DSA - Gaming

Back in June 2023, the Maltese Parliament had approved amendments to the Gaming Act (Chapter 583 of the Laws of Malta) by approving Bill 55, resulting in the introduction of article 56A to the Gaming Act.

The object of such amendment was to codify within written law Malta’s longstanding public policy of encouraging the establishment of gaming operators in Malta who offer the local and cross-border supply of their services in a manner compliant with Malta’s local gaming legislation.

Effectively, this was an attempt to enshrine into codified law Malta’s public policy on gaming which had been implemented in practice since the early 2000s when Malta’s first remote gaming licenses to operate in and from Malta and legal framework were issued.

In practical terms, the scope of the amendment was meant to ensure that if an entity licensed by the Malta Gaming Authority (the “MGA”) which acted in compliance with Maltese Law was to be sued for providing online gaming services in a country other than Malta, then as a principle of public policy, a judgement issued by the courts in the player’s respective jurisdiction declaring such online gaming activity illegal would not be enforced in Malta since the activity is purely lawful (and licensed) from a Maltese gaming law point of view.

As is widely known in gaming industry circles, back when this amendment was issued it had attracted significant criticism, on account that it was alleged that the Maltese Government is effectively adopting a framework to protect its online gaming sector from accountability with EU Legislation and in turn effectively undermining principles of EU Law of enforcement and recognition of judgements with the EU.

Judgements ruling on the correct implementation and validity of Article 56A remain in development and are to date evolving, but developments in the gaming industry seem to indicate that the MGA licensed gaming industry will also have to deal with certain uncertainties and possible legal risks in view of the adoption of the Digital Services Act (Regulation 2022/2065, the “DSA”), an EU Regulation.

1. What is the DSA?

The DSA is an EU Regulation and thus directly applicable in all Member States. It aims at creating a safer and more transparent online environment by establishing rules for digital services which focus on accountability, tackling illegal content, ensuring users’ rights and improving transparency including in digital advertising.

The DSA applies to any “intermediary service” which are information society services that consist in (1) a “mere conduit” service, (2) a “caching” service and (3) a “hosting” service.

In turn, these services are further specified as follows in terms of the DSA:

  • a ‘mere conduit’ service, consisting of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network;
  • a ‘caching’ service, consisting of the transmission in a communication network of information provided by a recipient of the service, involving the automatic, intermediate and temporary storage of that information, performed for the sole purpose of making more efficient the information's onward transmission to other recipients upon their request;
  • a ‘hosting’ service, consisting of the storage of information provided by, and at the request of, a recipient of the service;

Services that constitute “intermediary services” in terms of the DSA are very much prevalent in the modern online gaming industry. Player chat or messaging services for example, would constitute a “conduit” service, while a “caching” service may also apply for games that are hosted online. “Hosting” services would be particularly relevant for distribution platforms, which can also be a type of service falling under the further definition provided for “online platform” under the DSA.

“Hosting” would also be relevant for example in context of user generated content and data centres, colocation and hosting suppliers.

Critically relevant to the online gaming industry are the DSA’s rules on the dissemination of illegal content.

The DSA specifies that “illegal content” as a concept should be defined broadly to cover information relating to illegal content, products, services and activities. In particular, that concept should be understood to refer to information, irrespective of its form, that under the applicable law is either itself illegal, such as illegal hate speech or terrorist content and unlawful discriminatory content, or that the applicable rules render illegal in view of the fact that it relates to illegal activities.

Online gaming content is thus also captured by the DSA and thus in turn, the DSA also has an impact on the legality or otherwise of cross-border online gaming services, a domain which is subject to local national legislation and often-times licensing frameworks.

2. Key Issues related to Online Gaming in virtue of DSA

Rules on liability of providers of intermediary services are established under the DSA and particularly key to note for online gaming activity purposes are also the rules established as regards orders to act against illegal content, orders to provide information, as well as the notice and action mechanisms under the DSA.

