Maltese Declassification

The Malta Lotteries and Gaming Authority (LGA) is doing away with its classification system for online gambling licenses. The shift is the LGA's response to changes in games and business models in the I-gaming space and will be ordered through amendments to the country's Remote Gaming Regulations of 2004. A draft version of the amendments has been made available for public consultation.

"I consider the amendments as part and parcel of our ongoing commitment to meet new challenges, by addressing present contingencies and also preempting future situations," said LGA Legal & Enforcement Director Dr. Anthony Axisa. "In an industry where law is frequently outrun by technology, it is important to constantly monitor developments and make the necessary adjustments to make regulation a feasible proposition for operators."

Axisa, who co-authored and drafted the amendments, added, "The proposed amendments are sufficiently streamlined to make them future-proof for some time to come. Moreover it is important to note that while being sufficiently flexible, the amended regulations do not compromise on our philosophy of effective regulation, promotion of responsible gaming and protection of players."

One of the main goals of the draft amendments is a broadening of the concepts of game-neutral and technology-neutral licensing. The original regulations provided for the licensing of various remote games by creating four distinct classes of licenses. But recent developments have seen the emergence of gambling opportunities that do not fit cleanly into any one licensing class if the classes are tied to specific types of games. Betfair, for example, recently launched a new poker exchange product from Malta that incorporates elements of both a poker network and a betting exchange.

"We realized immediately that it didn't make much sense to continue speaking about specific games," Axisa explained. "We had already made the regulations technology-neutral so we decided to make them equally game-neutral."

So the new amendments remove specific references to betting and games in favor of neutral terminology that will provide for the licensing of new and innovative gambling products.

As Axisa indicated, the regulations also provide neutral definitions for enabling technology. They authorizes more than simply "online" or Internet" systems, providing the flexibility to license gambling via mobile phones or whatever communication systems arise in the future.

Another significant reason for the amendments is to address the relatively new business models that have changed the methods of interaction between licensees and service providers. It is becoming increasingly common, for example, for licensees to work with an intermediary business (like an agent, a white label or other type of affiliate) in another territory.

"We were finding ourselves in a situation of having an operator come in and say, 'I have an intermediary in the form of an agent or other affiliate, what do I have to do? Does the affiliate need a license, approval or permit?'" Axisa said.

The amended regulations, he said, address these situations.

"We need to know that an intermediary is operating lawfully in the territory in which he is established," he explained. "Similarly with white labels, we need to know that a white label exists, we need to know the contractual arrangement between the licensee and the white label, and we would need to know most importantly that the licensee is assuming all the risks of the operation because one of our foremost concerns is the promotion of responsible gaming and protection of players. Indeed players will now have the possibility to request self-barring from all Maltese licensed remote gaming operations."

The regulations also define the functions of control systems and gaming systems; remote gaming terminals have been defined, and the specifications of remote gaming equipment facilities have been also included.

The LGA has commissioned the Malta Remote Gaming Council (MRGC) for the management of the draft amendments' public consultation process, which will last until Nov. 16, 2005. Composed of remote gaming license holders, data carriers, Internet service providers and legal and financial professionals, the Remote Gaming Council advises the Maltese government on the most recent developments in the online gambling sector.

"We want the MRGC to lead the consultation process to stress the point that the regulatory update reflects the needs of the industry," LGA Chairman Zammit Maempel explained.

Following the consultation period, it should not take long for the amendments to come into force. To take effect, the regulatory changes only need to be approved by the minister and then published in the government gazette. They do not need to pass through Parliament.

The LGA expects to have over 100 remote gambling licensees by the end of 2005.

Click here to view a copy of draft amendments to Malta's Remote Gaming Regulations.

The document is also available at the LGA's Web site: www.lga.org.mt/lga/home.asp.