In a first attempt to delineate between games of chances and games of skill, the Maltese legislator set out an exemption from the requirement to obtain an MGA licence for a Fantasy Sports Game in the recently published legal notice, L.N. 271 of 2016.
This relates specifically to fantasy sports where players choose virtual representations of real-life athletes, where the value and points attributed to an athlete reflect the athlete’s performance in actual sporting event and where the outcome is determined predominantly by skill and knowledge rather than by chance.
The definition for Fantasy Sports set out by the legislator in the Legal Notice in question is:
“A contest played for money or money’s worth whereby the winning outcome is determined predominantly through the skill or knowledge of the player, and where the results are determined by the accumulation of statistical results of the performance of a number of individuals in sporting events, but shall not include the forecast of the score, point spread or any other future occurrence of one or multiple events, and for the avoidance of doubt, the definition of a "bet" as defined in the Act shall not be applicable.”
Games of Skill
The MGA’s position vis-à-vis Digital Games of Skill was laid out in a Position Paper published in December 2015.
The MGA’s position is that the regulatory intervention should be proportionate to address the level of risk presented to the consumer. In this respect, the Maltese legislator is committed to introduce legislation to regulate certain skill games which may present increased risks to the consumer. In an attempt to achieve this, the proposed Skill Games Regulations have been notified to the European commission as part of the process for the Authority to roll out its licensing framework to regulated the skill-based games.
In the interim period, and until the proposed regulatory framework for skill games is put into force, the MGA is accepting interests via notification in order to closely monitor these operations and evaluate the potential risks to the consumer.
The MGA believes that having clearer indicators (qualitative and/or quantitative) as to which types of games would fall under the categories defined under the current Act, would, in future, allow for a more comprehensive regulatory framework that is clear, streamlined and providing adequate safeguards for the consumer, depending on the risk factors to which the consumer is exposed. The MGA is seeking a scenario where it will intervene only in areas where it is warranted to mitigate and address risks to consumers and only to the extent necessary within the current and forthcoming regulatory framework.
In its position paper, the MGA sets out classification of two types of Skill Games, the variant in the two types is the level of skill which is exhibited in the game
Type I Skill Games
These games are, in effect, games of chance and skill, but in which skill of the player predominates in determining the outcome.
In view of the element of chance present in Type I skill games, and the risks to consumers that may ensue, the Authority is of the opinion that a licensing regime and regulatory oversight provided by the current regime should be retained in the forthcoming new legislation.
Whilst other legislation, such as consumer protection legislation may still apply, specific regulation is still warranted to ensure the fairness of the games, imposing responsible gaming measures, protecting player funds and keeping the industry free from fraud and crime.
Type II Skill Games
The Authority is of the opinion that Type II skill games are incomparable to games of chance, games of chance and skill, and even Type I skill games. These are games in which the result is completely determined by the skill of the player. More dominant skill factor is present in this classification. This does not mean that any element of chance has to be completely absent, rather, that any chance factor is so minimal, that the outcome of the game is not affected by such an element of chance.
With regard to Type II skill games, the Authority is of the opinion that an ex-ante licensing requirement is not warranted as the risks to which a player of such games may be exposed are currently adequately safeguarded by means of existent general and horizontal consumer protection legislation emanating from domestic and European legislation, including the Consumer Rights Regulations (S.L. 378.17), which implements the Consumer Rights Directive (Directive 2011/83/EU) and other general consumer protection legislation.
In view of the continuous evolution and development of different types of games, the Authority is of the opinion that the ideal manner in which to categorise gaming activities is by means of a subjective assessment, on a case-by-case basis, which should, however, be conducted on the basis of a series of objective criteria.
According to the MGA, the criteria used shall be the following:
- The presence of random draws and their effect on the outcome;
- The length of each game or match;
- Whether the intention is amusement or competition;
- Whether a skilled player is able to win more than an unskilled player;
- Whether a player’s chance of winning is significantly increased by experience in playing the game;
- Whether skill can be acquired through reading literature or other educational material;
- Whether a rule-set or format that is used further nullifies the effect of any element of chance;
- Whether the game is played against other human players, or against the house, though a skill game can also be played against the house; and
- Common sense and opinion of the player community.
