Karl Diacono, Managing Director of Fenlex, looks at the state of online gaming licensing in Malta (article appeared in iGaming Business Jan/Feb 2010).
Malta’s Remote Gaming Regulation 2004 is due for updating. In fact it is known that the Regulation in the current form is somewhat weak in that, in many areas, it is open to interpretation or does not give operators or the authority itself, clear cut answers in a number of areas. It is also known that the regulator is not too happy with the current state of affairs but has been too busy solving the big issue that cropped up this year when Maltese villages where invaded by gaming shops packed with gaming machinery that was not regulated. This problem is now solved with new legislation in place regulating these onshore operations. The next big project, after the LGA settles into its spanking new offices, should be updating the current remote gaming regulations.
Having been involved in the on line gaming industry since its onset in Malta in 1998, I have over the years come across the frustrations of many applicants and licensees. Whilst I am sure that the authority has heard of these directly it may be opportune to put these in writing now, at a time when the authority is in the process of redrafting the regulations.
Currently there are four classes of license one can apply for. Class 1 for casino style games, Class 2 for sportsbooks, Class 3 where operators do not partake in the risk (such as poker rooms and Bingo Sites) and Class 4 that are platforms that offer managed solutions to operators. All applicants go through a similar process to obtain a license that include a fit for purpose process known as stage 1, a procedural and management review where operators need to clearly (and in detail) document polices and procedures, known as Stage 2, and then once approved, a system audit by an external auditor prior to being given a license.
Many a time applicants have queried the need for so many licenses. Many operators under today’s regulations apply for more than one license as they offer different games to their clients. This tends to be the norm and there are very few sites that offer one type of gaming experience. The question asked is "Who is licensed?" The operating company (being the shareholders, directors and management) or the game? What is key for the authority is that the persons behind the business are fit for purpose and therefore eligible to hold a license. Once they are satisfied with this and with the financial strength, management structures, software used and operational procedures in place the operator should be allowed, under one license, to offer any of the three types of on line games (Casino/Sports Book or Pier to Pier games) allowed today as long as these, the games, are approved by the authority.
Current policy is that operators who already hold a license have to re-submit fresh license applications whenever they wish to offer new games through licensed solution providers (Class 4). Both the operator and the solution provider are already licensed and, therefore, already approved by the authority. Licensed operators also have to have procedures and policies that were already approved under a previous license application audited again, a waste of precious time. Some operators, at times, feel that these are mere means to collect extra revenue from operators – they have no issue with paying fees but claim the authority can be more operator friendly in this regard and come up with a procedure that is less time consuming and repetitive.
These are a couple of simple recommendations, and I am sure there are many others. The authority will very probably issue a draft of the proposed changes for discussion. It is important that all stakeholders, operators, players and their representatives as well as service providers to the industry contribute to this discussion to ensure that Malta remains the leading remote gaming jurisdiction with regulations that offer operators clarity and players’ protection and peace of mind.
In parallel, the authority also needs to ensure that it has sufficient resources to deal with all that falls on its plate. It certainly generates enough revenues for government to warrant the investment as current timelines to have a license application processed are considered to be a deterrent by many.
Malta has worked very hard to become the leading remote gaming jurisdiction within the EU. Success brings pressure and Malta and its licensed operators have had their fair share of pressure and attacks that have so far been contained and well defended. Strengthening regulation and the authority is in the best interest of all players in the industry.