If you are running your own online gaming company, you will face the moment when you need to register your online casino service to perform legally and become the fully entitled subject of your local governmental law. The process often becomes a stumbling rock for the newcomers in the online casinos and sports betting market, as it consists of several important steps and requires a large investment — one of the highest expenses in the whole budget of creating a new online gambling business.
What is an online gambling license?
Basically, this is an official document issued by a special gaming authority of a certain jurisdiction. A gaming license confirms that the gambling business has come through due diligence, the website and its owners or users are not involved in unlawful actions like money laundering and that it coincides with all regulations of the jurisdictions the license is valid for.
There are several major companies that provide the operators with the license so the owners of online casino can choose between their local jurisdiction and the offshore ones. Obtaining a license is the key process of launching a business in the betting and gaming industry as it opens all opportunities. What are they?
Why do I need to issue a license?
Some business owners start to hesitate and consider not getting an online gaming license after they get acquainted with the financial side of the question, a range of requirements, and the whole process of making the online casino a legal body.
However, upon a closer view, it turns out that obtaining a license is not only a fuss and bother but, in the end, a great helping hand for the online gambling business.
Clients’ trust
Sophisticated gamblers, who have seen plenty of different online casinos, always check if the new website they want to enroll in is the licensed one. As soon as they run into the main page, they usually scroll it to the bottom to see which license does the services approved by. When they see that a casino is submitted to a certain trusted jurisdiction, they can be sure that their performance is protected, the payments are secure, and no fraudulent actions will be aimed at them. Slot machine lovers value the licensed software because it regularly goes through due diligence to prevent the casino from involving in the randomizing algorithm in order to make the winning chances lower or equal to zero.
Setting up contracts
Running an online casino or a sports betting website implies having a special corporate bank account, agreements with merchant organizations, and purchasing the software from the games providers. All of the mentioned operations require a license — unless you want to work with illegal shadowy organizations without any guarantees and financial trust.
The quality of your software has a direct impact on your profit, so to cooperate with such powerhouses as Microgaming, NetEnt, Red Dog, Play’N’Go, you will need to assert the evidence of the fact you are working in full compliance with certain jurisdictions’ rules.
Marketing and promotion of your gambling business
Your business plan will definitely include a range of marketing actions aimed at attracting customers to your brand new platform. To make the initial process of launching a marketing campaign easier, you may want to apply to some reputable agencies, and in case you lack an online gambling license, the advertising companies may refuse to cooperate with your casino regarding it as a reputational risk for them. In addition, luring clients will be much easier if your marketing campaign contains information about your gambling licenses and other proofs of reliability.
Financial benefits
Not only your customers, but your own earnings will profit from a gambling license. The holders of gambling licenses have benefits in terms of the lower tax rate, and some other tax concessions, for instance, when you need to stock up with foreign inventory necessary for the business.
How to choose a licensing organization?
There are several jurisdictions that can issue a gambling license, and they are all different: prices, the licensing process, a list of documentation you need to provide, covered territories, and many extra requirements.
Before you issue a license, compare the information of demands and regulations of different operators to choose the one you can afford. Below is a brief summary of the most popular and reputable licensing organs of various jurisdictions.
Curacao
Curacao Gambling Committee is one of the companies whose regulations and fees attract many newly founded gambling sites. Even though the Curacao online gaming license is one of the easiest to obtain, it is still an upstanding and respected committee so it makes sense to start with considering this place for issuing your first i-gaming license.
There are two types of licenses existing in Curacao: a master license and a sublicense. The difference between them is that a master license holder reserves the right to issue sublicenses to the other online gaming organizations. At the moment there are four master license holders in Curacao and the other online casino owners have a sublicense.
The main advantage of the Curacao Committee is that you do not need to come to any office in person: it is possible to apply on a distance basis, which allows entrepreneurs to take advantage of different agencies who can take the lead of all documentation and the whole application process. However, in case the Committee may want to reconfirm some information or have a personal interview with the applicant they might ask you to come in person and have a separate audience before making a decision on your approval.
Among the required documents are the police clearance certificate, reference letter from a bank, passport copy, utility bill copy, and another personal identity document (for instance, a driving license or a personal tax reference number). If you prepare the documents package yourself, make sure you have got acquainted with all regulations; if you have any hesitations, it is better to hold a consultation with a lawyer experienced in the online gambling questions.
The fee you have to pay to the Curacao Committee for a sublicense is 5 000 EUR per month during the first two years. After this period, you can apply for the reconsideration of the monthly or annual fee amount. The income tax is only 2 percent in Curacao.
Another advantage of this license type is that it covers all the online gambling entertainment by one document: scratch cards, lottery, table games, card games, slots, and sports betting.
Malta
Maltese online gambling licensing organs is also one of the leading organizations; it is a strict commission operating as an additional legal organ controlling fraud and money laundering.
This jurisdiction is rather prestigious and has one of the highest credence levels among the members of gambling platforms. The leading top-rated online casinos often opt for Malta jurisdiction to maintain their status on the market and offer the ultimate level of credence and security to their customers. It covers most of the European countries, and, in addition, having an online gaming license from Malta, you have a chance to obtain a resident permit.
The income tax on Malta is 35 percent. It sounds very high, however, you have the right to receive the refund of most of the paid taxation amount which reduces the total percentage to only 5 percent in the end.
It will take approximately six months to register your company and obtain a license with Maltese organs. What should you do for that?
