The Malta Gaming Authority (MGA) has published a guidance note on the impact which the UK exodus from the European Union (EU) is expected to have on the local gambling industry.
The guidance note’s contents are only related to the regulatory operations within the MGA, with the regulatory body also emphasising on the Brexit’s consequences for gambling operators. These effects include but are not limited to data protection, employment, copyright considerations, immigration and duty. The MGA also highlighted the fact that the contents of the guidance note are particularly important to gambling companies based in Malta and operating in the UK, or to operators based in the UK and operating in Malta.
As explained by the gambling regulator itself, the purpose of the recently-issued guidelines is to warn all players in the local gambling sector of the potential effects which Brexit could have on the Malta gambling industry. The guidelines are related to transitory measures and regulatory matters.
The MGA further noted that there would be some aspects of the gambling sector that would not be affected by the Brexit. Such regulatory causes include MGA’s acceptance of UK licensed and regulated financial, payment and credit institutions and payment methods; MGA’s recognition of random number generator (RNG) or game certificates issued in accordance to UK standards; MGA’s acceptance of essential components of gambling operations which are situated on the territory of the UK. The Maltese gambling regulatory body would also have no objection for licensed gambling companies which have offices or performing their duties from the UK.
Gambling Operators May Be Forced to Transfer Their Operating License to Another Company
One of the regulations the MGA has paid special attention in its guidelines is Regulation 10 of the Gaming Authorisations Regulations. Under the provisions of this regulation, a person who holds a gambling operation license in Malta is required to be a member of the European Economic Area (EEA).
However, the exodus of the UK from the European Union would mean that people and companies which are based there are no longer part of the EEA. As explained by the Malta Gaming Authority, the main principle of Regulation 10 is based on the prohibitions on restrictions to the freedom of establishment in correspondence to Article 49 of the Treaty on the Functioning of the European Union (TFEU). It also corresponds to the prohibition on restrictions to the freedom to service provision as per Article 56 of the TFEU, as well as to some subsequent interpretations made by the Court of Justice of the EU.
The UK’s exit from the EU, and the EEA, respectively, may require some measures to be undertaken in order for gambling operators based there and operating in Malta, or based on Malta and operating in the UK, to be able to continue the provision of their services. These measures may include transferring the operating licence to another company within the same corporate group. Such a move would require the preliminary approval of the MGA, as well as re-domiciliation of the company.
A 12-month transitory period would apply, starting from the moment when the UK leaves the EU and the Union’s accumulated legislation, legal acts and court decisions are no longer applicable to the UK.
Special Recognition Notices Would Be Issued by the MGA for 12-Month Period
Another regulation which needs to be taken into account considering the upcoming Brexit is Regulation 22 of the Gaming Authorisations Regulations. Under the provisions of the above-mentioned regulation, gambling companies that do not own a licence issued by the MGA but offer their services under an operating licence issued by another Member state of the EU or the EEA are required to file an application for a recognition notice with the MGA. The main goal of this procedure is providing the Malta gambling regulatory body with the chance to recognise and depend on the license which another EU/EEA Member State had already issued without any regulatory gaps. This is based on the principles of Article 56 of the TFEU.
The upcoming exodus of the UK from the EU is expected to have to major effects in terms of Regulation 22 – it would affect the existing recognition notices’ validity and could breach Regulation 3 of the Gaming Authorisations Regulations.
The MGA intends to process all applications for a recognition notice which are submitted before the Brexit. Such recognition notices would be fully valid for 12 months but after that, they would not be subjected to renewal. So, in case that gambling companies which have been using such recognition notices want to continue operating in or from Malta, they would be required to either apply for an MGA operating licence or apply for a recognition notice in terms of any other licence within the EU or the EEA they may own to that date.
Any gambling companies which offer their services in or from the country without holding an operating licence issued by the MGA or a recognition notice would be violating Regulation 3 of the GAR, which is classified as a criminal offence and would be treated as such.