Malta regulator tightens definition of start-ups

22 October 2019

The Malta Gaming Authority (MGA) has announced changes to the regulations surrounding gaming license fees to narrow the definition of a start-up, potentially ramping up costs for smaller gaming businesses.

Where previously a start-up owner had to generate less than €10m in revenue from gaming or related sectors during the previous financial year, now such an owner must generate less than this amount over the previous 36 months.

The rule applies both to individuals who have generated more than €10m and to those who are, “part of, or controlled by, a corporate group” who have generated the same.

Under the current license fee regulations, start-ups are exempt from paying the compliance contribution, which may be between €15,000 and €600,000, depending on revenue and the type of gaming services offered.

For Type One games, which are games of chance played against the house and determined by a random generator, the contribution starts at 1.25% for the first €3m.

In the case of Type Two games — games of chance played against the house but not determined by random number generation — the contribution starts at 4% for the first €3m.

Operators of Type Three games, which are games of chance not played against the house such as poker, must pay a contribution starting at 4% for the first €2m.

Finally, for Type Four games — “controlled skill games” such as fantasy sports — it starts at 0.5% for the first €2m.

With each of the first three types, the rate is applied regressively, while for type four games, it is a progressive rate.

The MGA said that it believes the changes should ensure that only genuine start-ups benefit from the start-up grace period.

“This amendment is aimed at ensuring that undertakings classified as start-ups are truly such, whilst simultaneously not prejudicing corporate groups that were in the business many years back and wish to benefit from such an incentive by starting up again,” the MGA explained.

The MGA also changed the name of one type of fee from, “Request for the addition of a new game type” to “Request for the addition of a new game vertical.” The fee remains at €1,000.

The changes will come into effect from 1 January, 2020.