Skill-Based Fantasy Sports Enjoy Formal Exempt Status in Malta
The daily fantasy sports (‘DFS’) industry has been a hot topic of debate in the United States market. Since US Law is not clear on the legality of DFS, individual states have adopted their own legislation on this topic. As a result of this, DFS operators in the US have started to explore the option of expanding to other markets, such as Europe. The main problem with the regulation of DFS in any jurisdiction, is that this is sometimes classified as a game of skill, and at other times classified as a game of chance.
In the wake of the publication of its Position Paper on Digital Games of Skill with Prize in December 2015, the Malta Gaming Authority (‘MGA’) has published its position on this activity, announcing that DFS operations would be exempt from licensing. This exemption is being granted on the basis of the element of skill and knowledge involved in fantasy sports, which warrants that such an activity should be differentiated from games of chance in terms of licensing and regulation. Fantasy sports where players choose virtual representations of real-life spots men and women, and where the credit attributed to the player reflects the athletes’ performance in actual sporting events, necessarily involve an outcome that is determined predominantly by skill and knowledge rather than by chance. The MGA is of the view that fantasy sports are to be differentiated from games of chance in terms of licensing and regulations due to the elements of skill and knowledge involved in fantasy sports.
The proposed Skill Games Regulations have been notified to the European Commission as part of the process, in accordance with the Technical Regulation Information System (TRIS) procedure. These regulations will form part of the MGA’s planned technical overhaul of Malta’s regulatory and licensing framework. In the interim, Legal Notice 271 of 2016 entitled the Fantasy Sports (exemption) Regulations (S.L. 438.10) has been published, exempting fantasy games from the requirement of a gambling licence in terms of the Lotteries and Other Games Act (Chapter 438 of the Laws of Malta) or the Remote Gaming Regulations (S.L. 438.04).
The MGA is open to receiving interests via ad hoc notifications, in order to closely monitor operations and evaluate potential risks to customers. Entities offering fantasy sports may voluntarily notify their operations to the MGA by completing the ‘Fantasy Sports Notification Form’ (this may be viewed here), in order to obtain formal recognition from the MGA, which recognition will effectively serve as a “seal of guarantee” for players..