DraftKings has received a Malta gaming license, paving the way for European expansion

DraftKings was just approved for a Controlled Skill Games License from the Malta Gaming Authority, which is the entity that runs gaming in Malta – a small island nation south of Italy.

While this may not sound like a big deal, (especially considering Malta has a population of under 500,000 people) the nation is part of the European Union, meaning DraftKings can now expand into some other EU countries without any additional licenses or permits.

For example some counties, like Germany, don’t require an additional local gaming license as long as an operator is licensed somewhere else in the EU – like Malta.

On the other hand some other European countries, like France and Italy, do require local gaming licenses. And while DraftKings has said they are “meeting with regulators in all EU countries to understand the details of local licensing requirements”, they haven’t yet announced additional countries that they intend to apply for licenses in. But for now the Malta license will pave the way for an expedited expansion throughout certain European countries that will allow them to operate with the existing Malta license.

While DraftKings won’t launch today in any European countries, they said that they hope to start by offering contests in Malta and Germany during Q1 2017.

Of course DraftKings has already been operating in the United Kingdom for about a year – which is still part of the EU. So why couldn’t they have just used the UK license to expand throughout the EU? Essentially, the way DraftKings is licensed in the UK is not an optimal setup – specifically because the country hasn’t yet passed separate licensing legislation to differentiate between games of skill (like daily fantasy sports) and games of chance.

So while the company made a business decision to accept the UK’s licensing scheme to expedite entry into the country, they knew that it wasn’t the type of license that would best allow them to scale across the continent.

And that’s where Malta comes in. In the gaming world the small country is actually known for being very progressive when it comes to providing licenses for online gaming and gambling. And over the last two years the country has worked to create a new license category for “controlled skill games,” which in this case explicitly covers skill-based games like daily fantasy sports and differentiates it from gambling.

While DraftKings and FanDuel are set to merge sometime in the future, this new license will only benefit DraftKings – as they are still two separate companies.