Consultation Feedback Summary

The Malta Gaming Authority (MGA) is publishing a summary of the responses received for the public consultation on Digital Games of Skill with Prize, as submitted by respondents.

Click on the questions to view feedback received.

Respondent 3   

  • Yes, the respondent offers skill games through its websites

Respondent 4   

  • Offers platform services where players can compete against each other on pure skill games in the category of e-sports. The matches are always between real players, never against the platform or against robots

Respondent 5   

  • Yes, however the skill games offered are all third party applications. The respondent has no control on, whatsoever on the games themselves, except for tournament rules or codes of conducts

Respondent 6   

  • Offers skill games via its platform through B2B arrangements with its individual clients, which then enter into a relationship with the individual players

Respondent 9   

  • Yes

Respondent 10

  • Yes, the respondent offers fantasy sport games in free-to-play mode

Respondent 11

  • Offers the skill-based game

Respondent 3   

  • Offers card games, board games, arcade and sports games. The games are provided to players via websites

Respondent 4   

  • Offers platform services for the e-sports games which are of pure skill
  • The e-sports video games integrated in the platform are existing video games from third party game manufacturers

Respondent 5   

  • Promotes games categorised as AAA video games and include titles such as League of Legends, Counter-Strike, Hearthstone, Call of Duty and FIFA
  • Respondent offers services in the form of organising tournaments and act as an intermediary between the participants and the games

Respondent 6   

  • Has a vast portfolio of skill games (vary from billiard games, card games such a s bridge and rummy and other games such as a football games or Sudoku)

Respondent 8   

  • Offers solely mobile games
  • One of the games involves racing from point A to point B where player can make a wager to another player
  • The channel of distribution is the IOS app store and the Google Play store or mobile devices

Respondent 9   

  • Offers 3 card games (player vs. Players, not player vs. Machine)

Respondent 10

  • Fantasy football
  • The game mechanics are based on the assumption that a player wants to prove to his friends that he knows the game better than them
  • It is critical that the game has to be as close as possible to reality (if not, the outcome would only be a matter of chance)

Respondent 11

  • Offers 3D action games which is free (in-game purchase are available)
  • The more points a player has at the end of the match, the better the result and the greater his reward in in-game currency

Respondent 3   

  • Participants may win monetary prizes but no physical prizes are awarded

Respondent 4   

  • Participants compete for a stake in point or cash. When a participant wins a match, the prize will consist in winning the amounts as stake
  • The respondent charge a fee for the use of the Platform Services

Respondent 5   

  • Yes, participant can win either prize money, or other rewards when winning a tournament
  • These prizes are mainly provided by the sponsors or through registration fees

Respondent 6   

  • Respondent’s clients do allow this and the prize on offer is a monetary gain but not monetary worth or other gift in kind

Respondent 8   

  • Yes, player A wagers money against player B; winner takes all less a rake that is paid to the house

Respondent 9   

  • Yes, they can win money

Respondent 11

  • There are no real-money prizes

Respondent 3   

  • Yes, respondent provides skill games and games of chance through website

Respondent 4   

Respondent does not offer any gambling games. For any game to be integrated into Respondent’s platform, the said games can not contain any element of chance

Respondent 5   

  • No

Respondent 6   

  • Respondent does not provide any gambling services directly but they are offered through its platform

Respondent 9   

  • No

Respondent 3   

  • The company operates two main websites, one of which provides skill games only, and the other provides skill games and games of chance.

Respondent 4   

  • Respondent does not offer any gambling services

Respondent 6   

  • Respondent’s clients do not offer the games of skill on the same site as the gambling sites (said games are treated separately from an operational perspective)

Respondent 6   

  • As a platform provider, the respondent’s portfolio includes gambling games and leave it up to their clients as to how they want to deliver them to their clients – as long as within the remits of the contractual and licensing obligations

Respondent 2   

  • In the video games industry, this does not play an important role as the majority of the games have very large fan bases and are run by renowned companies
  • Moreover, players are used to interacting with the company on a payment level and have an established level of trust

Respondent 3   

  • Although legislation may play a part in protecting players, it mainly boils down to the business model and the approach taken towards players by the company

Respondent 4   

  • In case of e-sports games, legislation would be appealing to the participants as there is a strong convincement on the players that those games are of pure skill (although it should not apply to the platform providers)
  • Some legislation is necessary to determine which games are games of pure skill and to clarify which games would be games mainly if skill

Respondent 5   

  • Not necessarily as it depends on the category of skill games in subject
  • With regards to video games, customer would not feel more comfortable and secure to play such games since these games are mainly played for entertainment purposes

Respondent 6   

  • It is in the interest of the Operator that skill games do all under the licensing structure of the Authority since it would ensure the legitimacy and fairness of said games (in eyes of the law and player)

Respondent 8   

  • Yes, although the current regulations offer adequate protection a licence would attract more clients

Respondent 9   

  • Yes, customers would feel more comfortable if there is an Authority controlling an operator

Respondent 11

  • Do not think so as license does not provide full protection of players’ rights and does not guarantee that companies will act in accordance with the legal acts after licensing
  • Moreover, the current legislation adequately protects skill game players

Respondent 2   

  • Need more discussion.

