An Overview of the Malta Gaming Authority (MGA)

The Malta Gaming Authority is arguably the most popular regulatory body in the online gambling industry. It is a coveted stamp for players and casinos alike, with a global reach into many markets. Keep reading to learn all you need to know about the MGA and how it functions.

What is the Malta Gaming Authority?

The Malta Gaming Authority (MGA) is the gaming control board of Malta. It regulates most forms of gambling in its territory, including land-based and online gambling services. The retail gaming it regulates includes casinos, amusement and slots machines, betting offices, fantasy sports and lotteries. The online sector includes B2C and B2B services.

The MGA was established in 2001 and is widely considered to be one of the most reputable and respected gaming regulators in the world. Nowadays, holding a license from the MGA is a coveted seal in the online gaming industry. The MGA is set up to ensure that gaming is conducted in a fair and transparent manner. One of its biggest responsibilities is to ensure that player safety and security meets the requirements. In order to achieve this, the MGA only brands out licenses to operators that can meet the strict regulations and policies set out in their legislation. After acquiring an MGA license, the operators are under constant monitoring and supervision to ensure they meet the requirements set out by the MGA.

History of the MGA

The Malta Gaming Authority was established in 2001. It was formerly known as the Lotteries and Gaming Authority (LGA) before being renamed in 2015. In 2004, Malta became the first EU member to enact legislation for the remote gambling sector, creating a trusted jurisdiction for businesses worldwide. However, as far back as 1922, Lotto (adopted from neighbouring Italy) was government regulated.

The Maltese law-making control board has been a pioneer in the online gaming industry since the early days. Since its formation, the MGA has grown tremendously within the territory. It now accounts for more than 12% of the country’s GDP.

What are the Basic Principles of the Malta Gaming Authority?

Ever since 2001, the MGA has been responsible to regulate various sectors of the gaming industry for both retail and online operators. The MGA is responsible to perform the following duties:

  • Ensure transparency to players using gaming services
  • Preventing crime, corruption and money laundering
  • Protecting minors and vulnerable players

The Malta Gaming Authority also must ensure a secure atmosphere for players by regulating the activity of online gambling casinos and bookmakers. It was one of the first regulators to offer a comprehensive set of legislation, regulations and directives that now regulates most of the industry.

The Functions of the Malta Gaming Authority

The MGA is now widely considered to be one of the international axis of iGaming. It is a leading licensor and regulator in the industry. Most of this credit is due to its forward-thinking government and thriving technology and business sectors.

What are B2B and B2C Responsibilities?

The MGA has to ensure services for both B2C and B2B clients. This is seen below:

  • B2B – business-to-business products or services that are intended for a business to use, not a consumer. These services may include software developers that product casino games or betting markets, payment service providers and customer support infrastructure.
  • B2C – business-to-consumer products or services that are intended for the end-user (the consumer). Examples of these are online casinos, bookmakers and lotteries.

Essentially, the MGA license provides the framework of B2B interactions between operators and developers for gambling materials. The B2C license can be divided into four different classes, as seen below:

  • Type 1 – permits operators to use a Random Number Generator (RNG) to organize games of chance for customers.
  • Type 2 – permits operators to bet on the outcome of a real-life event which falls into the sportsbook category.
  • Type 3 – permits operators to organize games of chance where revenue is generated from commission based on stakes or prizes (for instance poker).
  • Type 4 – permits operators to organize betting on skill games where the results are determined by performance (fantasy sports).

The Gaming Act 2018

In 2018, the MGA went through a revamp where new rules and regulations were introduced to create a more transparent and straightforward process for operators. It also extended every MGA license validity from five to ten years.

Why hold an MGA License?

There are many reasons why operators in the online gaming industry strive to hold a license from the Malta Gaming Authority. In addition to its growing reputation, the MGA sits in the centre of Western Europe, making it a global hub for iGaming businesses and events. Here are a few other reasons:

  • A Well-Respected Reputation – the MGA license is one of the most prestigious in the industry.
  • A Fair Authority – the MGA regulations are forward-thinking and enable the industry to grow.
  • An Increasing Industry – the MGA contributes massively to the Maltese economy with growing revenue year-by-year.
  • A Stable Environment – the MGA is home to many trained professionals and experienced veterans in the industry.

The Maltese Gambling Market

Malta is one of the most gambling-friendly countries in the world. The Maltese government welcomed change in the 2018 regulatory restructuring to make it easier for operators to apply for a license and comply with the legislation set out by the regulatory body. Furthermore, the MGA also eliminated gaming tax, ensuring operators were not taxed more than once for certain things. However, despite removing taxation on operators, the Maltese gaming industry still managed to generate €80 million in compliance contributions, license fees, levies and consumption taxes. Essentially, holding an MGA license is a win-win for both the Maltese economy and the operators.