First of all, it is a must to have a legal entity registered in compliance with the Maltese regulation: with a local address and a phone number. Then you must prepare a package of documents about the company; every document is to be translated into English. Malta Gambling Commission also requires police clearance certification for each employee of the company, as well as their personal ID and biographical details. Your business, financial, and marketing plan is also to be included in the list as well as technical documentation, quality certificates of the used software, antivirus programs, and data storage systems.
The application fee is 5 000 EUR; this fee is non-refundable, no matter if your request is approved or not; you pay this fee for the process of considering your application.
As soon as your application is approved, you receive a license. There are four types of licenses you can obtain in Malta as an online casino:
- Type 1 covers casinos and lotteries, slot machines
- Type 2 is issued for the sports betting platforms
- Type 3 is assigned for betting exchanges and poker rooms. The difference is in the responsibility of the platform: Type 3 license activities do not imply any risks connected with the winning pool, because the game is based on the Player VS Player principle. The company gets only a commission fee as their profit.
- Type 4 licensed companies are the casino games providers who do not take any risks for the gambling activity of the users; this is a B2B license.
It is possible to issue two licenses if you need to cover more than one type of gambling service; this is fully legitimate and if you check some leading casino websites you will discover that they hold type 1 and type 3 licenses together.
Within 15 days from obtaining the license, an operator is obliged to put an annual payment. Each type of license fee is 7 000 EUR; if you have two or three licenses, you have to pay for each of them separately even if they are issued for one platform. This is the annual fee that has to be paid promptly without any delays as Maltese online gambling authorities are very strict about the deadlines.
Isle of Man
The Isle of Man is located in the Irish sea and is the Crown Dependency of Great Britain. It means that it is not a part of the United Kingdom, but is not classified as a foreign territory as well and is not included in the British jurisdiction, being an autonomic unit.
The online gambling license regulations are the subject of the Online Gambling Regulation Act (OGRA). It allows online casinos to obtain the following gaming licenses:
Full license
Covers all types of online gaming except spread betting and also gives holders the right to issue sublicenses. The application costs 5 000 British pounds and the annual fee is 35 000 GBP.
Sublicense
Such a license type covers the online gaming companies who want to work under the control of already registered operators. The annual fees and the application prices are lower, which is an advantage for the new businesses, however, their online casinos will be limited by the games that are offered by the holder of the main license.
Network services online gambling license
This is a license given to the offshore online casinos if they want to expand their customer base and offer its services to the members registered under another jurisdiction. This license costs 50 000 GBP per year.
The Isle of Man Gambling regulations force the operators to fulfill quite a wide range of requirements: you have to register the company in the Isle of Man, receive a corporate bank account in a local financial institution, register at least two managing directors with the official residential status on the isle, present the evidence of the servers registered at the Isle of Man and provide the authorities with the full business plan.
It is required to apply in person: you are scheduled for a special audition and then, in case this step is successful, the online casino website is going through a range of tests so that the commission is sure that the platforms are secure and the software used performs in compliance with every requirement. The total process might take from 2 to 4 months.
Gibraltar
Gibraltar authorities who are responsible for the gambling licenses do not only monitor the actions of the websites and investigate the breach of regulation cases, but also provide the members of online casinos any kind of support in case they faced any issues with the gambling website.
The Gibraltar online gambling license is one of the hardest to be approved: only 60 percent of the annual applications result in gaining a status of a legal Gibraltar company. The standard document package is essential, but not enough for winning the gambling department favor: they also notice such factors as the total experience in the gambling industry, possible success of the company in the market, the stability of the financial health of the applicant, and transparency of their intentions. The logical conclusion we can get from this summary is that a new unknown online casino barely has a chance to get a Gibraltar license unless they have some serious recommendations from a serious and reputable warranter institution.
The license is given for all types of gambling sites and different services; in addition, the Gambling Department of Gibraltar is willing to help with the technical hardware and software to supply their beneficiaries with flawless performance.
The documentation package mainly consists of evidence of income: Gibraltar is interested in approving companies that will bring huge earnings and are capable of running and maintaining a profitable business. This includes the bank statements, annual income evidence, bank references. In addition, they need a very detailed business plan that will describe the rules of each game published on the site, sponsors and partners, long-term financial and marketing plans. One of the key elements for gaining the license is having all hardware located within the boundaries of Gibraltar.
Panama
Having a gambling business licensed in Panama means a possibility to provide the services to US citizens. The main currency of Panama is the US dollar; the online gambling activity is not obliged to a tax so this option is really luring for the newcomers in the i-gaming industry.
The requirements are also rather mild in comparison with, say, Gibraltar or the Isle of Man. In addition, running an online business in this country means having access to the optical fiber of excellent quality and an opportunity to hire educated bilingual staff for the positions of casino management, maintenance, and customer support.
There is a range of quite typical requirements claimed for the site and its owners. None of the applicants should have any criminal records; the website has to show the availability of systems that can identify and control the users. Financial evidence is also necessary; moreover, the applicant must be ready to show their competence and deep knowledge in the area of the online gambling business.
To apply and get the license you will have to pay 10 000 USD; after it is approved there is also an annual fee of 20 000 USD. All license holders are also obliged to leave a security deposit that will guarantee following the terms and conditions of the signed agreement. The deposit amount may vary and is determined by the commission personally for each applicant.
Summary
Getting a license might cost much money and effort, so if you are not sure you are ready for the process, it is better to gather support from professional lawyers’ teams. It will certainly imply spending extra amounts but will prevent you from major mistakes that can be made due to the lack of experience. New small casinos are most likely to get more profit from receiving a sublicense first and work as a white label casino to see what perspectives are going to open in a couple of years.
