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Gambling taxes and law in Malta

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Taxes

Lotteries

The National Lottery is operated under an exclusive licence with private licensee pursuant to terms – including the payment of fees and taxes – included in that license. Based on information provided to us by the Lotteries and Gaming Authority, the tax on lotteries is 20% on gross turnover and 12.5% on gross turnover from Instant Lottery tickets. The national lottery operator pays an annual licence fee of approximately €46’000.

Online Gaming

The annual licence fee for any class of licence is Lm 3’000 (approx. €7’000). Where a 5-year licence renewal of a licence is granted, a fee for of Lm 3,000 per annum is payable.

(Remote Gaming Regulations 2004, Second Schedule.)

Although International Trading Companies (ITC) are subject to the normal corporate tax of 35% levied on all Maltese companies based upon their chargeable income for the year of assessment, upon a distribution of dividend by an ITC to its non-resident shareholder, certain fiscal incentives and tax refunds available to non-resident shareholders render the effective tax rate 4.17%.

All remote gaming (except betting and pool betting) is subject to fees of Lm 2,000 per month during the first six months after issue of the licence and subsequently Lm 3,000 per month for the entire duration of the licence period, provided that on remote gaming operated by a Class 4 Remote Gaming licensee, the licensee who operates the hosting platform shall not pay any tax for the first six months after the issue of the licence, shall pay tax of Lm 1,000 per month for the subsequent six months and subsequently Lm 2,000 per month for the entire duration of the licence. Licensees operating from the hosting platform shall pay five hundred Lm 500 per month.

(Remote Gaming Regulations 2004, Fourth Schedule.)

With respect to betting and pool betting, the licensee pays tax (a) On the gross amount of bets accepted in remote betting operations a sum equivalent to 0.5%; (b) On betting exchanges – 0.5% on the sum of all net winnings calculated per player per betting market, and on pool betting – a sum equivalent to 0.5% on the aggregate of stakes paid.

The foregoing notwithstanding, in all cases the total maximum of tax payable per annum by one licensee in respect of any one licence shall not exceed Lm 200,000.

Casino gaming

A casino licensee pays a tax of 36% on total gross takings of table games, 15% of the gross takings generated by table games dedicated to approved junkets, 40% on total gross takings of gaming machines played at the casino, 25% on the gross takings of all gaming machines dedicated to approved junkets

(Gaming Act CAP 400 Act X of 1998, as amended by Acts XXIV of 2001 and III of 2004, Schedule Taxation.) in addition to such rate of tax on the casino entrance fee as may be specified in the casino licence.

Land-based casinos are subject to an annual licence fee of approximately €46’000.

Other Gaming

The tax on betting other than online betting is 25% on net turnover. For off-line bingo the tax is 20% on gross turnover.

As discussed above, under

online gaming, online bingo operators are subject to an annual licence fee of approximately €7’000 and a

Malta law provides for the issuance of licenses for Amusement Machines (which are regulated by the executive police) as well as for Broadcasting Media Games, Commercial Bingo Halls

(N.B. on January 27, 2006, the Lotteries and Gaming Authority published Commercial Bingo (Tombola) Regulations.), Commercial Communication Games and on-course racecourse betting and sweepstakes. With the exception of Amusement Machines, each of these licences will be subject to fees and/or taxes in accordance with regulations which have yet to be published.

LISTING

LEGISLATION ENACTED

Federal

General

– Financial Services Act (CAP. 330)

– Financial Services Act (CAP. 330): Distance Selling (Retail Financial Services Regulations, L.N. 36 of 2005

– Prevention of Money Laundering Act CAP. 373

– Prevention of Money Laundering Regulations 2003, L.N. 199 of 2003

– Consumer Affairs Act (CAP. 378)

– Operation of Betting Offices Regulations 2000, L.N. 34 of 2000

– Lotteries and Other Games Act (Act NO. XXIV of 2001, as amended by Act III of 2004)(CAP. 438)

– Lotteries and Other Games Act (Act NO. XXIV of 2001): National Lottery Gaming Devices Regulations, 2004 L.N. 75 of 2004

– Lotteries and Other Games Act (Act NO. XXIV of 2001): National Lottery Regulations, 2004

– Lotteries and Other Games Act (Act No. XXIV of 2001): Notice of coming into force, L.N. 74 of 2004

– Lotteries and Other Games Act: Publication of a Directive by the Lotteries and Gaming Authority

– Lotteries and Other Games Act: Remote Gaming Regulations, 2004

– Gaming Act and Prevention of Corruption (Players) Act

– Electronic Commerce Act arts. 22-25

– Remote Gaming Regulations 2004 L.N. 176 of 2004

Lotteries

– See above (no legislation regulating only lotteries)

Casino Gaming

– Gaming Act 1998 (CAP. 400)

– Gaming Act: Gaming Act (Amendment) Regulations, L.N. 79 of 2003

Machine Gambling Outside Casinos

– – See above (no legislation regulating only machine gambling outside casinos)

Betting

– Racecourse Betting Ordinance, Cap. 78

6.-9.

