Proposed Skill Games Regulations

MEDIA ROOM

The draft regulations issued under the ‘Lotteries and Other Games Act’, circulated by the MGA, and having a prospective adoption date for 2017 focus on Games of Skill. Through an attempt to give a new approach to gaming licenses, the legislator is providing the following definitions:

  • Skill: knowledge, dexterity, strength, speed, accuracy, reaction time, coordination, and/or competence in other physical or mental feats acquired, developed or learnt through practice, experience or study;
  • Skill Game: a game for money or money’s worth and through means of distance communication, the result of which is determined by the use of skill alone or predominantly by the use of skill and is operated as an economic activity, but does not include a sport event;

The games which are thus being regularised are games where one competes for a money prize, which are offered over the means of communication at a distance and whose outcome is determined only by means of the skills of the player or mostly by means of the skills of the player. Sports events are not included in this classification.

These regulations also set out further details in view of Skill Games, such as the licensing requirements and details as to how a licence can be issued; validity and term of such licence; instances giving rise to suspension and termination of a license; the requirement of record keeping for KYC; and the powers of the MGA vis-à-vis Skill Games; its investigation and enforcement powers. The MGA is also retaining the supervisory and regulatory role for skills games to ensure the correct functioning and the adequate transparency in operation.

From this, one can deduce that this proposal authorises the MGA to issue directives to regulate the skill games so as to protect the consumers. The MGA, as an authority reserves the authority to create new sub-sectors as the case of ‘controlled skill games’ where it feels that games falling within this category require more regulations. Controlled skill games, for instance, are skill games subject to licensing requirements.

It is interesting to note, that following the recent position being adopted by the MGA, skill games are subject to risk-based regulatory intervention. This regulation sets out the licence requirements and the regulatory objectives in respect of Skill Games.

It is the party operating the game that has the burden to prove that an activity is a skill game, this being said, the MGA has the discretion to classify a game as a ‘skill game’ or not a ‘skill game’.

Of particular interest in this proposed regulation is the First Schedule to these regulations, a summary of which is listed below. This Schedule sets out the Criteria for Classification of Skill Games.

  1. The presence of random draws and their effect on the outcome;
  2. If the game is played for money and, or prizes with a monetary value;
  3. Whether participation in a game involves any form of monetary commitment, or commitment of a monetary value;
  4. The possibility of a negative social impact of the game;
  5. Whether the activity is closely associated with games of change and/or gambling;
  6. The duration;
  7. If at face value, the skilled player is able to win more than an unskilled player;
  8. If a player’s chance of winning is significantly increased by experience in playing the game;
  9. Whether skill can be acquired through training, experience, reading literature or other educational material;
  10. Whether a rule-set or format that is used further nullifies the effect of any element of chance;
  11. Whether the game is played against other human players, or otherwise;
  12. The level of interaction between the players and between the operator and the players and the level of intervention of by the operator;
  13. The complexity of the game, including the amount of player choices and their potential effect on the outcome and the strategies involved,

One may assert that it will only be through an examination of each case that more checks may be found proportionate and necessary in the public interest.

While acknowledging that this is a progressive way to address this sector, at this stage it is worth noting that the government has kick-started the notification procedure by sending the proposed draft regulation to the European Commission. According to Directive (EU) 2015/1535 Member States must inform the Commission of any draft technical regulation prior to its adoption. Starting from the date of notification of the draft, a three-month standstill period – during which the notifying Member State cannot adopt the technical regulation in question – enables the Commission and the other Member States to examine the notified text and to respond appropriately.

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