Gambling License- Sports Betting- Online Casino:  International Licenses

Our tax and law office assists clients from the European Union and European Economic Area (EU / EEA) as well as in many other couries (e.g. Switzerland, Russia, U.S.A, China) with the realization of their online gambling. On behalf of our clients we incorporate companies with gambling-licences in many countries such as Malta, Gibraltar, U.K., Costa Rica, Antigua and Barbuda and Kahnawake. Further, we advise you in tax planning and tax-free routing of dividends e.g. by setting up a holding.

In the process of incorporating gambling company and obtaining a gambling licence we offer all relevant services:

• Incorporation of the company, including Registered Office proper place of business

• If necessary or ordered: Trustee Director (place of establishment in terms of place of taxation)

• Apply for licence, business-plan, profit and loss statement

• On request: connection to software company for gambling-software

• Gambling regulation, draft of general terms of trade according to national Gambling Act

• Server hosting in the jurisdiction at your place of business of the company

• Connection to tax advisory firm at the place of business (bookkeeping, annual account & return, advance return for VAT, matters on gambling taxes)

Choosing the right jurisdiction, several key factors are important. Depending on these factors we kindly ask you to answer the following questions in order to reduce the number of possible jurisdictions:

• Where do you reside, where do you usually live?

• Where do the shareholder(s) of the proposed Gambling Company reside, where do they usually live?

• To which customers in which countries shall the gambling be offered?

• Shall the gambling be offered to residents in the European Union also?

• Which kind of gambling shall be offered (Poker, betting, Bingo, Casino etc pp)?

• Will the gambling be offered on you own hosted platform o rare you going to offer it as a reseller /affiliate ie. will your games would be hosted by a company that already has a gambling licence?

  I fit is a reseller program, of which country does the licence origin?

• If Lottery of goods or real estate: where is the real estate located?     The following has its focus on EU-legislation respectively on gambling-licences within the European Union. But further, we have the experience with the application of gambling-licences outside the EU and EEA or from clients abroad (e.g. Switzerland, Russia, U.S.A, China).

Please, have close look at the following:

• By offering gambling the legislation of the country applies where the company has its proper place of management but also the laws of those countries, to where the gambling is addressed.

• In most countries – such as China, Switzerland or China – gambling is prohibited, reserved to government bodies or regulated.

• Within the EU and the EEA the Freedom of Establishment and verdicts of the European Court of Justice apply. By this, companies on Malta holding a gambling-licence may offer its range of games to all European Union without a new licence in those other countries in the EU abroad Malta. This fact about a Maltese licence is also important and very interesting to clients from other countries. To offer our clients from non EU/EEA-countries with strict gambling-legislation an attractive way to implement a gambling-licence, we have several arrangements. Please have a look at our remarks below.

Learn more: Gambling LicenCeS And BASIC CONSIDERATIONS FOR SERVICE PROVIDERS

• Gambling and Betting Licences: General Legal Principles

Gambling License: Do not underestimate the costs!

In some Internet forums one can read entries which state, for example, that a license can be purchased in Malta for approximately 7,000 Euro per annum. This is of course total nonsense; one cannot just develop a lucrative business "on-the-fly". He who wishes to be a successful entrepreneur must make certain investments. The following fees and taxes must be considered when pursuing a gambling license:

- Preparatory steps regarding the submittal of the approval process at the relevant agency in the seat country (these services are provided by our partner attorneys in the seat country). For this process numerous documents/proofs must be submitted depending on the seat country: Business plan and profit and loss plan for the first years, software, general terms and conditions of the gambling operation, measures for child and youth protection as well as addiction prevention, excellent credit record of the managing director, sufficient paid in capital in the event of distributions and many more considerations.

-Approval process / accompaniment up to receiving the license

-Formation of a company in the seat country, no bogus firms [as defined by term/act/provision]. In this process, for example, Gibraltar mandates a commercially structured organization.

- Government fees to be paid to the relevant agency in the seat country, gambling taxes, corporate/company taxes

-In many countries: Fees for the prescribed auditor, fees for accounting, preliminary value added tax return and annual financial statement.

