MGA issues a Guidance Document on the Impact of the United Kingdom’s Exit from the European Union

NEWS

14 Oct 2019

The Malta Gaming Authority (“MGA”) has published a guidance document (“Guidelines”) with respect to the impact of the United Kingdom’s (“UK”) exit from the European Union (“EU”).

The Guidelines, which provide guidance to regulatory matters falling solely within the MGA’s remit, give us an indication of the potential impact on the gaming industry operating in or from Malta. Moreover, guidance on applicable transitory measures is provided to ensure minimal impact on regulatory efficiency and the ongoing of business activity.

(i)   As things currently stand, persons holding a licence must be established within the European Economic Area (“EEA”), as provided for by Regulation 10 of the Gaming Authorisations Regulations (S.L. 583.05) (the “Gaming Regulations”). Following Brexit, the UK will no longer form part of the EEA; as a result, any person or entity established in the UK shall no longer satisfy this requirement. Thus, measures are to be adopted for this criterion to be adhered to. Starting effectively from when the “EU acquis is no longer applicable” to the UK (the “Effective Date”), a transitory period of 12 months is to be applicable, for any inconsistencies to be regularised by affected persons.

(ii)  Regulation 22 of the Gaming Regulations, requires that entities providing a gaming service, or a critical gaming supply in or from Malta, which do not have a licence issued by the MGA, but which have a licence issued by the Authority of an EU/EEA State, may apply for a recognition notice with the MGA, so as to continue to operate without the need of having to apply for a licence in Malta.

Following Brexit, operators making use of, or intending to use regulation 22 in relation to licences issued in the UK will be affected in the following ways:

  • The MGA shall process all applications for recognition notices submitted prior to the Effective Date. However, any issued recognition notices shall enjoy a validity term of 12 months, which shall thereafter not be renewed. Affected persons wishing to continue to operate in or from Malta, would need to either apply for a licence issued by the MGA, or apply for a recognition notice, which would subsequently need to be recognised by the MGA, in relation to any other EU/EEA licence which they may have.
  • Brexit may lead to the potential breach of regulation 3 of the Gaming Regulations. Following Brexit, entities operating in or from Malta, on the basis of an authorisation issued to them by the competent authorities in the UK will no longer be able to make use of the procedure laid down in regulation 22 of the Gaming Regulations, effectively running the risk of committing a criminal offence. Once again, affected persons are directed into taking the necessary measures which may be either to apply for a licence issued by the MGA, or to apply for a recognition notice, which would thereafter need to be recognised by the MGA, in relation to any other EU/EEA licence which they may have.

(iii) The UK’s exit from the EU will, however, not have any impact on certain regulatory causes, which, amongst others, include:

  • the MGA’s recognition of random number generator or game certificates issued according to UK standards;
  • the MGA’s acceptance of UK licensed and regulated credit, financial and payment institutions for the purpose of holding player funds;
  • the MGA’s acceptance of the use by licensed entities of UK licensed and regulated payment methods;
  • the MGA’s acceptance of essential components located in UK Territory (without prejudiced to the position that may be taken by the European Commission, the European Data Protection Supervisor, and the Information and Data Protection Commissioner in Malta); and
  • the MGA’s no objection for licensed operators having offices, including key function holders performing their duties from the UK.

Operators are advised to also be aware of any other potential consequences resulting from Brexit, falling outside the MGA’s scope, including but not limited to data protection, immigration, employment, duty, and copyright considerations.

For more detailed information on the above, refer to MGA’s Guidelines which can be accessed here.