As regards orders to act against illegal content and orders to provide information, it should be noted that both Article 9 and 10 of the DSA respectively refer to the order being “issued by the relevant national judicial or administrative authorities, on the basis of the applicable Union law or national law in compliance with Union law”.

The issuance of any such order in terms of the DSA against an MGA Licensee, based on the illegality of an online gaming services in a jurisdiction other than Malta, which in turn is issued by the respective Regulator on the basis of its national law has thus nowadays become a possibility under the DSA. Thus, despite being an EU Regulation, the DSA leaves room for it to be triggered derivative from national law.

With regards to orders issued by certain EU countries, it might be a possibility to argue against the respective order on the basis that the derivative national gaming law might not be in compliance with Union law.

This possible argument is reinforced by Recital 32 of the DSA which reads: (…) The applicable national law should be in compliance with Union law, including the Charter and the TFEU provisions on the freedom of establishment and the freedom to provide services within the Union, in particular with regard to online gambling and betting services (…)

Ultimately however, an order under the DSA against an MGA Licensee, acting in line with Maltese Laws, might clash with the DSA’s ambitions and lead to the need of courts to interpret the ultimate effect of Article 56A of the Gaming Act in view of the existence of the DSA and supremacy or otherwise of EU vis-à-vis national laws in such specific context.

3. Lack of Broad Gaming Ecosystem Coverage

Apart from online gaming operators (“B2Cs”), the gaming industry is composed of an ecosystem of various suppliers including game providers, aggregators, platform providers, data centres, IT managed services, marketing and various other forms of suppliers and intermediary service providers.

In context of the DSA’s rules on liability for illegal content and orders, it may be observed that it is possibility that Article 56A provides national law protection only to B2Cs, leaving the remainder of the gaming ecosystem which is prevalent in Malta, possibly not be able to resort to Article 56A or possibly similar legal protection.

That is because the precise wording used by the Maltese legislator when codifying Bill 55 resulting in Article 56A of the Gaming Ac was the following:

“Notwithstanding any provision of the Code of Organization and Civil Procedure or of any other law, as a principle of public policy:

(a)  no action shall lie against a licence holder and, or current and, or former officers and, or key persons of a licence  holder  for  matters  relating  to  the provision of a gaming service, or against a player for  the  receipt  of  such  gaming  service,  if  such action:

(i)  conflicts with or undermines the legality of the provision of gaming services in or from Malta by virtue of a licence issued by the Authority,  or  the  legality  of  any  legal  or natural  obligation  resulting  from  the provision of such gaming services; and

(ii)  relates  to  an  authorised  activity  which  is lawful in terms of the Act and other applicable regulatory instruments; and

(b)  The  Court  shall  refuse  recognition  and,  or enforcement in Malta of any foreign judgment and, or  decision  given  upon  an  action  of  the  type mentioned in sub-article (a).”

Key to note is that he narrative “no action shall lie” is tied to the wording “licence holder” and “gaming service”.

A "gaming service" means making a game available for participation by players, whether directly or indirectly, and whether alone or with others, as an economic activity. In industry terms, this effectively means a B2C operator’s activity.

Albeit the term “licence holder” is used in Article 56A, it is used with reference to “for matters relating to the provision of a gaming service, or against a player for the receipt of such gaming  service”.

Therefore, at present, it would be doubtful or at least unclear, whether Critical Gaming Supplies MGA Licensees, in other words business-to-business (“B2B”) license holders, can also resort to some protection under Article 56A should they for example receive an order for illegal content takedown of a customer (B2C) and refuse to comply.

As drafted, the use of the term “licence holder” also excludes those suppliers holding a Material Supplies Certificate from the MGA.

Any other suppliers to the gaming industry, including most notably suppliers such as data centres, platforms and other technology intermediaries, that may qualify as “intermediaries” under the DSA seem to also be excluded from the possible protection of Article 56A given the use of the wording “license holder” and “gaming services”.

Article by Dr Terence Cassar

 

You may also wish to read:

The intersection of the Digital Services Act with the Artificial Intelligence Act

Disclaimer This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.
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