add value to establishing a business in Malta which is recognised as a jurisdiction that gives businesses, both large and small, the right environment to maximise their resources for the establishment and growth of the business. Malta offers start-ups the required atmosphere and location to bring their innovative ideas to life. The incentives and schemes assist new businesses to get their ideas off the ground and they also fnd at their disposal experienced staff and the range of services necessary for the set-up and sustainability of the business. Businesses already established in Malta may also qualify for the incentives and schemes offered by Malta Enterprise.

They may also, with the imminent introduction of the SGR, already dedicate resources to innovate and diversify their portfolio of games by creating skill games with prize to give them the edge they require in this industry by making their websites and services more appealing to different types of players, as well as more intriguing to customers who are accustomed to the product that is currently being offered.

 

Future positioning of Malta and the legislative structure

The FSER and SGR continue to confrm Malta’s position as a reputable jurisdiction that understands and adapts to the regulatory framework and environment required by the gaming industry and the different facets it adopts. Furthermore, Malta already has the necessary infrastructure to service and host this growing innovative gaming industry of skill games given the experience and knowledge garnered throughout the last decade. Over and above these characteristics, the incentives available in Malta further contribute to the growth of the gaming industry and to the investment in innovation.

With the introduction of these regulations, skill games operators, including fantasy sports operators, have a serious jurisdiction and regulator who will regulate their specifc needs in view of the divergences between such operations and that of operators of games of chance. The regulations are also ensuring the protection of players which give the licensed operators a stamp of approval of compliance and professionalism, the end result being that players are given a secure environment to enjoy these games. By means of these regulations the legislator and the MGA are also giving an indication of the legislative approach which is to be expected in the legislative overhaul whereby a more risk-based approach will be adopted and implemented allowing for innovation. However, based on and ensuring seriousness and compliance with fundamental requirements.

 

For more information contact Samuel Gauci or call 20925100