Author: Anton Johan
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There are many online gambling-friendly jurisdictions around the world,
but one of the largest is the Southern €opean island state of Malta, which by
the end of 2009 had reportedly issued over 500 gambling licenses and attracted
more than 330 online gaming firms to its shores, many of them from the UK,
including Betfair, Mr Green, Unibet and many more.
According to figures published by the Lotteries and Gaming Authority, in 2009
Malta's online gambling industry employed more than 5,000 people, who
collectively serviced approximately 10 per cent of the world's online gambling
market, and generated taxes in excess of €52.5m.
A History of Malta Online Gambling Jurisdiction
The Republic of Malta's symbiotic relationship with online gambling started many
years ago, in 2000 to be exact, when the government passed ground-breaking
legislation specially designed to attract international online betting firms to
the country, along with its 'tax-friendly' Income Tax Act as a further incentive
for companies to set up shop there.
In 2002 the Malta Lotteries and Gaming Authority was formed to govern and
regulate all gaming interests in the country, covering online casinos, sports
betting, bingo, the National Lottery, non-profit games, remote gaming and more.
The authority's mission is to ensure that 'gaming is fair and transparent to the
players, preventing crime, corruption and money laundering and by protecting
minor and vulnerable players.'
That same year the Authority compiled the legislative and licensing framework
covering all of the above areas, which came into effect in 2003, and was
designed to: provide unbureaucratic, but robust online gambling regulations;
protect online gamblers, and; fit in with Malta's reputable and long-standing
financial services industry.
As a result, almost overnight Malta was inundated with applications for online
gambling licenses from gaming firms from all over the world, and in 2004, it
became the first EU member state to legalise and regulate online gambling when
it passed its Remote Gaming Regulations as part of its Lotteries and Other Games
Act 2001.
Malta's legislative and licensing framework has four classes of gaming license,
each of which are issued for five years before they must be renewed:
Class 1 - Aimed at operators seeking to manage their own risk on repetitive
games, such as online casinos.
Class 2 - Aimed at operators seeking to manage their own risk on betting events,
such as online sportsbooks.
Class 3 - Aimed at operators taking a commission from promoting and/or betting
games, such as those offering peer-to-peer games, betting exchanges, poker
networks and online lotteries.
Class 4 - Aimed at firms seeking to host and manage remote gaming operators,
such as online gambling software vendors.
As part of Malta's online gambling licensing agreement, every successful
licensee must have the core part of their online operation physically based in
Malta.
UK Government Reaction to Offshore Operators
Recently the UK government has expressed its concerns about the fact that most
large UK gaming firms have relocating to offshore online gambling jurisdictions
such as Malta, to avoid the UK's high tax rate. In fact, it is proposing to
change the UK's remote gambling tax and licensing regime so that taxes are
levied at the 'point of consumption.'
In other words, in the country where
players who are signed up with the respective gaming operators live, and no
longer where the online gaming operators are base. In addition, the UK
government wants a scenario where gaming operators - based in the UK or abroad -
must hold a Gambling Commission license to offer their services in the UK.
The UK government's reasoning behind this is that it believes that under the
current regulations, offshore operators have an unfair advantage over UK-based
companies, because they pay far less tax.
It will be very interesting to see how these proposed changes to the UK's
remote gambling tax and licensing regime will affect UK online gaming operators
based at offshore online gambling jurisdictions like Malta.
Posted by Anton Johan at 13:17 on 14 December 2011
