Internet-Based Online Betting Companies Operating From Malta

Revision No. 21 - Last Updated : 11-04-2002

Quick Reference: (Click on any link in the table to go straight to the relevant paragraph)
Back office	Call centre	License application procedure
Advantages and fiscal benefits	Restrictions	Inspectors
Conclusion	Downloads	Further Reading

In February, 2000, a Legal Notice was issued [Legal Notice 34 of 2000 (Operation of Betting Offices Regulations, 2000)] amending the Public Lotto Ordinance to enable international betting offices to be set up in Malta to conduct betting transactions by electronic means (whether over the internet or using other electronic means such as telephone, fax, computer or any other means approved by the Gaming Board) to people residing outside Malta.

Back office

Internet-based online betting companies wishing to establish a processing operation (back office) in Malta can do so by incorporating an International Trading Company (ITC) in Malta in which case they do not require to be licensed provided the contract for the bet is not carried out in Malta.

However, betting companies not requiring a license 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 in their discretion.

Call centre

Online betting companies wishing to establish a call centre in Malta to receive bets together with a processing operation (back office) may also do so by incorporating an ITC but, in this case, they will also require a license.

License application procedure

For a detailed description of the licensing application procedure please refer to Appendix I.

If all documentation is properly submitted, generally speaking, it would take between 8 - 10 weeks for a license to be issued. Any such license issued will be up for review on the 31^st December, 2002.

Licensees shall be requested to submit a full set of financial statements to the Gaming Board within 30 days from the end of each 6-month period.

Advantages and fiscal benefits

The betting tax is 0.5% of turnover (i.e. the value of all bets received and accepted by the betting company at its betting office).

Although ITCs are liable 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 dividends by an ITC to its non-resident shareholders, certain fiscal incentives and tax refunds available to non-resident shareholders render the effective tax rate 4.17%.

[For further information on ITCs please refer to our fact sheet entitled ‘INTERNATIONAL TRADING COMPANIES’]

Restrictions

Betting against computer-generated games such as cybercasinos on the internet is not allowed but the internet may be used as a communication medium (email) to the call centre.

Maltese residents are prohibited from placing bets with such licensed companies.

Operators issued with a licence will be expected to operate within the regulations in force at the time.

Inspectors

The Public Lotto Ordinance provides that inspectors have the power to enter and remain in a betting office at any time upon production of an appropriate identity card for the purpose of observing the operations of the betting office, making sure that such operations are being properly conducted, ensuring compliance with conditions imposed in the license and ensuring that the correct amount of tax is being paid.

The Gaming Board also has a number of supervisory powers in relation to Betting Offices. Thus, for instance, all employees must be approved beforehand by the Gaming Board.

Conclusion

Since the enactment of the above-mentioned rules, the number of foreign companies setting up operation in Malta has been remarkable. To give just one example, one of the oldest bookmakers in the world, Heathorns International, established as far back as 1890, has recently set up operation in Malta. Speaking during a recent press conference managing director Matthew Simmonds stated that he was lured to Malta by the tax incentives and the security of operating within a well-regulated environment.

Downloads:

· This Document in PDF Format.

· Appendix 1 – License Application Process