WH Partners: Providing a holistic approach

What makes the company so ideally placed to assist the Gaming industry?

WH Partners has vast experience in the industry having been established as a gaming firm since its inception. Due to its focus, WH Partners can provide a holistic approach to a client wishing to become established in the gaming industry. The team understands the needs and concerns of a gaming operator and therefore can assist a client from the formation stage of operations to daily assistance related to compliance, as well as to any eventual  sale of the business. 

Who are your typical gaming clients?

There are various offshore jurisdictions which offer remote gaming licences. However serious operators opt to be licensed under a strict regime. Our typical gaming clients are those companies seeking to be established as reliable gaming operators. The majority of gaming clients are foreign owned, mostly from the Scandinavian countries and the Balkans. 

Robert Zammit

Joseph Borg

Why is Malta considered to be a top jurisdiction for the attainment of a gaming licence and what are some of the factors which make Malta appealing to operators?

Malta was the first European country to set a legal framework for the remote gaming business. Its strong legal framework together with the tight procedures implemented by the Malta Gaming Authority placed Malta immediately as a top gaming jurisdiction. This resulted in other countries looking toward Malta as an example to follow. 

Apart from the strong legal framework, operators see Malta as an attractive jurisdiction due to the competitive costs for hiring personnel and also due to its tax legislation. 

What are the four classes of Malta Gaming Licences and how does the gaming tax vary among them?

Under the current remote gaming regime, applicants can opt to apply for four types of  licences. There are three business-to-consumers licences which depend on the type of product being offered (1) remote gaming, (2) remote betting, and (3) a licence to promote and abet remote gaming. The fourth is a business-to-business licence for the hosting and managing of remote gaming operators. 

The remote gaming licence, what is commonly known as a Class 1 licence, can be either a standalone – whereby the operator offers his own proprietary games – or a class 1 on a class 4 – whereby the operator would offer games hosted and managed by a licensed business-to-business licensee.  Such licences are subject to a fixed monthly gaming tax. For a Class 1, the gaming tax is set at €4,660 per month for the first six months which is increased to €7,000 thereafter. For the Class1 on 4, the monthly gaming tax is set at €1,200. Remote betting licences are subjected to a variable monthly tax calculated at 0.5% of bets accepted. This is capped at €466,000 per year. The tax for the Class 3 licence is put at 5% of the rake less certain acceptable expenses.

The business-to-business licence, also known as the Class 4, is not taxed for the first six months of operation. For the second six months, the tax is fixed at €2,330 while thereafter the tax is €4,660.

Can gaming applications be  declined?

The Malta Gaming Authority has the discretion in declining gaming licence applications. However we have rarely seen situations where the Authority  has  declined an application entirely. Generally a discussion process is ensued between the applicant and the Authority in order to remedy any serious concerns, if possible, and only if the situation cannot be remedied, then the licence application would be rejected. 

What are the main concerns of Gaming companies with regard to tax advice?

The main concern at the moment probably relates to tax – what needs to be paid and where. In particular, this has become a major issue when it comes to VAT. As from 1 January 2015 there was a change in the place of supply rules of electronically supplied services, telecoms and broadcast provided to consumers, whereby it is now considered that the place of supply shall be where the customers are located.  Suppliers of said services would have an obligation to charge VAT in terms of the rules in the Member State where the customer is located unless said services are exempt in said Member State. The challenge for gaming companies is therefore to establish where their clients are based and whether or not VAT is to be charged. 

What are some of the key legal issues Gaming companies must take note of?

Apart from the general compliance with the licence requirements, gaming operators need to be aware of their obligations under Maltese law in general. Some areas of law are generally very similar to other European countries in view of harmonisation at European level but nevertheless there could be some aspects of law which differ and which may require particular attention. 

Of particular note to gaming companies is employment legislation and the way employees may be dismissed, as such practices may differ from one country to another.

Furthermore, with the publication of the New Anti-Money Laundering Directive, as well as the new EU General Data Protection Regulation, it is safe to say that Money Laundering and Data Protection legislation will take a central stage as key legal issues for gaming companies for the months to come.

Joseph Borg, Senior Advisor to WH Partners, is an expert in gaming law and also lectures Gaming Law at the University of Malta. Formerly, he was Chief Regulatory Officer at the Malta Gaming Authority and a Member of the Board of Trustees of the International Association of Gaming Regulators, Inc (IAGR). He is also the Secretary General of the Malta IT Law Association.  

Robert Zammit, Senior Associate at WH Partners, is a regulatory, licensing and corporate lawyer and practices primarily in the gaming and transport industries. His principal areas of expertise are licensing of gambling businesses and regulatory compliance in the area of gambling, intellectual property, information security, privacy and data protection. He is a member of the Malta Chamber of Advocates.