Malta Online Gaming Licensing Procedures

Licensing in Malta is a two-phase process. After successful completion of both phases a letter of intent is issued by the Gaming and Lotteries Authority (LGA). This is followed by certification of the operation, which is normally done out within six months of obtaining the provisional license. Upon successful certification a five year license is issued.

The two phases of the licencing procedure include:

• Online gambling licence application.
• Lotteries and Gaming Authority (LGA) audit and inspection.

Phase 1: Online gambling license application

The process of applying for a license to offer Internet gaming services in Malta covers the follwing:

• Fit and Proper Business Plan Review
  The Authority conducts investigations on the business viability of the operator and carries out a financial analysis of the business plan. The applicant should provide the LGA with completed Application for Remote Licence and Personal Declaration Form. The stage is completed within 4 weeks.

• Business and Technical Ability Assessment
  On successful conclusion of the first stage the applicant is appraised on the instruments required to manage the business. It includes considering incorporation documentation, the games, the business processes, the rules and terms of conducting the remote games, the application and system architecture of the gaming and control systems. It takes about 6-8 weeks and results in granting a provisional license to the applicant to operate online gaming with the intent of obtaining a certification of compliance within 6 months.

• Compliance Systems Review
  During the period of six months the licensee is to organize the business in Malta, conclude all agreements and endure a System Review.
  Besides, a licensee is required to submit the following documents:
  • A Service Provider Authorisation Form (LGA/51/2004-4)
  • LGA Compliance Audit Questionnaire (required for those operators seeking to gain or retain a license for Remote Gaming in Malta).

A compliance certification procedure normally takes 4-6 weeks.

The next thing to do is launch an offshore company in Malta. Costs involved amount to around 5,500 Euro. These investments include the following basics:

• Malta Financial Services Authority (MFSA) registration fee;
• Memorandum and Article draft;
• Duty Exemption stamp receiving;
• VAT registration;
• Costs on a secretary hiring;
• Two nominee shareholders involvement;
• Land-based office registration.

The initial cost of the license application is approximately 2,330 EUR and is non-refundable. It is paid with the submission of an application for the license. Your application will be filed in a two-week period from the moment that all the required documentation is collected and sent to the legal company that handles your business licensing. The processing of your application will take one or two months followed by a six month period for establishing the business, auditing and other required arrangements. When these activities are completed the LGA will issue the license, the final stage of which will take just two weeks if your application is correct.

Phase 2: LGA audit and inspection

During the first phase, a prospective licensee submits an application form and provides detailed information about the proposed business and the persons involved. The information submitted is the basis of the due diligence process carried out by the LGA, evaluating the suitability of the applicant for the granting of a license.

STAGE 1: Shareholders personalities and business plan investigation

The first point to investigate is personal data of persons involved in the licensing process from the side of the applicant. Aspects investigated are financing, management and viability of the operation. The investigation involves national and international regulatory bodies and law enforcement agencies. The business plan is also carefully analyzed. The business plan should highlight the following:

• Business and objectives of operation overview;
• Desired structure of the company;
• Descriptions of the services that will be offered;
• Technologies and tool that are planned to be utilized;
• Description of the software planned to be used as a basis of the online gambling website;
• 3 year promotion plan;
• 3 year profits & loss estimate;
• 3 year cash flow statement;
• 3 year financing plan.

The LGA will require the following list of legal documents for every shareholder with over 5% interest:

• Filled form LGA/51/2004-1, which is an application for Remote Gaming Licence Personal Declaration;
• Coloured copy of a passport in good quality;
• Original of birth certificate;
• Police conduct certificate;
• Financial/Bank reference;
• Passport-size photo;
• Statement of affairs;
• Bookmaker licence (if issued in any other country).

Costs involved:

• Legal guidance - EUR 11,800;
• Key official fees - EUR 6,800.

STAGE 2. Tools for business conduct audit

The audit of tools and instruments to be utilized includes documents of incorporation examining, gambling games security and honesty audit, games rules and terms and conditions research, etc.