Gambling License: Fundamental Differences and Issues

Within the context of Internet gambling or betting offerings one must first differentiate if the client only acts as an "agent", i.e. as a reseller of existing web offerings or if the client wishes to realize its own platform/service. In the event a client wishes only to pursue "reseller activities", in this case the client could, for example, form a Cypriot Limited which offers such services. It is true that gambling is illegal in Cyprus, however, reseller offerings are legal. In the event the client wishes to offer its "own offering" the laws of the target countries must be considered. Of course the domestic laws of the respective seat state must also be taken into account. Within the EU the a license can be obtained in an EU state (for example Malta), and that said license must , under certain conditions, be recognized by the other EU states. The legal basis for this opportunity is the effect of the EU freedom of establishment and the judicial decisions of the European Court of Justice The situation can become legally problematic, if the offering is to be made available to customers in different countries, also outside of the European Union. If a license is realized in a EU state (for example in Malta), then one must consider that the only applicable law is the law of the seat country and that no permanent establishment exists, as defined by an applicable double taxation agreement. This could lead to the application of the target country’s domestic law, which as a rule should be avoided., Consequently, at most only a representation may be installed "in other countries outside of the seat country" (no permanent establishment as defined by a an applicable double taxation agreement, only consulting activities). Based on different legal considerations we however are inclined to recommend against maintaining any connection to a target country, for example Germany or Austria (as a rule the seat country of the beneficiaries).

Learn more: Gambling LicenCeS And BASIC CONSIDERATIONS FOR SERVICE PROVIDERS

Popular Gambling License Jurisdictions

To operate an online casino, poker room or sports betting gaming site legally you will need to obtain a gambling license first. The actual gambling license to operate online gaming site is issued by many governments worldwide, but the most popular jurisdictions issuing such offshore gambling licenses are from the Caribbean and Pacific Island Governments such as Antigua and Barbuda, Costa Rica, St Kitts, Dominica, Curacau and Vanuatu. When selecting a gambling license jurisdiction, you should select one with a sensible approach to taxation, and license cost in combination with a strong licensing law and technical standards.

Why do you need the gambling license for your online casino, poker or sports betting site?

It is possible to make your online gaming business without a license, but most of major online casinos have license. Here are three main causes why it is worth to have a gambling license.

• In player's opinion gambling license guarantees reliability and straight dealing of the gaming company. Players have more confidence playing in casinos and poker rooms with license.
• In case of a settlement account opening banks insist on gambling license and especially while concluding agreements for receiving payments from bank cards.
• In many countries operating a gambling business without a gambling license is illegal and it may result in termination and criminal responsibilities.

You can apply for a gambling license in one of the countries listed below:

Antigua and Barbuda

Antigua and Barbuda is a twin-island nation located in the Eastern Caribbean. Antigua and Barbuda was one of the first jurisdictions to license interactive gaming and wagering companies in 1994. The internet gaming companies are classified as “Financial Institutions” and are subject to all the Anti-Money Laundering (AML) and Caribbean Financial Action Task Force (CFATF) requirements of the jurisdiction.

The licensing and regulation of online gambling services on the islands of Antigua and Barbuda is handled by the Financial Services Regulatory Commission's Division of Gaming. The FRSC Gaming Division awards two types of licensees: interactive gaming and interactive wagering.

The gaming license is for casino and poker sites and the wagering license is for sports betting sites. It's one of the offshore jurisdictions which contain the biggest number of registered online casinos.

For more information on Antigua's interactive gaming and wagering laws and regulations see the following:

Interactive Gaming and Interactive Wagering Regulations, as Amended 2007
Control Systems Guidelines
Social Responsibility Commitment

-http://www.antiguagaming.gov.ag/files/Antigua_and_Barbuda_Gaming_Regulations-Final.pdf

The Antiguan gaming regulations are enforced by the Antiguan Directorate of Offshore Gaming (the “Directorate”). For more information on obtaining a gambling license in Antigua and Barbuda please visit www.antiguagaming.gov.ag

Costa-Rica

Costa Rica is the Mecca of online casinos and poker rooms because it has the best infrastructure available in the Caribbean basin - its reliable telecommunication system, its multilingual workers, and its lack of online gaming and Internet regulations. A lot of online casinos have chosen Costa Rica as registration country because of the fact that there are no direct prohibition on gambling business and no necessity to receive a special license.

