The Malta-Alderney MOU- is it a game-changer?

Following the announcement of the signature of a bilateral Memorandum of Understanding between Malta and Alderney between the Malta Lotteries and Gaming Authority (LGA) and the Alderney Gambling Control Commission (AGCC) on the 9^th October 2013, several operators await further details about the MoU with some anticipation. This MoU complements the previous MoUs signed by the LGA with Denmark, Jersey and the Isle of Man, besides other bodes such as FIFA and the International Olympic Committee.

According to the press announcement on the LGA’s website, “This MoU will provide a formal basis and framework for cooperation between the two jurisdictions, including for the exchange of information and investigative assistance of providers and remote gaming services. The MoU also addresses issues such as reciprocal server location, cloud regulation, the recognition of national certification bodies and player liquidity.”

So what could this MoU mean for your business? Does it present any real opportunity?

Regrettably there are no quick answers just yet. At the time of writing the operational aspects of the MoU were being finalised by the respective authorities and further details are expected to be announced during the ICE Totally Gaming Conference in London in the first week of February 2014. Hopefully the four-month wait since the announcement of the MoU will be worthwhile for those operators having components of their operation based in both Malta and Alderney.

From a Maltese perspective, the need for more co-operation between jurisdictions has been a point on the LGA’s agenda for some time. This is evidenced by the Authority’s successfully securing similar arrangements Denmark, Jersey and the Isle of Man, and its continued efforts in identifying other key igaming jurisdictions with a view towards further enhancing co-operation including the exchange of information, effective enforcement and server location in recognised facilities.

The principles set out in the various MoUs serve to set aside the legal and procedural Pandora’s box that would otherwise arise in circumstances where the home state regulator seeks to enforce its rules and regulations in the host state. In this light, the widening of this MoU network by the LGA has become an increasingly material consideration for igaming operators having their gaming servers based in more than one jurisdiction, or wishing to have solid mirroring or disaster-recovery arrangements in place.

The significance of the MoU with Alderney and other jurisdictions must also be considered in the context of the 2011 amendments to the Maltese Remote Gaming Regulations, which permitted the hardware of a Malta-licensed operator to be based in a jurisdiction outside Malta, being either another EEA jurisdiction or a jurisdiction being approved by the LGA - effectively a jurisdiction having a bilateral MoU with Malta.

As a result of the MoU between Malta and Alderney, there is now mutual recognition of licenses, allowing Malta-based Class 4 software (platform) providers to service gaming operators licensed in Alderney.  Under this arrangement the Maltese operators seeking to enter such arrangements will need to obtain prior approval of the new business from the LGA and, once approved, pay a month gaming tax for every operator so approved that is not covered by a Maltese licence.  Responsibility for players and player complaints rests squarely with the B2C operator.

Key people in the industry have been very positive about improved efficiencies in the application process in Malta by companies licenced in one or more MoU jurisdictions. The fact that the hardware infrastructure is approved in an MoU jurisdiction serves as material comfort to the LGA in the course of reviewing the application, rendering the process significantly less burdensome (and consequently less costly) from a compliance standpoint.

Further announcements from the LGA and AGCC with respect to the MoU are keenly awaited and it will also be interesting to understand how the MOU will serve to address the recognition of certification bodies and player liquidity, the latter point certainly being of interest to poker networks and other similar setups.

The MoU between Malta and Alderney is by no means a “game changer”- it is simply another tool providing the basis for seamless and effective regulation of gaming business across borders.

What is clear is that in an industry like online gaming which has a global reach, and which requires a correspondingly multi-jurisdictional infrastructure to support it, such MoUs will unavoidably become the order of the day. My personal view is that it is only a matter of time until all the key igaming jurisdictions will put into place the appropriate legal and regulatory measures to co-operate with other relevant jurisdictions to achieve proper regulation and enforcement of online gaming activities.