This stage involves submission of the following list of legal documents:

• Statutory documentation package;
• Company policies descriptions;
• Company procedures overview;
• Detailed company description;
• Random number generator description;
• Specification of the Gaming System.

When the audit process is passed, the applicant will be issued with a Letter of Intent (LOI) that allows operating remote gambling business with the intent of obtaining a certification of compliance within six months. During this period the business in Malta should be established and all agreements should be finalized. The applicant may then establish the business in Malta, conclude all agreements and carry out the whole system testing. As soon as approval is received from the LGA an applicant will be issued with a compliance certification entity.  This process takes about 2 weeks.

After the LOI is issued by the LGA, you can deploy your system and set-up your business in Malta. You will have to pay an annual license fee of EUR 7,000 and a compliance audit fee of EUR 5,000. Maltese gambling licenses are issued by the LGA for a period of 5 years.

At the end of the second application stage the Licensee is required to appoint at least one key official who will be in charge of supervising further operations and ensuring they are conducted in full compliance with applicable laws, regulations, LGA requirements and conditions.

The person eligible for appointment to the position of the key official must satisfy the following requirements:

• resident in Malta;
• director of the Company holding the license (this requirement is subject to being removed by the proposed amendments to the Remote Gaming Regulations);
• physical person not a legal entity;
• fit and proper person.

In determining whether the applicant is a fit and proper person, the Authority shall take into account the following matters:

• the character of the persons vested with executive powers in the applicant, and the business reputation of such persons;
• the current financial position, financial background  and business reputation of the applicant's promoters, shareholders and directors; 
• whether the applicant has the appropriate business  ability to conduct remote gaming successfully; 
• whether the applicant has, or is able to obtain, appropriate resources and is able to maintain minimum required  reserves as may be established by the Authority in order to  ensure that players shall have winnings paid and deposits returned;
• the commitment of the applicant to maintain a physical presence in Malta;
• whether the applicant is, in the Authority's opinion, untainted with illegality;
• whether the applicant has followed policies and will  take affirmative steps to prevent money laundering and other suspicious transactions; and
• whether the applicant has the capacity and the internal control structures to enable it to comply with the policies and directives which the Authority deems appropriate. 

The Authority may cancel the license of a key official if such an official is convicted in any country or territory of an offence punishable with imprisonment. To surrender his license, the key official requires the written consent of the Authority.

Fees and taxation required

Fees to be paid:

• An application fee for a license of any class is €2,330. It is paid with the submission of an application for the license.
• A license renewal fee for 5-year period is €1,165.
• An annual license fee for any class of license is €7,000.

The highest annual gaming tax by one licensee of any type of license is €466,000. There is also a differential gaming tax depending on the license class:

Class 1 – €4,660 monthly for the first six months, thereafter €7,000 per month.
Class 2 – for fixed-odds betting 0,5% on the gross amount of bets accepted.
Class 3 – 5% on real income.
Class 4 – the tax by a hosting platform is not paid for the first 6 months of operation, €2,330 monthly for the subsequent 6 months and thereafter; €4,660 per months for the entire license duration.

The gaming tax for Class 1 licensee operating on a Class 4 platform is €1,165 per month.

Tax Capping

The maximum gaming tax payable annually by a licensee in respect of any license class is €460, 000. However, in cases where the casino operators (under Class 1) operate from the host platform (under Class 4 license), the cap tax is applicable to the total tax payable by all licensees in this cluster together. In other words, in this case the cap tax is reached when the sum of tax payable by all casino operators licensed under Class 1 and their common host platform reaches €460, 000.

Corporate Tax

Corporate tax for companies in Malta is 35% on profit. However, shareholders of Malta-registered companies may apply for a refund amounting to six-seventh of the tax paid by the company. For shareholders non-resident in Malta, for tax purposes, this means that the effective rate of tax is 5% on profit.

For more information on Malta online gaming licensing and sample application forms, please visit LGA.