Malta Proposes Skill-Based Gambling Licenses for DFS

Most gaming regulatory bodies put luck-based and skill-based gambling into the same category. But the Malta Gaming Authority (MGA) has a different idea: issue separate licenses for skill-based forms of gaming like daily fantasy sports (DFS).

The MGA recently made this proposal to the European Union after sifting through from their “Position Paper on Digital Games of Skill” (see here) of last year.

The convinced them that a licensing system that separates luck-based and skill-based online gaming is a good idea.

Skill-based games would be subject to “light touch” regulation, and new licensing requirements would begin in early 2017. This would exempt games like DFS from the same heavy regulation that lotteries and online casinos experience.

The new plan will require approval from the EU, which should come before the end of 2016. If the EU approves as expected, licensees would be able to offer skill-based games in any EU member state.

Ever since the explosion of DFS sites like DraftKings and FanDuel, gaming regulatory bodies have struggled to integrate this form of gambling. It’s obvious that DFS contains a skill element, but given its new status, European countries and American states have been slow to adapt.

Based on their research, the MGA sees DFS as a low-risk form of gaming that doesn’t require heavy regulation. Here’s one excerpt from the paper that explains why Malta views DFS differently from other games of chance:

“‘Fantasy Sports’ and, or ‘Fantasy Sports Game’ means 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.”

It’s very likely that the MGA could include poker in their skill-based gaming category. And how Malta classifies games of skill will no doubt receive attention from other gaming regulators.

In the U.S., some states have banned DFS while floating the idea that it’s pure gambling. Of course, these moves have likely been made to keep DFS out of their states until they can put their own regulatory framework in place.

How the MGA deals with DFS and other skill-based games should not only help U.S. states decide what to do with this form of gaming, but also motivate them to enact regulation sooner rather than later.