Malta However, to be able to obtain a Class

Malta
is the ideal base for remote gaming operations for several reasons. The Maltese
Gaming Authority and other gaming regulations offer a very efficient and
inexpensive licensing process within a gaming sector which is characterised by
an accessible and flexible regulator. The Maltese legal and tax framework is
continuously improving to be up to date with modern day technology. 1 Malta holds a great
telecommunications infrastructure together with having a multi-lingual labour
force who are knowledgeable on sectors such as remote gaming operations. The
Maltese gaming taxes are relatively low, having the lowest effective corporate
tax rate in Europe, that of 5%, and is also signatory to a multitude of double
taxation treaties with countries around the world.2

Licensing
a foreign, non-EU corporation in Malta to offer managed sports betting modules
to remote gaming operators is in fact possible. Your company will be acting as
a software vendor, providing management and hosting facilities to other
operators under its platform.3 Since Betallyouwant is a
Nevada corporation, for it to offer its services to remote gaming operators in
the US and in Malta, it needs a Class 4 Maltese Licence.  The Maltese subsidiary legislation, no.
438.04, regarding the Remote Gaming Regulations, in its First Schedule declares
that “(d) Class 4 Remote Gaming Licence shall be a licence to host and manage
remote gaming operators, excluding the licensee himself”.4 It is the Class 4 licence
which provides a business to business (B2B) gaming licence. However, to be able
to obtain a Class 4 licence, Betallyouwant must be a body corporate established
in Malta, in terms of the Maltese Companies Act. Betallyouwant must become
first a limited liability company under the Maltese jurisdiction in order for
it to be licenced.5

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I.                 
The Application Process

The
first stage, together with sending the Remote Gaming Application to the Malta
Gaming Authority (MGA), a fully and precise plan of the business adequacy must
be presented in order to forecast precisely the operation so that the MGA can
confirm that such a business is viable. The application fee is of €2330.  If the business plan is accepted, a System
Review is conducted where the MGA assesses the technical ability of your
company, as per Article 20 (1).6 The Memorandum of Articles
of Associations and the Incorporation Certificate of the company need to be
presented at this stage. If the review is of a positive result, then the Gaming
Licence is issued and Betallyouwant Inc. can operate its activities.

A
compliance systems audit is to be carried out within the first six months of
the issuing of the licence. A Maltese licence is granted for 5 years, provided
that an annual fee of €8500 is paid by the corporation, and may be renewed for
further five-year periods after it expires, following another renewal process
which is to be received by the Authority at least 60 days before the expiration
of the current licence. An application to appoint a key official of the
incorporation is also to be done and has to be approved by the MGA as per
Article 15. The key official is required to supervise the operations as well as
ensuring that Betallyouwant Inc. will be complying with the laws and
regulations given when obtaining the licence. 

II.             
Taxation

The
Remote Gaming Regulations in its Fourth Schedule, Article 1 (d) states that an
operator holding a Class 4 license which hosts and manages other remote gaming
operators shall have the first six months tax free. Then, the operator shall
pay €2330 monthly for the proceeding six months and after, €4660 monthly until
the end of the licence. A monthly tax of €1165 shall also by paid by the
hosting platform, which in your case will be your company, Betallyouwant Inc.,
when hosting operators which are licenced by the government or competent
authority of a European Economic Area Member State, thus not being in Malta.7 These are the companies
which are not in possession of the relevant Class 1, Class 2 or Class 3 licence
in terms of these regulations, being hosted and managed by the Class 4 licensee
on its platform. The Maltese registered company owns at least 10% of the equity
shares in the non-resident company. Such tax shall be paid monthly by not later
than the 20th day of the following month.8

Tax
starts to become due right after the commencement of the gaming operation, or
otherwise as particularly specified by the Lotteries and Gaming Authority. The
Lotteries and Gaming Authority may issue directives to grant any reductions,
set-off or relief regarding gaming tax. 9  These may be granted unilaterally,
bilaterally or multilaterally, depending on the treaties and memoranda of
understandings or any other agreements to which Malta enters into with foreign
governments or local or foreign authorities of the government agencies. The
maximum tax to be paid should not exceed €466,000 annually. The tax is paid to
the Lotteries and Gaming Authority on behalf of the Government of Malta.
Generally, shareholders would incur an effective tax rate of 5% upon claiming
tax refund. Such effective tax rate is the lowest in Europe.10

III.          
Type of Setup

In
Malta, licensing regulations specify what type of person may apply for a
licence. The Authority has to be “reasonably satisfied that all persons
involved are fit and proper persons”.11 To determine this, the
Authority examines the character and the business reputation of the persons
which are vested with the executive powers in the application, together with
their current financial position and background. The MGA examines also the business
reputation of the applicant’s promoters, shareholders and directors and whether
the applicant has enough business means in order to conduct the operations
successfully. Is the applicant able to obtain resources and to maintain the
minimum required reserves in order to make sure that the players will have
their winnings paid and their deposits returned? Is the applicant committed to
maintain a physical presence in Malta? Has the applicant followed policies and
will he prevent money laundering and suspicious transactions? The authority
gives out its opinion whether or not the applicant is tainted with
illegalities. Checks will too be made regarding whether the applicant is able
to comply with the policies and directives given by the Authority while making
use of his internal control structures. The MGA may conduct several
investigations with other national and international regulatory bodies and law
enforcement agencies.

