BDO MALTA - Changes to Licensing requirements for Fantasy Sports and similar Skill Games
26 August 2016
Original content provided by BDO Malta.
By Josef Mercieca, Senior Tax Manager, BDO Malta.
With effect from 1st August 2016, the offering of Fantasy Sports games is exempt from requiring to obtain a licence in terms of the Lotteries and Gaming Act and the Remote Gaming Regulations, meaning that such endeavours may be conducted in and from Malta without the requirement of a licence. The removal of such licence (up to July 2016, a Class 3 licence issued under the Remote Gaming Regulations (S.L. 438.04)) for gaming proposals represents a significant saving in costs incurred by online gaming operators in Fantasy Sports offerings and in particular will avoid the tedious and bureaucratic process of applying for a licence, will reduce ongoing compliance and notification costs and will also trim down the stringent monitoring otherwise carried out by the Malta Gaming Authority (MGA) on licensed operators.
A Fantasy Sports game is a contest played for money or money’s worth whereby the winning outcome is determined predominantly through the skill or knowledge of the player, and where the results are determined by the accumulation of statistical results of the performance of a number of individuals in sporting events.
It is important to note that Fantasy Sports is a different game offering from live sports betting (where punters bet on the outcome of an event or forecast the score, point spread or any other future occurrence of one or multiple events). In fact, live sports betting is and will remain a regulated activity which requires a Class 2 licence issued by the MGA
Moreover, the Maltese Government is committed to introduce legislation to regulate certain skill games which may present increased risks to the consumer. The exemption from the licensing requirement for Fantasy Sports is a temporary measure until the proposed Skill Games Regulations are enacted into law. In fact, the proposed regulations have already been notified to the European Commission as part of the process for the MGA to roll out its licensing framework to regulate such skill-based games, including Fantasy Sports.
The proposed Skill Games Regulations are the aftermath of the “Digital Games of Skill with Prize Position Paper” issued by the MGA in December 2015. Such position paper, which was an avant-garde move by the MGA, distinguishes between skill games which involve an insignificant element of chance on one hand (and where a formal licensing process may not be cost effective vis a vis the desired player protection) and, on the other hand, skill games where the element of chance cannot be considered irrelevant and as such would require an elevated level of scrutiny from the licensing authority to protect punters.
During this temporary period and until the proposed regulatory framework for skill games is put into force, the MGA is receiving interests via ad hoc notifications. This has been done in order to closely monitor these operations and evaluate potential risks to the consumer. Entities offering Fantasy Sports may voluntarily notify their operations to the MGA, and subject to meeting certain general conditions applicable under general law, the operator would be formally recognised by the MGA.
BDO Malta can assist with any queries on the Regulations and the requirement or otherwise of a licence for Fantasy Sports games or other games which are similar in nature.