Any person who is somewhat familiar with the Maltese remote gaming law regime would know that this requires the licensee to appoint a Key Official. And yet few prospective (or actual) operators would know what this role really entails. Some may look upon this requisite as an added cost and administrative burden of a Maltese licence. Others simply appoint one of their local employees to do the job without appreciating the extent of responsibility involved and the powers which the Key Official has, or should have.
The remote gaming industry is by nature a very mobile business. Indeed not only its end-clients are remote, but even its management can operate remotely. The element of physical presence required under Maltese law relates mainly to the hosting servers of the remote gaming system. Thus one can easily have a Malta registered company being licensed under Maltese law, but being actually managed and directed from different parts of the globe. Hence the requirement of a Malta resident Key Official.
The remote gaming regulations do not define the term "resident". Thus there is no fixed test such as that set for fiscal residency, which has to be satisfied by the person acting as Key Official. The Maltese Lotteries and Gaming Authority (LGA) interprets this requirement in the context of the Key Official's responsibilities. This is very onerous since these responsibilities make it impossible for the Key Official to be out of the country for any long period of time. The Key Official must be on-call to give any assistance or information which the LGA may require of him. If, when contacted, the Key Official is repeatedly unavailable to meet the LGA's requests, his suitability as Key Official would be questioned and his appointment as Key Official may be withdrawn. Some technical issues which may arise in relation to the remote system hardware are time critical and since the Key Official is the only person authorized to grant access to the licensee's hardware his availability upon request is crucial. Indeed, it is for this reason that operators sometimes choose to appoint multiple Key Officials. In such a case the different individuals acting as Key Officials for the same licensee would be jointly and severally liable between them to fulfill their obligations at law.
A remote gaming licence is a privilege granted by the LGA which can be withdrawn should any of its conditions, or the law, be breached. The Key Official is the person who is obliged to ensure compliance by the licensee and as such is considered to be the guardian of the licence. Whereas the whole board of directors and management remain responsible for the management of the licensee, the Key Official is personally and directly responsible for the licensee's adherence to remote gaming regulations. As such, the Key Official must have a very clear and updated understanding of the operations of the licensee. While not expected to be a high-tech guru, the Key Official must have an adequate technical background to have a high-level understanding of the main components of the operating system. Furthermore he must be in a position to acquire and relay information in real time to and from the operator's management and technical staff upon the LGA's request.
The Key Official has to be appointed upon the issue by the LGA of a provisional licence to operate (Letter of Intent) and is thereafter expected to be directly involved in the process of system compliance review leading to the confirmation of the licence. The Key Official must inform the LGA of any changes made to the hardware or software of the licensee by submitting official incident reports and must seek the LGA's approval of any proposed changes to the set-up. He is also duty bound to ensure that monthly gaming tax and annual gaming license fee are paid to the LGA. He must ensure the safe-keeping of client's money and personal data,
The person acting as Key Official has to be approved by the LGA following probity checks about his personal and professional background. Under current regulations the Key Official must be a director of the licensee. The reasoning behind this requirement is that the Key Official should be actively involved in the decision making of the licensee. The Key Official must in certain circumstances, such as hardware failure, take instant action on behalf of the licensee. As such his appointment should not be a mere formality but should grant him the necessary power to act on his own. This entails a high level of responsibility which should be exercised with great caution by the Key Official. Being also a director of the licensee, the Key Official must be knowledgeable about his obligations under Maltese company law and under other laws and regulations such as the Prevention of Money Laundering Act & Regulations, the Data Protection Act and the Income Tax provisions relating to companies.
The perfect mix of competence, trustworthiness and physical presence may be quite difficult to put together in one individual especially when an operator first sets up shop on the island. It is for this reason that some operators choose to appoint a Key Official from outside their orgainsation, at least for the first months of their operation. Such a choice must be exercised with caution. Due to his central role, a Key Official will necessarily have access to confidential information about the licensee. Although the law does not prohibit multiple appointments of the same individual as Key Official, for obvious reasons it is preferable that the individual chosen does not act as Key Official for other operators. In any case care must be exercised to ensure that the individual appointed as Key Official is bound by professional secrecy and that the relationship is subject to clear fiduciary obligations.
'The key official then, represents the most important and enduring link between an operator and the regulatory authorities. If it is considered that any confidence and respect that he or she personally enjoys is to the benefit of the entire organisation, the related costs of this post become well worth it.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