Respondent 3   

  • License may potentially grant more comfort to a payment processor considering a relationship with a skill games provider

Respondent 4   

  • Considers that EU Directives are clear enough on the fact that games of skill can be offered without gambling license
  • The missing aspect is a clear definition as to what is a game of pure skill (not just a games of “mainly” skill but of “pure skill”)

Respondent 5   

  • This could help in obtaining sponsorship for the tournaments and give a legitimacy to a business

Respondent 6   

  • It is a value added as it gives legitimacy to a business

Respondent 8   

  • Yes, it will speed up the process significantly

Respondent 9

  • A license is an added value with some payment processors and for customers
  • However, license has to be recognised by a given country otherwise it will not help for that country

Respondent 11

  • Additional regulation would not add any benefits in banking and payments relationships
  • The value of skill game is determined by functionality of the game, not by the license

Respondent 2   

  • It should be the case in regards to larger sums – betting above single digit levels for example

Respondent 3   

  • Yes, to ascertain that sufficient funds are maintained by the company to cover customer liability
  • No need for regulation arises by virtue of the provision of skill games

Respondent 4   

  • No, there are sufficient regulations to prevent and/or prosecute fraudulent activities

Respondent 5   

  • Yes

Respondent 6   

  • This is a must

Respondent 8   

  • Yes

Respondent 9   

  • When money is involved, it should be regulated.

Respondent 10

  • The licensing regime should be addressed to the operators who have launched paying games (monetised games)

Respondent 3   

  • The same mechanisms adopted for licensed activities (games of chance) are in place in respect of funds of players who participate in skill games held by the company

Respondent 4   

  • Customer funds are kept in a separate and secure account designated for those funds
  • All payments and withdrawals are made to customers as requested and as regulated in T&C signed with the customer
  • The respondent has no other bank account for its own business operations

Respondent 5   

  • When organising an event or tournament, participants pay the money where in exchange they get a ticket meaning no holding of customers’ funds whatsoever

Respondent 8   

  • Protects players’ funds by using well established payment gateways

Respondent 9   

  • Has players’ bank account with funds covering their deposits at all time

Respondent 11

  • Respondent does not hold customer’s funds
  • In accordance with the Directive 2011/83/EU on consumer’s rights, players have a period of 14 days to withdraw from a contract (in-games purchase) without giving any reasons

Respondent 2   

  • Yes

Respondent 3   

  • Yes, it should be made
  • Skill games which are capable of awarding monetary prizes should be restricted to persons who have attained the age of majority; whereas skill games which only give the player the chance to win physical non-monetary prizes may be made available to minors, provided that parental consent is obtained

Respondent 4   

  • In case of e-sports, customers above 16 years old should be allowed to play (they are normally the best players)
  • As it is also a case for the real sports, sometimes there are players below 18 which reach the highest levels in professional sports

Respondent 5   

  • In case of video game, it is not necessary as these games have a PEGI rating
  • Moreover, there are no risks that the customers become addicted to tournaments as the entry fees are low and they are organised for entertainment purpose, not a profit

Respondent 6   

  • Said games should be restricted to those players who have attained the age of majority and this because there is the possibility of monetary gain or loss

Respondent 9   

  • Yes, as otherwise it would attract bad publicity

Respondent 11

  • A monetisation system for skill games is very different from the holding of customer funds. In skill games, players pay for in-game items or in-game currency, and these are never converted back to money
  • Money paid during the in-game purchase process may be reimbursed, but only if a consumer exercises his/her right to withdraw from a contract (in-game purchase) within 14 days of the payment

Respondent 2   

  • This is to be of lesser importance for the video games

Respondent 3   

  • Provider should be obliged to be subject to verification by the Malta Gaming Authority
  • Should the Authority establish that such games are indeed skill games, then it would be clear to the company that there is no need for licensing or regulation in respect of those games

Respondent 4   

  • First step should be issuing the necessary legislation to make a clear distinction between games of pure skill and those mainly of skill and provide the relevant definitions and characteristics for each one

Respondent 5   

  • The video games offered are developed, tested and supported by some of the biggest video games development companies in the industry
  • As games are chosen by the participants themselves, we do not believe it is in any way necessary for there to be independent verification of the prevalence of skill

