Small Gaming Businesses Face Steeper Fees After Changes By Malta Regulator

Changes in the regulation of gaming license fees has been announced by the Malta Gaming Authority (MGA), in a move that narrows how a start-up can be defined. The changes restrict the amount of revenue which can be earned within the first year and will prevents many new firms from being recognised as a start-up.  

The new rules will apply both to individuals running a company as well as those representing part of a larger organisation.  

Sharp reduction in permitted earnings 

The main changes announced by the MGA surround the amount of revenue that a business will be allowed to earn before it stops being recognised as a start-up. The change is significant for many businesses, as gaming start-ups have an exemption from fees for compliance contribution. These can climb as high as €600,000 so represent an enormous potential saving for firms who fall within the start-up criteria.  

The existing rules specified that a firm could be considered as a start-up if it had generated less than €10 million in revenue over the previous year, from gaming or related activity. However, under the new regulations, the period has been stretched to three times as long. In other words, if a business has revenue exceeding €10 million in the preceding three years, it cannot be treated as a start-up.  

The fee structure 

The compliance contribution changes depending on the amount of revenue generated as well as the type of games services being provided.  

Type 1 contributions relate to games which are played against the house and are determined by chance and by a random generator. For the first €3 million of revenue, the contribution is set at 1.25%. 

Type 2 games fit the same criteria as Type 1, except that a random number generator is not used. For these, the contribution climbs to 4% for the first €3 million. 

Type 3 games are also chance but not played against the house; this would include card games such as poker. The contribution here is 4% for the first €2 million. 

The last category, Type 4, are games which include “controlled skill” such as fantasy prediction sports games. These attract a 0.5% contribution for the first €2 million.  

The MGA has said it is introducing the changes because it believes that only companies which are legitimately start-ups should be able to benefit from a grace period at the beginning.  

The changes will take effect from January 2020.