MGA proposes increase in iGaming licence capital requirements

The Malta Gaming Authority (MGA) is conducting a consultation on the minimum paid-up share capital requirements for new iGaming companies seeking an MGA licence.

The industy’s concerns will be taken into consideration with regards to the proposed change, viewed as a proactive measure aimed at safeguarding the gaming industry’s reputation and enhancing its long-term attractiveness. While the MGA proposes to extend these proposed changes to both existing and new entities, it is premature to comment on the implementation as the final details have not yet been concluded.

Current vs Proposed Share Capital Structure

• Critical Gaming Supply: Current: €40,000 – Proposed: €300,000
• Gaming Service Type 1: Current: €100,000 – Proposed: €500,000
• Gaming Service Type 2: Current: €100,000 – Proposed: €500,000
• Gaming Service Type 3: Current: €40,000 – Proposed: €300,000
• Gaming Service Type 4: Current: €40,000 -Proposed: €300,000
• Multiple Types: Current: €240,000 – Proposed: Multiple type approvals to meet the above capital requirements up to a capping of €1 million

These increases vary based on the type of MGA licence application, leading to a substantial rise in capital investment across the board.

In response to inquiries about the potential impact of these proposed requirements on attracting new iGaming entities to Malta, an MGA spokesperson said that the regulatory objective of nurturing an environment conducive to sustainable growth.

MGA addressed the importance of openness to start-ups possessing the necessary resources to operate effectively and in compliance with regulations. The aim is to bolster the industry’s integrity, sustainability, and long-term competitiveness.

Concerns about start-ups

MGA acknowledged concerns about the ability of start-ups to raise the required capital. However, they asserted that financial barriers should not be eliminated at the expense of viability. According to the MGA, ensuring sufficient shareholder investment in proportion to growth plans fosters trust and confidence, ensuring the company’s financial feasibility and sustainability.

Concerns have been raised about the potential challenges for start-ups in meeting the increased capital requirements. Some argue that these requirements may hinder innovative start-ups, while others express concerns about reputational damage to the industry if under-capitalized iGaming start-ups struggle to meet financial obligations.

B2C operators

Malta, known for its role as an iGaming jurisdiction, has historically been a point of supply for B2C iGaming firms across Europe through its MGA license. However, recent changes in European regulations have weakened the strength of the MGA licence, especially for B2C firms. The B2B gaming supply segment, licensed through the Critical Gaming Supply Licence, has continued to thrive despite these challenges.

Awaiting Cabinet approval

Regarding the legislative process for these proposed changes, it is anticipated that legal amendments in Malta’s gaming subsidiary legislation will be required. The initiative is likely to go through the Cabinet before being transposed into law via a legal notice.

The proposed changes in paid-up share capital requirements result from a closed consultation by the MGA, which included an internal study. The MGA is currently reviewing feedback received during the consultation to ensure that the proposed changes align with their objectives without compromising the industry’s aims.

Paid-up capital, defined as the amount of money received by the company when selling shares to shareholders and investors, is crucial for the financial stability and sustainability of the iGaming companies.

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