Relevant provisions included in legislation cited above.

BARRIERS

Panorama

General

Persons in Malta may only play those games that are specifically authorised by the law. Under art. 67 of the Lotteries and Other Games Act, an offence against the Act is punishable by a fine of 3’000 – 100’000 liri (Lm) and/or imprisonment for up to 2 years.

Lotteries

A single National Lottery

is permitted under Part VI of the Lotteries and Other Games Act. The Minister of Finance may grant a licence to operate a National Lottery to only one person at a time. The Minister of Finance may impose such terms and conditions on such licence as he deems appropriate. Such person must be a company registered in Malta whose sole purpose is to operate the National Lottery. In 2004, an exclusive 8-year licence to operate all State Lottery Games was granted to the Greek company Intralot.

The sale of games comprising the National Lottery requires a permit from the Lotteries and Gaming Authority subject to the terms and conditions the Authority deems appropriate.

Casino Gaming

The Lotteries and Gaming Authority is responsible for issuing casino licences. Pursuant to article 15 of the Gaming Act,

such licences are issued only to companies registered in Malta. Casino employees, casino managers and junket leaders must have a licence from the Authority. Although the minimum age for entry into a casino generally is 18 years, citizens of Malta must be at least 25 years old.

The Authority may specify the games that may be played in a casino.

Article 49 of the Gaming Act prohibits most forms of advertising of casinos within Malta.

Machine Gambling Outside Casinos

The importation, manufacture, maintenance or supply of gaming devices requires a licence from the Lotteries and Gaming Authority.

The operation of Video Lottery Terminals is subject to a licence by the Authority, which may be issued only to a company registered in Malta.

Betting

Games of chance and games of chance and skill, sport bets and games which depend on a sport event or a set of sports events are

prohibited unless specifically authorised. This includes games offered directly or indirectly from abroad or from Malta to persons in Malta through a means of distance communication. No authorised game may be organised on the results of games operated by the holder of a casino licence issued under the Gaming Act without the prior approval in writing of the Lotteries and Gaming Authority and subject to the terms and conditions imposed by that Authority.

Racecourse Betting

Racecourse bets on horse races and dog races, as well as sweepstakes in connection with horse races, require a licence from the Authority. Both the racecourse(s) and the meetings must be approved by the Minister of Finance.

Internet Gaming

Online gaming was addressed by legislation in 2000. No person may operate, promote, sell or abet remote gaming in or from Malta without a valid licence of the relevant class. Four types of licenses are available:

Class 1: Online Gaming License (Covers casino and casino-type games)

Class 2: Online Betting Office License

Class 3: Online Betting Exchange License

Class 4: Online Gaming Platform (Covers software platforms from which casinos can operate)

Licences are granted for five year periods but are revocable by the Authority. To qualify for a licence, an applicant must be a limited liability company registered for this purpose in Malta.

Commitment of the applicant to maintaining a physical presence in Malta is one of the criteria for granting such licence. One of the criteria for suspension or cancellation of a licence is that the Authority be reasonably satisfied that the licensee presents a danger to the reputation of gaming in Malta.

Betting operations are carried out through an International Trading Company (ITC) set up for that purpose. The activities of ITCs are limited to those carried out outside Malta, therefore Maltese residents are prohibited from placing bets with licensed companies and the companies may only take bets from non Maltese residents.

If the ITC is to be a processing operation only and will not conclude contracts for bets in Malta, it need not be licensed; however such companies will be asked to make a voluntary contribution to the arts or to a charity of their choice, the amount of such contribution being left entirely to their discretion. If the ITC will operate a call centre in Malta to receive bets as well as a processing operation, a licence will be required.

A presence in Malta is required

in the form of premises from which the betting office’s operations are carried out. Generally speaking, a call centre is established exclusively to receive bets together with a processing (back office) operation. Betting against computer generated games such as cyber-casinos on the Internet will not be given licences but the Internet may be used as a communication medium (though e-mail) to the call centre.

The Malta Financial Services Authority, which regulates the financial services sector as a general matter, regulates and registers all companies, including betting companies, oversees the due-diligence process on prospective licenses and advised the Gaming Authority on the suitability of an applicant for the issue of a betting license.

Bingo

The operation of commercial tombola games requires a licence from the Lotteries and Gaming Authority which will be granted only to a company registered in Malta.

Media Gambling Services

Operation of a “broadcasting media game” requires a licence from the Authority.

Sales Promotional Gambling

Operation of a “commercial communication game”

requires a licence from the Authority. Where the prizes to be won in such a game are participations in the National Lottery and the game is operated in agreement with the National Lottery, the licence requirement does not apply.

Charity Gambling

Under §38 of the Lotteries and Other Games Act, the Authority may grant a licence to a company registered in Malta to operate commercial tombola games in a tombola (bingo) hall.

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