V.

Would
obtaining a licence in Malta allow Betallyouwant Inc. to supply its services
all over the world?

There
is no such thing as an international gaming licence, therefore Betallyouwant
Inc. must take notice of the local gaming jurisdictions of the countries in
which it wishes to operate. Malta’s regulatory framework is both game and technology
neutral. This means that it accepts any form of gaming coming from any country
for licencing.12
This being said, one still has to note Article 3 of the RGRs which states that
”no person shall operate or promote or sell or abet remote gaming in or from
Malta unless such person is in possession of a valid licence of the relevant
class, as set down in the First Schedule, issued by the Authority or is in
possession of an equivalent authorisation by the government or competent
authority of an EEA Member State, or any other jurisdiction approved by the
Authority. Any person who acts in breach of the provisions of this regulation
shall be guilty of an offence against the Act.”13 Unfortunately, there is
no determinate list of restricted countries when it comes to moving a B2B
operator services from Malta to other countries worldwide. One has to take note
of the other countries’ jurisdictions first. The host countries requirements need
to be adhered to i.e. Companies wishing to set up B2B and B2C operations in UK
and Romania still need the host countries’ authorised platform licence or
provider licence, irrespective of the Maltese Class 4 licence.

When
it comes to offering services to remote gaming operators in Europe, the MGA
signed and Administrative Cooperation Agreement with European Economic Area
gambling authorities, in 2015, in order to reach the enhancement of
cross-boarder cooperation between EU Member States within the EU internal
market.14 This helped to exchange
information in an easier manner and reduced any unnecessary administrative
burdens which were imposed by gaming related issues.15 However, not all EU
Countries accept a foreign licence to operate within its territory. Several
examples are Italy, Spain and the UK which allow companies to operate within
their territory only if they have the country’s licence. 16

To
operate in the United States of America, the Maltese licenced company has to
take a different approach. Different states of the US have different laws
regulating such remote operations, several of them even banned such operations.
Most common rules requirements in the US are that only land-based operations
located within the particular state will be eligible to apply for licenses to
operate within the said state’s online gambling industry. The majority of
offshore gambling operators therefore are prohibited from taking advantage of
the legal online gambling in the US.17

The
Congress of Washington banned online gambling having the only exceptions being
Nevada and New Jersey, provided that the online gambling which takes place in
these two states is all state regulated. 
Basically, if other states do not enact laws in the future,
Betallyouwant Inc. may only supply its sports business modules to operators
where it already has business (New Jersey and Nevada), which both States
require a specific licence in order to operate within.18

VI.         
The Future of the Maltese Gaming
Legislation

On
the 12th of July 2017, the MGA proposed a white paper in Parliament
holding numerous changes to Malta’s iGaming Law. Such changes will affect
Betallyouwant Inc. if it relocates itself under the Maltese jurisdiction.
Having a full list of changes, the following are the most relevant to your company:
The current multi-licenses system is to be eliminated and there will only be
two different types of licenses; a Business-to-Consumer (B2C) licence and a
Business-to-Business (B2B) licence having a broader, objective based (not an
excessively prescriptive one as we have to date) regulatory process becoming
more operator friendly. The position of the Key Official would be enhanced and
given functional responsibilities including having the ability to directly
scrutinise and target supervisory controls. B2B licensees, such as
Betallyouwant Inc. are to be exempted from gaming tax.19

1
Joseph Cuschieri, ‘Future Proof’ 2015

2
Gaming Jurisdiction Overview, ‘A New Chapter’ 2016

3 ‘Gaming & Gambling – WH Partners – Leading Law
Firm Malta’ (WH Partners – Leading Law Firm Malta)
accessed 3 January
2018.

4
Remote Gaming Regulations, SL 438.04

5 ‘Types Of Igaming Licenses | Ksi Malta’ (Ksimalta.com,
2018) accessed 3
January 2018.

6
Remote Gaming Regulations, SL 438.04

7 DrSilvana Zammit, ‘Malta I-Gaming Licence’
accessed 3
January 2018. & Remote Gaming Regulations, SL 438.04

8
Ibid.

9 ‘Igaming Taxes And Fees | Ksi Malta’ (Ksimalta.com,
2018) accessed 3
January 2018

10
Ibid.

11
Remote Gaming Regulations, SL 438.04

12 Andrew Massa, ‘The Relevance Of Maltese Remote Gaming
Regulatory Regime In The Light Of The Widespread Adoption Of National
Authorisation Regimes Across Europe.’ (LL B (Hons), University of Malta 2016).

13
Remote Gaming Regulations, SL 438.04

14
EC, ‘Cooperation Arrangement between the gambling regulatory authorities of the
EEA Member States concerning online gambling services’ (Arrangement)(2015).

15
Ibid.

16 ‘Gambling Legislation In Western European Countries –
Everymatrix’ (Gambling Legislation in Western European Countries –
EveryMatrix, 2018)

accessed 3 January 2018.

17 ‘Legal US Online Gambling – A State-By-State Guide For
The United States’ (Play USA, 2018)
accessed 3 January 2018.

18 ‘Summary Of Online Gambling Laws In The USA’ (Legitimatecasino.com,
2018) accessed 3 January 2018.

19 A White Paper to Future Proof Malta’s Gaming Legal
Framework 2017.