Respondent 6   

  • Skill games should fall within the scope of regulation in order to ensure the legitimacy of said games
  • There does exist some confusion as to what currently is a game of skill, necessitates need for independent verification by a recognised test lab as to the proper classification of the game itself

Respondent 8   

  • Common sense should prevail as testing each and every games would be very ineffective, time consuming and most important expensive
  • There should be checks in place to ensure that customers are playing games that are not “”rigged”” and that are truly games of skill, however if players are playing against other players then the rules should differ

Respondent 9   

  • No need for a formal assessment

Respondent 11

  • No need for independent verification. Previous testing and certification may limit the development of new indie games
  • E-sports games should not require technical test and from a programming or programming code perspective. Those games do not include any random number generators and should be reviewed as to their functionalities and rules and certified as skill games

Respondent 2   

  • Has no experience with independent verification
  • These are usually done by testing and company due-diligence

Respondent 3   

  • It is difficult to obtain it and would not want to rely on the verification of an independent party

Respondent 6   

  • Only recognised and reputable rest labs are in position to test such games
  • The cost depends on a number of commercial factors

Respondent 8   

  • Never obtain such verification as players are competing with other players and not against a house

Respondent 3   

  • No other features need testing or verification

Respondent 4   

  • In the case of games of pure skill, we consider other existing regulations already protect users and we do not consider other features of the skill game need to be tested or verified

Respondent 5   

  • Tournament rule sets or terms and conditions would require review

Respondent 6   

  • Even those games, where there is an element of chance but this is minor on the final outcome of the game, should also fall under the definition of what constitutes a game of skill
  • Hence one should verify just how much the drawing of a card or the rolling of a dice has an actual impact on the final outcome / result of the game
  • It is in Respondent’s opinion that the mere drawing of a card or the rolling of a dice does not result in said game being classified as a game of chance – as is being done in some other jurisdictions

Respondent 10

  • Before granting the license, the MGA should study with great care the points system the future operator intent to set up and make sure it is as close as possible to reality
  • The respondent proposed two methods: (1) launching the game in free-to-play mode for at least one sports season to prove that the game’s statistics are similar to the real life, (2) use a system that has been already approved by the MGA

Respondent 2   

  • No as respondent does not see any current benefit for the targeted segment

Respondent 3   

  • No, unless a license is obligatory

Respondent 5   

  • Unless there are incentives that would make respondent’s business more viable, a licence would not be required
  • Do not consider a skill games license is necessary in the case of pure skill games given the fact that the EU Directives do not require any license for the provision of pure skill games
  • The starting point should be having a full and legally detailed definition of pure skill game in Maltese regulations followed by verification/certification process

Respondent 6   

  • There are a number of factors which need to be considered. If it makes a commercial sense, then yes, respondent would apply for a license

Respondent 8   

  • Yes

Respondent 9   

  • Yes

Respondent 11

  • Not interested unless this is a strict legal requirement

Respondent 2

  • Required further discussion

Respondent 3   

  • Only in the event that the license is recognized throughout all Member States of the EU

Respondent 4   

  • Existing EU laws are sufficient to allow skill games for a prize without any license. It may be different in the case of those companies providing games which are “mainly” of skill

Respondent 5   

  • In the respondent’s particular market, license and regulation by an EU member state is not a necessity.
  • Instead, prefers a form of registration to comply with the minimum standards established

Respondent 6   

  • Respondent argues that regulation gives certainty and whilst the ideal situation would be one whereby the principals of the EU Treaties would be respected
  • Obtaining a license is a decision taken after much consideration as to the market realities in the different Member States

Respondent 9   

  • Yes, it would be beneficial
  • The games of skill are authorized as free movement of electronic commerce under the EU2003/21/CE directive; however it is not so obvious in the EU country
  • Thus, having a license specifically targeted at games of skill would make things clearer

Respondent 11

  • Does not see any benefits from previous testing and licensing of skill games
  • Licensing may generate an additional barrier to the changes and to the development and improvement of the game’s functionalities

Respondent 2   

  • No

Respondent 3   

  • No

Respondent 4   

  • If a license would be established and this would entail a tax, we consider it should be low in order to help in the developing of these type of business focused on pure skill games and e-sports

Respondent 5   

  • Depending on whether the specific tax offsets other expenses incurred such as VAT and Corporate Tax

Respondent 6   

  • No, as long as the tax levied makes commercial sense

Respondent 9

  • No

Respondent 11

  • The respondent will try to optimize its tax corporate scheme in other jurisdictions in case a specific skill tax is provided for skill games activities in Malta