There is no online gambling license in Costa Rica. A company incorporated under the laws of Costa Rica can operate an online gaming business. Companies operate under a "data processing" license.

Costa Rica is home to 200+ online gambling companies, without a legislation specifically dealing with gambling over the Internet. Legislation does exist to restrict land-based gambling, but these laws are not interpreted as extending to Internet gambling.

The requirements to obtain a license are:

• Office Lease Contract

• Health permit

• Workers insurance policy

Kahnawake

Kahnawake is an Indian (native American) territory in Quebec, Canada. 

The Kahnawake Gaming Commission is an organization that licenses a large number of online casinos and online poker rooms. The Kahnawáke Gaming Commission was established in June 1996. The Commission is empowered to regulate and control gaming and related activities within and from the Mohawk Territory of Kahnawáke. These gaming activities are regulated in accordance with the highest principles of honesty and integrity. 

The fee for the initial application is C$15,000 plus an annual license fee of C$10,000

Visit http://www.kahnawake.com/gamingcommission for more information.

Panama

Panama adopted regulations governing the licensing of electronic games of chance and wagering activities in late 2002. Internet gaming companies domiciled in Panama enjoy complete tax exemptions. Customs duty concessions are given for imports needed to carry on Internet gaming. As long as the income made from Internet operations are to jurisdictions outside of Panama, there is no income tax, withholding tax, sales tax or VAT taxes. Offshore companies, such as online gaming companies are not subject to foreign exchange control. There is also a new call center incentive and training program that boast numerous qualified bilingual workers.

The regulations allow master licenses to be granted that are valid for up to seven years upon payment of a license fee of US$40,000. There is also an annual license fee of US$20,000. Master license holders may grant sub-licenses, which are subject to the annual fee. Applicants must pay all investigation costs incurred in the processing of the application. Operators must comply with money-laundering regulations and notify the Financial Analysis Unit of any suspicious transactions above US$10,000. An account must be maintained to guarantee payment to winners. Until now a very few companies have applied for the license, mainly due to the huge paper work and the cost of the gambling license.

Antilles Netherlands and Curacao

Within the Netherlands Antilles, Curacao offers gambling licenses for online casinos, poker rooms and sportsbooks. Gambling licenses are available through the Department of Justice or through sub-licensing from an existing gambling license holders. Licenses from the Department of Justice last for two years.

Gibraltar

All gaming operations in Gibraltar require licensing under the Gambling Ordinance 2005. Remote Gambling licenses, including for telephone and internet betting, are issued by the Government of Gibraltar.

Only companies with a proven track record in gaming, of reputable standing and with a realistic business plan can be granted gambling licenses. Gibraltar gaming licenses are generally difficult to obtain.

For more information on obtaining a gambling license in Gibraltar visit http://www.gibraltar.gov.gi/gov_depts/internet_gaming/internet_gaming.htm

Isle of Man

The Isle of Man specifically encourages the location of online gambling businesses: "The Isle of Man Government actively encourages the development of gambling and e-gaming business on the Isle of Man. It remains committed to delivering a stable government and strong regulatory environment, supported by a wide range of attractive Business Benefits."

The Commission requires independent testing of software to ensure games offered are not rigged and will make accurate payment of player winnings. Games may only be offered by licensed, corporate operators. All operators must also establish bond arrangements to guarantee players will be paid in the event the licensee ceased operations for any reason.

Fees

• GBP35,000 per annum
• GBP1000 one off administration fee which is non-refundable

Duty

• for gross gaming yield not exceeding £20 million per annum 1.5%
• for gross gaming yield of more than £20 million per annum, but not exceeding £40 million per annum 0.5%
• for gross gaming yield exceeding £40 million per annum 0.1%

For more information on how to obtain a gambling license in the Isle of Man please visit
http://www.gov.im/gambling/licensing/

Malta

Class 1 – Remote Gaming Licence for online gaming
Class 2 – Remote Gaming Licence for online betting office
Class 3 – Promotion and abet gaming from Malta
Class 4 - Hosting and managing only gaming operations, excluding licences itself.

