Malta Gaming Licenses: Understanding Malta’s Capital Requirements for Gaming Licenses and Maintaining a Positive Equity Position
The below article summarizes the rationale and the current minimum share capital requirements for gaming licenses in Malta.
The Capital Requirements Policy, which is a binding instrument in terms of Article 7 (2)(a) of the Gaming Act, serves as a foundation for ensuring the financial soundness of legal entities licensed by the Malta Gaming Authority (the “MGA”/ “Authority”), holding a licence to provide gaming services by remote means and/or a critical gaming supply.
Licensees must comply with specific financial standards to maintain their operational sustainability. The Capital Requirements Policy (the “Policy”) aims to protect the integrity of the gaming sector, as outlined in Article 4(1)(e) of the Gaming Act (Chapter 583 of the Laws of Malta).
It establishes minimum capital thresholds, requires entities to maintain a positive equity position, and defines procedures to address financial shortfalls.
Background to the Type of Licenses and Games
The MGA offers two primary types of licenses:
1. Gaming Service Licence: This Business-to-consumer licence allows operators to offer or carry out gaming services directly to players. The following services shall each constitute a gaming service:
a. Offering, provision or operation of a gaming service;
b. Hosting by a person in his premises accessible to the public, the operation or making available for use a gaming device or gaming system.
2. Critical Gaming Supply Licence: This Business-to-Business licence permits providers to offer critical gaming supplies, such as game software or management systems to other businesses. The following services shall each constitute a critical gaming supply:
a. supply and management of material elements of a game;
b. supply and management of software, to generate, capture, control or process essential regulatory record and/or supply and management of the control system itself on which the software resides.
Corporate groups may apply for a B2C/B2B corporate MGA licence, whereby the whole group is deemed to be the Licensee. This applies as long as the group’s parent entity exercises control to the extent of over 90% over other bodies corporate in the same group, whether by way of shareholding or voting rights.
Within these licenses, the Authority categorises games into four types:
• Type 1: games of chance played against the house, the outcome of which is determined by a random generator, and shall include casino-type games (including roulette, blackjack, baccarat, and virtual sports games), poker played against the house, lotteries, secondary lotteries; and/or
• Type 2: games of chance played against the house, the outcome of which is not generated randomly, but is determined by the result of an event or competition extraneous to a game of chance, and whereby the operator manages his or her own risk by managing the odds offered to the player; and/o• Type 3: games of chance not played against the house and wherein the operator is not exposed to gaming risk, but generates revenue by taking a commission or other charge based on the stakes or the prize, and shall include player versus player games such as poker, bingo, betting exchange, and other commission-based games; and/or,
• Type 4: controlled skill games as per regulation 8 of the Gaming Authorisations Regulations.
Applicability
This Policy applies to both current license holders and those applying for licenses with the MGA to be authorised to provide a B2C gaming service by remote means and/or to provide a B2B critical gaming supply.
Minimum Share Capital Requirements
Licensees and licence applicants must meet specific minimum share capital requirements, depending on their license type throughout the duration of the licence. The minimum thresholds are as follows:
Licence Type Minimum Share Capital Requirement (€)
• Critical Gaming Supply 40,000
• Gaming Service Type 1 100,000
• Gaming Service Type 2 100,000
• Gaming Service Type 3 40,000
• Gaming Service Type 4 40,000
• Gaming Service Multiple Types Gaming Service Applicants/Licensees offering multiple type approvals are required to meet the above capital requirements cumulatively up to a capping of 240,000
An applicant for a Corporate Group Licence, may either singularly satisfy the total required minimum share capital by one corporate group entity, which will be covered by the prospective Corporate Group Licence or cumulatively and not necessarily equally, by two or more prospective corporate group entities. With regards to existing Corporate Group Licences, the minimum share capital shall be satisfied by the corporate group entity already covered by the Corporate Group Licence (the “CRP entity”) or alternatively, cumulatively and not necessarily equally, by two or more CRP entities.
Maintaining a Positive Equity Position
The Policy strengthens the current regime by introducing the requirement to maintain a positive equity position. This new standard provides a clear and objective measure for assessing, monitoring, and rectifying a Licensee’s financial position within a stipulated timeframe.
The Authority will ascertain whether a Licensee has a positive or a negative equity position by considering the total assets and liabilities reported within the Licensee’s financial statement. If a Licensee is faced with a negative equity position, such Licensee shall be required to restore such negative equity position within a stipulated timeframe established by the Authority.
While the current regime allows the MGA to take action in instances where the Licensee has failed to discharge financial commitments for its operations, or when the MGA has reason to believe that such failure is imminent, the new requirement to restore a negative equity position will serve as an objective early warning measure for the MGA to ensure that Licensees remedy the situation at an early stage.
Restoration of Equity
Any Licensee can restore a negative equity position through issued and paid-up share capital, share premium reserves, and other reserves of components classified as equity within the statement of financial position. This method does not necessarily mandate adding funding, but may be achieved through the conversion of existing shareholders loans to capital.
Licensees closing their financial year end with a negative equity position shall be required to restore their capital within 6 months from their financial year end (the “Restoration Period”), regardless of whether the financial statements covering the previous financial year have been audited. During the restoration period, the Licensee is prohibited from increasing its loans payable until its equity position has been restored.
Special Considerations for B2B Licensees
On the basis of proportionality, the process for restoration of equity of B2C and B2B Licensees shall differ slightly. B2B license holders, solely licensed to provide a critical gaming supply, given the absence of player funds and higher initial costs, shall only be required to restore a negative equity position if such negative equity exceeds €3 million. Nonetheless, the MGA may require earlier action if financial stability is at risk.
Derogations
The MGA may exempt a Licensee or, where applicable, a CRP entity, from restoring their equity position under specific circumstances, such as:
• The Authority is satisfied with the consolidated performance and stability of the Group to which the Licensee in a negative equity position pertains.
• Adequate safeguards, such as asset pledges or guarantees, are in place.
• The Licensee can prove that the consolidated financial statements of the Corporate Group Licence show a positive equity position.
Transition Period and Extended Deadlines
For licenses issued in 2025 or any subsequent year, equity restoration must occur by June 30 of the year following the granting of the licence, regardless of the financial year-end. Licensees with negative equity as of December 31, 2024, shall be required to fully restore their equity within an extended timeframe, to be decided by the MGA on a case-by-case basis.
For entities with negative equity exceeding €1 million as of the 2024 year-end, a recapitalisation plan must be submitted to the MGA by May 31, 2025. This plan should outline proposed actions and include financial forecasts.
The MGA reserves the right to adjust deadlines or require earlier action in cases of significant financial deterioration.
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