Why Are Online Casinos Based In Malta?

Why Are Online Casinos Based In Malta?

Many of you might have noticed the MGA, or licensed by MGA logo in the footer of your favourite online casino website.

This is a clear indication that the company operates, at least in part from the European island of Malta. Have you ever asked yourself why this is the case, why are online casinos based in Malta?

We will cover this question further on down in this article but first let's understand what the MGA does and what role it plays with casino operators.

MGA - Its Role

In the early 2000's before the great iGaming boom the first gambling websites started to appear under the Maltese jurisdiction (MGA) Casinos Gaming Act-Regulations of 1998. This started a chain reaction and the whole industry took off for Malta from that point on-wards.

The Malta Gaming Authority is a government run regulatory board which oversees the operations of all online casinos based in Malta. The organisation's primary role is to audit and grant licenses to new and existing operators.

Since Malta is a part of the European Union, under free trade laws, any operator licensed in Malta is automatically given a legal right to trade in all EU member states. This is not limited to casinos in any way, the EU promotes free trade amongst it's members making it illegal for another country to impose additional taxes or restrict trade on good or services originating from another member state.

When it comes to licenses the MGA has a number of different type, four (4) of them at the time of writing, each of which serving a specific purpose:

Class 1 License - remote gaming (for example casino games and online lotteries)
Class 2 License - remote betting (for example fixed-odds betting)
Class 3 License - promote and/or abet remote gaming in or from Malta (for example Poker Rooms)
Class 4 License - host and manage remote gaming operators (for example business to business as a software provider)

Malta - A Tax Haven Country

Malta is a small independent island nation located right in the middle of the Mediterranean sea under the Italian island Sicily.

It has established itself as the first EU nation to regulate online gambling and it has do so with a great deal of success.

Once the country joined the European Union in 2004 the law related to e-gambling became regulated as well and it guarantees both operators and player total security and full anonymity at which point operators took advantage of this change and the ability it now brought them to operate freely within European countries.

The main appeal that casino operators find in Malta are the low tax rates they pay. The country has been given the fame of being considered as a tax haven of sorts from which these companies can operate legally. Again legally, no operator is breaking the law or avoiding tax (at least in a strict legal sense) they simply choose to operate from a country with lower national tax rates than others.

The country is small however it has a stable economy and political status. These facts coupled with the already very attractive tax conditions for iGaming companies and backed with a robust I.T. infrastructure nationwide and a skilled workforce of programmers and top level managers to run these casino operations make the island of Malta almost irresistible to gambling institution.

The lower taxes Malta licensed casinos pay to the Maltese government save them incredible amounts of money on a yearly basis whilst providing a good stable injection into the Maltese economy; creating an incentive for the Maltese government to cultivate the industry further.

This mutually beneficial situation between casino operators and for Malta has been heavily criticised by many other EU members states quoting unfair trade laws.

The topic itself is highly debatable but we don't see any wrong doing, after all other countries are free to lower their own taxes if they want to be a more competitive option for this market. We are also born and based in Malta so we know first hand the benefits the entire industry has brought to the country, I've personally see Malta change and grow extremely drastically thanks to the iGaming industry, jobs being created and incomes increasing.

Obtaining a License to Operate in Malta

Obtaining an online gaming license from the Maltese authorities is not a complex process, the MGA can issue so-called permissions to organize and facilitate games in online websites as long as their operators have the proper and valid documentation.

These games (mentioned by the MGA(+) may include sports betting, casino games, poker, lotteries, physical slot machines, and other forms of online gambling.

Any potential operator looking to operate out of Malta need to meet a certain number or requirements in order to do obtain such a license.

The company need to provide and present to the authorities a software which can handle the gaming operation (games, bets, player accounts, etc...), which has been tested for at least six (6) months, is ready to run, and that can provide a good experience to customers.

The MGA will audit the company and the software platform it operates on to ensure that the system meets these requirements and that it does not contain any malicious functionality or 'feature' which would allow the operator the cheat on its customers. Repeated failure to pass such audits means the revocation or non-issuing of a license for the operator in question.

The operator is also required to provide monthly financial and statistical reports to the MGA and to have their physical hardware physically sealed to prevent tampering of the hardware itself.

Finally a small fee of €2,330 is required to apply for a new license and €8,500 yearly per license as a license fee.

Should Players Care About Casino Jurisdiction?

Most players do not care where their favourite casino or casinos operate from as long as the casino provides them with a safe and fair gambling environment. The Malta Gambling Authority is tasked with enforcing this behaviour on the operators registered under it, a job which to date has been done properly.

There are some limitations which the MGA license cannot solve for operators, mainly being the fact that they do not have total freedom as to which countries they can provide their service to. In the past the UK market was open game for operators under an MGA license, this has however changed with the advent of the UKGC or UK Gambling Commission.

An MGA license is not recognised any more in the UK and operators wishing to take customers from the UK need to also hold a UKGC license in order to do so.

This is why many casino operators will have multiple casino licenses, usually listed in the footer of the website itself.

Something good to know is that the license logo which is displayed on the online casino's websites needs to be linked by law to the operator's license page hosted on the MGA's website. This is a great way to know if a casino is actually regulated or if they are some shady operator operating out of god knows where which just placed a simple MGA logo file fraudulently in their footer to trick unsuspecting players.

If you want to know further information about the Malta Gambling Authority, visit the MGA website directly.

You can also take a browse through a comprehensive list of all MGA registered operators on the MGA Operators Registry, however do keep in mind that an operator will generally not be listed with MGA under their brand name but rather under their company name (something which will also be listed in the casino's footer or terms and conditions).

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