Licences are issued for a minimum period of five years and may be extended for further periods of five years each.

Licensing Requirements

Obtaining a gaming licence in Malta is a serious affair and in the interest of the consumers and the local reputation, the Authority would require to know that the applicant can meet the licence obligations. The licensing procedure is quite extensive but thanks to the professionalism of the persons involved, this procedure should not take more than 5 to 6 weeks.

The application for a gaming licence requires the following documentation:

1. Detailed profile of the promoting company

2. A copy of the last audited accounts of the promoting company, where applicable

3. A business plan indicating the economic activity – including job creation if any – which will be carried out from Malta

4. A plan of the premises earmarked for adoption as a call centre.

5. Personal details of all shareholders having more than 5% interest in the local operations.

Basic Requirements

• Both hardware and software involved in the operations must be located in Malta, and there exist companies that can provide this service without the need for the licensee to obtain its own premises.

• The activities of the International Trading Company are limited to those carried outside Malta. No Maltese resident is permitted to place bets with such a company.

Licence Fees

On submission of application form – Lm1,000 (US$2,700) for any class of remote gaming licence.

On Issue of any Remote Gaming Licence – Lm3,000 (US$8100) per annum. Such a licence is normally issued for a 5 year period.

On application for renewal of any Remote Gaming Licence – Lm500 (US$1,350)

Taxation

On online gaming – Lm2,000(US$5400) per month for first six months and Lm3000(US$8100) per month for the entire duration of the licence period.

On Class 4 Licences – Lm0.0 (NIL) per month for first six months and Lm1,000(US$2700) per month for the next six months and Lm2000(US$5400) per month for the remaining period of the licence.

Online betting operations – one half of one per centum (0.5%) on the gross amounts of bets accepted

Online betting exchanges – one half of one per centum (0.5%) on the sum of all net winnings calculated per player per betting market.

Online pool betting – one half of one per centum (0.5%) on the aggregate of stakes paid.

Provided that in no case will the maximum of tax payable per annum by any licensee in respect of any one licence, exceed Lm200,000.

Company Registration

A Malta based gaming operation must be carried out by a Malta registered company as specified in Regulation 4 of the Remote Gaming Regulations (LN176/2004). Gaming companies are not subject to any special tax regime. In fact, online gaming operations may be carried out through a normal limited liability company registered in Malta under the Companies’ Act.

Taxation of Online Gaming Companies

Companies registered on or after 1st January 2007 are taxable at the rate of 35% however, shareholders are entitled to claim back a 6/7ths refund of the Malta tax upon distributions of profits. Alternatively, shareholders may claim a 2/3rds refund of the tax payable in Malta.

In addition, Malta does not levy withholding tax on any outbound distributions of dividends. The refund system and the absence of a dividend withholding tax ensures that profits derived by gaming companies are taxed and repatriated outside Malta in the most efficient manner.

EU Laws

The EU presently does not regulate gambling and in accordance with the EU principle of solidarity, EU member states are free to regulate the matter at a national level. In fact the EU welcomes Malta’s approach to attract and regulate the online gaming industry.

In a number of test cases, the European Court of Justice has held that the Treaty of Rome applies to the sector since online gaming is classified as a service and therefore guaranteed by one of the four freedoms enshrined in the treaty of Rome.

An important aspect to remember is that in order to benefit from the application of the Internal Market Principles and provide cross border services within the European Union one should be established in the EU. Malta, being an EU member since 1st May, 2004, offers such an opportunity which few other e-gaming jurisdiction can match.

What Malta Offers

• Low taxation on gaming operations in Malta
• Tax leakage in Malta may be as low as 5%
• A wide network of double taxation agreements

Other Advantages

• A sound legal and financial system
• A sound ICT infrastructure
• Legislation on betting and e-commerce
• Strong regulatory bodies
• A solid international reputation
• Skilled work force
• Low cost of doing business
• State of the Art telecommunications facilities
• An internal market of circa 500 million EU citizens.