Respondent 4   

  • No specific tax should be introduced for “pure skill games” as these games are not gambling or betting and do not contain any element of chance (in the case of “mainly skill games” the situation may be different)
  • In case of pure skill games and e-sports, if Malta was to tax such activity, this would be negative for Malta given the fact that such games are allowed in other jurisdictions without any additional taxation

Respondent 5   

  • Percentage of the gross revenue

Respondent 6   

  • Turnover based tax would not be ideal. Hence one should look at a reasonable tax based on Gross Gaming Revenues

Respondent 9   

  • A percentage of your gross revenue

Respondent 11

  • No special preferences

Respondent 2   

  • If a player can find a method or strategy of play by which he can positively and measurably influence the outcome of the game in his favour
  • An additional definition could be a game in which an Artificial Intelligence can be made to beat the game odds in a statistically significant manner

Respondent 3   

  • The term “mainly skill” should be interpreted as referring to a scenario where the level of skill of the player outweighs the level of chance involved in the game in determining the outcome of the game

Respondent 4   

  • Proposes a clear differentiation in the classification of skill-type games having the two categories of; “Games mainly of skill”, and “Games of pure skill” which cannot be treated in the same way
  • Being legally recognized in Malta as a game of pure skill, would facilitate company’s expansion in the other countries
  • Predominance Test and Material Element s should be analyzed as methods to determine the level of skill in game

Respondent 5   

  • Barely including an element of chance

Respondent 6   

  • Even those games, where there is an element of chance but this is minor on the final outcome of the game, should also fall under the definition of what constitutes a game of skill

Respondent 9   

  • The games where good players can beat the rake on behalf of their skill and be consistent winners should be deemed to be skill games. Given a quite common rake of 10%, a player must be able to win 56% of its games to become a winner
  • This gives an idea of a minimum value for an acceptable threshold

Respondent 11

  • The term “mainly” in the definition of “skill game” may be interpreted as substantially i.e. the result of the game would be substantially dependent on player skill

Respondent 2   

  • No

Respondent 3   

  • Adopts the interpretation provided in reply to Q 20. No distinction is made between P2P skill games and player vs. machine skill games

Respondent 4   

  • Developed an internal policy setting out the criteria a game has to comply with in order to be a game of skill and be eligible for its integration in Service Platform

Respondent 5   

  • The distinction between game of chance (or chance and skill) and game of skill is mainly based on the level of randomness that exists in the game and how much this element helps in winning the game itself

Respondent 6   

  • The current distinction lies with the Authority itself which verifies each game individually and has determined that those games of pure skill cannot fall under the current licensing structure

Respondent 11

  • The element of chance does not directly affect the result of the game. The result is determined not just by understanding game mechanics but also by skills a player gets over time
  • Effective decision-making and effective actions are important for the result of the game

Respondent 2   

  • Skill games could technically range from League of Legends to Backgammon or Chess
  • All above examples are organized in leagues and clubs and teams, essentially forming a sport
  • These should not require regulation and licenses

Respondent 3   

  • Players who participate in skill games tend to stake small amounts on each game/match and place bets less frequently than players of games of chance (as skill games tend to last much longer)
  • Thus, risks commonly associated with gambling, such as addiction and the spending of large amounts of money, are less likely to arise when players participate in skill games

Respondent 4   

  • The profile of a gamer in e-sports is different from the profile of a gambler in games of chance/games of chance and skill
  • Video gamers have traditionally played for entertainment and for the competition but not for winning money

Respondent 5   

  • In case of video games tournaments, the target market is different as it attracts video-game enthusiasts most of which fall within the bracket of 14-24 year old
  • Whilst there may be the risk of addiction, the existence of tournaments is irrelevant to this factor, as even without tournaments, players may become addicted
  • Expenditure by players is much lower, and it rarely exceeds €150 per year per participant
  • Thus, financial risk on players is minimal, even if they may be addicted to a particular game
  • The pay-outs from such events are much less than gambling related ones
  • The intrinsic nature of our skill-games related business model is not focused on the prize, money is just a bonus

Respondent 9   

  • Does not see any reason why it should be different

Respondent 10

  • Unlike classical money games, with paying social games, money is not the main stake (winning against friends is) but rather the reward for the victory
  • The gaming mechanics is hence intrinsically different and the majority of users will not be interested in playing high amounts of money

Respondent 11

  • A skill game is an entertainment service, but it is not a service to win money
  • Skill games players play for the playing process, not for monetary prizes
  • In a skill game, a player pays for an entertainment service, not for the chance to win money or a monetary prize
  • A player in a skill game does not risk the money he paid. If a player is not satisfied with the service, he may exercise his withdrawal right in accordance with Directive 2011/83/EU on consumer rights
  • A skill game project’s profitability is lower than in the organization of gambling (the proportion of the average check and players who pay is substantially lower than in the gambling business)