The short answer is yes, a Maltese game of skill licence will improve an operator’s chances of not only securing a banking provider but also several other crucial services.

Let’s start with a little background. New regulations expected to be enacted in Malta in 2017 will allow operators of ‘games of skill with prizes’ to become licensed. At present daily fantasy sports are exempt from Maltese remote gaming legislation and operators do not have to be licensed, and this is also the case in many other parts of the world (although the opposite is the case in many jurisdictions too). Many wish to be regulated despite this exemption, however, to demonstrate that they have been assessed as responsible operators, to attract both customers and providers who wish to due diligence on their client. Indeed, operators are flocking to Malta in readiness for the new regulations because their home jurisdictions do not offer the chance to be regulated.

It is important to note that this forthcoming regulatory regime is very different from the gambling regulations that sportsbook or casino operators fall under, and which would be the only regulatory option for DFS providers in other jurisdictions. The Malta Gaming Authority (MGA) has recognised after lengthy consultations that fantasy sports and other games with a substantial element of player skill should be separated from games of chance so that more appropriate regulation could be implemented, with less burdensome requirements. Legislation is expected to be passed in early 2017 and the Malta Gaming Authority has indicated that the regulations for games of skill will be lighter touch than they are for games of chance and as such licensing requirements won’t be as onerous.

So how does all this help with banking, exactly? As most professionals will be aware, the risk appetite of many banks has significantly reduced over the last few years and many banks will not consider servicing unlicensed gaming businesses. Not having banking facilities, of course, makes operating on any scale all but impossible. As there hasn’t been dedicated licensing available (or the only option is onerous and often expensive gambling licences) this has been a stumbling block for the DFS industry for some time, as DFS does sit in a grey area between pure skill and pure gambling games. However, the new regulations will help as banks will be much more comfortable providing banking services to a regulated gaming company, knowing they will be carrying out ‘know your customer’ due diligence on players who receive winnings over a certain threshold, thus significantly reducing the risk of money laundering and transmission of the proceeds of criminal activity, which are the key risks for banking providers.

Banking isn’t the only benefit. Being regulated will also increase the number of Payment Services Providers (PSPs) available to an operator, as these companies are as heavily regulated and as heavily risk-averse as the banks when dealing with this sort of business. Government licensing again provides comfort that will often help an operator pass a risk review. It may also have an impact on other business relationships, helping the company secure more favourable terms with providers.

Licensing under the new regime for Daily Fantasy Sports operators seems to be a win-win for operators as it should attract additional customers as well as assist with banking and payments relationships. No wonder huge numbers of fantasy sports operators have been almost falling over each other in a scramble to sign up to the new regime, which I should stress isn’t actually in place yet.

If you are interested in licensing under the new regime, check out our knowledgebase for more information.

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