Gambling Industry in Malta

Over the last decade or so, Malta’s gambling industry has been on the fast track to success. This small island country off the coast of Italy is taking its fair share of the gambling industry, which is expected to grow to a mind-boggling $564.5 billion in 2022.

According to the European Gaming & Betting Association, the online gambling sector in Europe alone is expected to be worth almost €30 billion. Malta is one of the few countries driving that profit. The country’s success lies in several factors.

First of all, it was the first EU country to regulate gambling and grant licences to online gambling operators. In 2001, the government established the Malta Gaming Authority (formerly known as the Lotteries and Gaming Authority (LGA)) to control all gambling activities, including remote gambling, lotteries, sports betting, etc.

Over the years, the country has also come up with numerous incentives for operators and gambling businesses, such as reduced income tax rates, refunds on dividends, double taxation relief, etc.

The Malta Gaming Authority has developed a legislative framework that helps the market evolve while safeguarding the integrity of games and devices, protecting players’ rights, keeping gambling free from crime and promoting fair, safe and responsible gaming.

Let’s learn more about how the Malta Gaming Authority operates and what type of services and regulatory requirements businesses must meet.

Curacao licence by SoftGamings

Types of Malta Gambling Licences

With an MGA licence, gambling operators are allowed to provide gaming services internationally. They can thank the country’s approach to gambling that is focused more on its benefits and how to stimulate gambling providers rather than restrict them.

In essence, the MGA offers two types of licences: a gaming service licence (B2C) and a critical gaming supply licence (B2B). According to the kinds of games and services offered, the applicants will be granted the following subtypes:

  • Type 1 — Issued to online casinos that focus on RNG-powered games of chance, played against the house, such as roulette, blackjack, baccarat, poker, lotteries, secondary lotteries and virtual sports games.
  • Type 2 — This type of licence is directed at gambling businesses that focus on games of chance played against the house but where the outcomes are determined by the result of an event, not a random number generator and where the operator manages the odds offered to players. It is perfect for sports betting sites and shops.
  • Type 3 — The Type 3 licence is designed for poker rooms, bingo halls, and betting exchanges where the operator generates revenue by charging a commission on the stakes or prizes.
  • Type 4 — The Type 4 licence is available to gambling software companies as well as controlled skill games and hosting.

Law Services

SoftGamings has a unique team of gambling and legal experts, lawyers, company administrators, accountants, and many others that can help you start your gaming business in Malta from the ground up. Some of the advisory and law services we provide to clients include:

  • Gaming licensing procedure and compliance
  • Tax planning
  • Hosting services
  • Accounting
  • Local physical office address
  • Company establishment process
  • The services of a local director
  • Payment systems and bank accounts
  • Recruitment of the local workforce
  • Administrative services
  • Consultation

Gambling Law Advantages

Malta’s gambling law was first enacted as the Lotteries and Other Games Act in 2001. Then the country became the first EU member to regulate remote gaming with its Remote Gaming Regulations issued in 2004. Currently, the Gaming Act of 2018 is in power and driving the success of Malta’s gambling scene.

One of the main advantages of such gambling-friendly laws is the appealing tax option that includes low taxes on employee wages, including high-earning individuals and businesses. Also, by working in Malta, gambling companies can enjoy the benefits of the EU’s free movement policies, all the while relying on protection from money laundering and other illegal activities.

With an MGA licence, companies can conduct their business internationally while enjoying all the benefits of being in an EU country — low taxes, advanced technical capabilities, skilled workforce, etc.

Key Requirements to Get a Licence

To start your gambling business in Malta, obtain its reputable gaming licence, and enjoy its onshore status, lower taxes, EU location, high anti-money-laundering standards, and other benefits, the companies have to meet several requirements.

First of all, you need to prepare the documents and send them to the MGA for revision. These documents need to include information on the management and founding members or shareholders (every private company needs to have at least two shareholders) so that the regulatory body can see if they are fit for running a gambling business.

Then there’s the business plan you need to have with all the financial and operational strategies, marketing, gambling equipment, sales targets, etc. Naturally, an applicant will be required to pay certain fees during the process. After the legalisation and verification processes are complete, companies are issued with the corresponding licence.

Licence Cost and Taxes

During the procedure, applicants will be required to pay administrative fees to the MGA, after which specific licence costs will apply depending on the type of licence. The one-time non-refundable licence application fee is €5,000. The cost of an MGA licence can go up to €100,000 or more for the establishment of the company and the licence itself.

The process may take up to a year to complete. The fixed annual fee for a B2C business is €25,000 (except Type 4, where the fee is €10,000), but the actual licence fee depends on the type of licence and the revenue generated.

Application Procedure

There are essential steps all applicants need to go through before they can obtain a licence. Stage 1 of the process involves verifying the personal and business information of all persons engaged in the company’s financing and management.

Then, Stage 2 commences with MGA’s in-depth financial analysis of the applicant’s business plan, including finances, marketing, HR, growth targets, etc.

The third step is focused on the operation and statutory requirements, such as how the business plans on conducting the games, their rules, terms and conditions of use, safe gambling policies, and other types of procedures and technical documents.

There are also the paid-up share capital requirements every licensee needs to meet, and the minimum for a Class 1 licence is €100,000. We then proceed to the system review, where the MGA makes sure every technical aspect is in order, and the games are fair. Finally, the compliance review is performed after the platform goes live to ensure the operator follows all the rules.

Maintenance

To maintain a successful business in Malta, you will need to pay annual maintenance fees and taxes. The licence is issued for five years, and there are yearly bills you will need to foot. The yearly licence fee is €25,000, and the gaming tax in Malta is set at 5% of the revenue. The costs of server hosting, key official’s fee, office, secretary, two shareholders, and other services amount to around €12,000.