The Numbers

The Maltese iGaming sector is one of the most popular in the world and is the third-biggest private sector industry in the country. According to the statistics, the online gaming market raked up over €1.5 billion in 2019, an increase of nearly 10% compared to the previous year. The total accounted for 13% of the country’s GDP.

In addition to a glowing revenue, Malta is also one of the most attractive places for companies to recruit a workforce. In 2019, the gaming industry accounted for over 7,000 full-time jobs. That is just under 4.5% of the country’s workforce. It is home to plenty of qualified professional and is the perfect environment for iGaming.

Every year, Malta hosts the SiGMA event. It is one of the most popular in the global iGaming industry. The expo allows representatives to mix for potential new partners and brings thousands of delegates and affiliates together. Furthermore, it is also a chance to learn about the latest news and innovative ideas or schemes in the industry.

How to obtain a Malta Gaming Authority License?

The Malta Gaming Authority is incredibly gambling-friendly and plays its role in helping operators and start-ups where it can. In fact, if a start-up wants to place its trust in the MGA, the first twelve months of licensed operations are waived. That is if the company can meet certain criteria, for instance being less than five years old and making under €10 million in revenues.

To obtain an MGA license, a company must go through five stages before it can display the MGA seal. The stages include:

  1. Background Check
  2. Reviewing Business Plan
  3. Operational and Financial Inspection
  4. System Audit
  5. Compliance Audit

Below, we disclose a little more information about each of these five stages.

Step 1: Background Check

For a company to start its application for an MGA license, it must first provide the MGA with all the necessary background information required. That includes the list of shareholders and key persons in the company. The MGA will conduct an investigation to verify these persons and to ensure that the company is in line with international regulatory bodies and law enforcement agencies.

Step 2: Reviewing Business Plan

In the second stage, the MGA examines the applicant’s business plan to ensure that it has a stable and concrete process. The business plan includes things like marketing, human resources, forecast of operation and financial prospects.

Step 3: Operational and Financial Inspection

Once the applicant has passed the first two stages, it will have to provide the MGA with incorporation documents, verticals, terms and conditions, policies and procedures and any other documentation.

It is at this stage that the MGA inspects the financial reserves of the business applicant. The company must be able to pay upfront for the following licenses:

  • Type 1 – applicant must pay upfront €100,000
  • Type 2 – applicant must pay upfront €100,000
  • Type 3 – applicant must pay upfront €40,000
  • Type 4 – applicant must pay upfront €40,000

Step 4: System Audit

In the fourth stage, the applicant is already notified that their application is approved. In this stage, the MGA uses a pre-approved system auditor that carries out a system audit. This checks whether the casino operates as it proposed to do in the application. To comply with the MGA system audit, the casino should operate exactly as it set out to do so in the business plan. If not, it will have to re-submit the application. Once the processes are certified, the applicant is granted a 10-year license.

Step 5: Compliance Audit

After the operator has gone live, the MGA will review how well the company complies with the policies and regulations. The operator must have a compliance auditor that is recognized by the MGA to review the project, 90 days after going live.

What are some potential risks?

Operators that hold an MGA license can legally operate in Malta and other jurisdictions that accept the license. However, not all operators apply for the license and instead try their luck operating without one. If the MGA finds operators guilty of this, they can potentially fine the companies with hefty penalties. Furthermore, casinos that operate without an MGA license may also face these potential risks:

  • Lack of games and banking options – if a casino is unlicensed, many game developers and payment services will not cooperate with the casino. This leads to a limited range of gaming products and banking options.
  • Lack of trust – if a casino does not have an MGA license, the majority of players will not play at the casino. This is because players enjoy a safe casino environment that has a well-respected reputation and know that the MGA will ensure this.
  • A hefty penalty – if a casino does not have an MGA license and is caught operating illegally, the MGA will brand a large fine to the operator. For first time offenders, the MGA will issue a fine ranging from €10,000 to €500,000.
  • Permanent closure – if a casino does not have an MGA license and operates illegally, it could potentially be shut down by the authorities if it does not comply with the regulations of the jurisdiction.
  • Illegal gambling services – it is considered a criminal offense for operators or persons to provide unlicensed gambling services which could lead to a hefty fine and up to five years in prison.

Thus, it is important for any operate to acquire a Malta Gaming Authority license if it plans to provide gaming services to the regulated markets.

How much does an MGA license cost?

To apply for an MGA license, the business applicant must cover the combined costs of the application fee (€5,000), license fee (€40,000/€100,000) and system and compliance audits (€36,000).

How to be successful in the Malta iGaming industry?

Below, we have included four separate tips on how to run a successful casino site in regulated markets:

  • Offer World Class Games – the best online casinos are the ones that cater loads of casino games from the leading software providers.
  • Trustworthy Banking Methods – for player security and peace of mind, online casinos with the most popular payment services available are likely to be the first choice for players.
  • Sport Wagering Options – online operators that have a sportsbook product alongside their casino product are more likely to attract the attention of more players.
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