Skill Games Regulations, 2017

The Malta Gaming Authority (MGA) embarked on the project of Skill Games’ regulations by virtue of a public consultation that was carried out in 2015. This involved feedback of the Maltese gaming industry stakeholders, which was then analysed and transposed into a position paper that was published in December 2015. The legislative process was then undertaken by the legislator in 2016. This involved notification to the European Commission which was followed by a three-month standstill period, which arises from Directive (EU) 2015/1535. Eventually, the once proposed-regulations came were transposed into Maltese legislation on the 24th of January 2017 by virtue of Legal Notice 31 of 2017. The Skill Games Regulations may now be cited from Subsidiary Legislation 438.11 of the Laws of Malta.

Under this new framework, the MGA is entrusted with the governance and regulation over the skill games sector, as originally envisaged under article 78 of the Lotteries and Other Games Act (Chapter 438 of the Laws of Malta).

By virtue of the Skill Games Regulations, the MGA is empowered to regulate the sector in terms of a number of public policy objectives listed down in regulation 3, including consumer protection, fairness of the game, and the prevention of criminality.

Furthermore, skill games which, in the opinion of the MGA, should be subject to additional regulatory supervision because of any additional risk they may pose to consumers, may, by virtue of a public ruling issued by the Authority in terms of regulation 6, be deemed ‘controlled skill games’, and thus become subject to the requirement of a licence, and the rest of the obligations envisaged in the regulations.

Therefore the legislator is putting a distinction between skill games which are not subject to such a ruling, are therefore not subject to the requirement to acquire a licence, and controlled skill games which require a licence.

A controlled skill games licence may be a licence to provide a service for the purposes of engaging with end consumers, or a licence to provide a supply, that is, in a business-to-business capacity. The licence is valid for five years, and is subject to a number of requirements, including a procedure

• Ensuring that the individuals behind the business are fit and proper;
• Of financial and system auditing to ensure that the operation is fair, sound and secure;
• Ascertaining that there are sufficient measures to prevent fraud and money-laundering,
• Ensuring a consumer-centric approach to the business, a high level of information security and segregation of player funds.

At this point it is worth quoting the definition of skill games as laid down by the Maltese Legislator. This being: ‘a game for money or money’s worth and through means of distance communication, the result of which is determined by the use of skill alone or predominantly by the use of skill and is operated as an economic activity, but does not include a sport event’.

Although a skill game does not bring about the licensing requirements, the burden to prove that the activity in question is a skill game rests on the party operating or promoting the activity. Skill games with a negligible element of chance did not previously fall within the scope of gaming legislation but within the scope of general consumer protection legislation. The MGA sought to capture this group of games under its competence to provide protection to participants/players in order to ensure a safe and fair gaming environment in all instances and scenarios.

The MGA is vested with the discretion to classify games as skill games, on the basis of the criteria listed in Schedule 1 of the Regulations. These being:

1. The presence of random draws and their effect on the outcome;
2. If the game is played for money and, or prizes with a monetary value;
3. Whether participation in a game involves any form of monetary commitment, or commitment of a monetary value;
4. The possibility of a negative social impact of the game;
5. Whether the activity is closely associated with games of chance and/or gambling;
6. The duration;
7. If at face value, the skilled player is able to win more than an unskilled player;
8. If a player’s chance of winning is significantly increased by experience in playing the game;
9. Whether skill can be acquired through training, experience, reading literature or other educational material;
10. Whether a rule-set or format that is used further nullifies the effect of any element of chance;
11. Whether the game is played against other human players, or otherwise;
12. The level of interaction between the players and between the operator and the players and the level of intervention of by the operator;
13. The complexity of the game, including the amount of player choices and their potential effect on the outcome and the strategies involved.

One may assert that it will only be through an examination of each case that more checks may be found proportionate and necessary in the public interest.