Malta Gaming Authority publishes Guidance Document on the Application of Enforcement Measures

On the 26th November 2019, the Malta Gaming Authority (‘’MGA’’) published an Explanatory Note setting out the principles which should guide the MGA in its application of enforcement measures when a breach occurs. This Explanatory Note substitutes the Explanatory Note which was issued in May 2016 on the Quantification of Administrative Fines.

In terms of Article 5(1) of the Gaming Act (Chapter 583 of the Laws of Malta) (‘’the Act’’), the MGA is entitled to impose different types of enforcement measures for non-compliance with the Act or any other regulatory instrument. Article 8 of the Gaming Compliance and Enforcement Regulations – S.L. 583.06 (‘’Regulations’’) lays down the different types of enforcement measures which the MGA may impose varying from the issuance of a warning up to the filing of a report with the Executive Police to institute criminal proceedings, depending on whether such breaches are administrative or criminal in nature.

With respect to breaches of a criminal nature, it is important to note that by virtue of article 25 of the Act, the MGA may impose a penalty or other administrative sanctions as an alternative to criminal proceedings thereby offering the offender the opportunity to enter into a regulatory settlement in lieu of criminal proceedings. In determining whether it should offer regulatory settlement or proceed with the commencement of criminal proceedings, the MGA should seek to achieve the following aims:

1. Ensuring that the licensee rectifies any default;
2. Ensuring that the interests of the players and the general public are safeguarded;
3. Ensuring that any financial gain which the Authorised Person may have made through non-compliance is neutralised; &
4. Ensuring that the licensed operation can be carried out in adherence to regulatory requirements.

In addition to the above, the MGA is entitled to make public any sanction which it has imposed, in particular in the case of suspension and/or cancellation of licenses and criminal proceedings, which are public in nature.

Decision-Making Criteria

In deciding which enforcement measure should be imposed, the MGA should take into account the non-exhaustive considerations listed hereunder:

1. The Nature of the Breach – the MGA would here look at inter alia the financial stability of the licensee; the seriousness of the breach as well as the impact on players.
2. Mitigating and Aggravating Circumstances – factors such as whether the licensee acted deliberately or negligently; knowledge of the breach; involvement of senior management; actions of the licensee in disclosing and rectifying the breach or covering up as well as the degree of cooperation shown by the licensee.
3. The previous disciplinary and/or supervisory record of the Authorised Person, including regulatory findings or warnings.

Quantification

In deciding the amount of a penalty to be imposed, the MGA should follow these steps:

1. Where relevant, the penalty amount should include the repayment of any economic benefit obtained by the Authorised Person through the breach;
2. The amount of the penalty must be appropriate in view of the nature and scale of the breach, and the extent to which it affects the regulatory objectives;
3. The amount of the penalty must be adjusted to take account of any relevant aggravating or mitigating factors;
4. Where appropriate, an adjustment should be made if the penalty amount will cause disproportionate financial hardship (the burden of proving financial hardship lies in all cases with the Authorised Person).

Procedural Matters

In most cases, when the MGA has decided to adopt an enforcement measure it will issue a written notice to the Authorised Person indicating a specific amount of time within which the Authorised Person can submit its defence together with any additional submissions to support such defence.

When the MGA receives a response by the authorised person in relation to the measure which has been imposed as a result of the breach, the said breach is re-analysed by the MGA, taking into consideration the contents of the reply.

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