Decentralisation, digital ledger technology (DLT) , virtual assets and tokens introduce a number of foundational developments in the gaming industry paving the way for a more user centric gaming economy.
This novel user centric economy will also see smart contracts, being coded and deployed to infuse more transparency and trust with users. DLT can be used in combination with smart contracts to help with the exchange of value, money, shares, or possessions in a transparent, conflict-free way that avoids the services of a middleman. The gaming user here will have more transparency and certainty, for example on pay out ratios, enhanced security and encryption and security features. Through a DLT environment he can also avail himself of more transparent and ascertainable publicly available gaming historical data, which can also have flavors of immutability giving more credibility to all the gambling community.
Smart contracts, DLT and tokens or virtual assets will also be foundational in monetising in-game actions to fuel real-life transactions in this novel user centric gaming economy. In theory, players could rent the necessary tools, tokens, hire or rent them and the possibilities here could be endless. It also paves the way for the adoption of Regtech by regulators the like the Malta Gaming Authority.
Malta has always been at the fore front of innovation and a trailblazer, particularly in the Gaming and Gambling sphere and lately also in the DLT and crypto space. Aside from having a novel legislation on cryptos, Malta also boasts an adhoc regime and Authority, being the Malta Digital Innovation Authority for innovative technology arrangements which includes AI, DLT and smart contacts.
The Malta Gaming Authority (MGA) leveraged on the above and was one of the first regulators in the space to role out Sandbox Regulatory Framework (Sandbox) and established the possibility for authorised persons to be allowed to accept Virtual Financial Assets (VFAs). Prior to applying to the MGA for the required approval to use a DLT asset within the context of the gaming operation, an operator shall conduct the Financial Instrument Test issued by the MFSA to determine the nature, from a financial perspective, of the DLT asset and submit the result of the Financial Instrument Test to the MGA. The aforementioned Financial Instrument Test, together with any other pertinent documentation, shall be submitted to the MGA.
The Sandbox now also allows the use Innovative Technology Arrangements (ITAs), includingDLT and smart contracts which require to be audited by auditors registered with the Malta Digital Innovation Authority (MDIA) in terms of the Innovative Technology Arrangements and Services (ITAS) Act (Chapter 592 of the Laws of Malta).
The MGA has also updated its LRMS system to allow:
- New operators to apply for approvals for the use of DLT assets as part of a New Licence Application;
- Existing licensees can apply for approvals for the use of DLT assets through the application type – New or Change in Payment Methods / Financial Management Information;
- Existing licensees can apply for approval for the use of Innovative Technology Arrangements through the application type – Change in Technical Setup;
- Existing licensees participating in the sandbox environment to report VFA player liabilities, fees and tax through the Monthly Player Funds Report. Licensees will also need to report any failed return transactions, with respect to any invalid deposits.
- It also issues an approval for the use of DLT assets/ITA by a license where a dynamic seal will reflect the fact that the licensee is participating in the sandbox environment.
Malta once again is paving the way for the next chapter of evolution in the gaming industry where innovation is embraced as a catalyst for more value and choice in the market.
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