International edition
August 15, 2020

By Ron Mendelson, Fast Offshore Founding Partner

Why operators need to apply for an online gambling license

Why operators need to apply for an online gambling license
Ron Mendelson says that as more and more entrepreneurs are looking to open an online casino or platform, licensing becomes an important matter that needs to be considered first.
Costa Rica | 06/09/2020

As online gaming keeps growing globally, the expert says that operating in a jurisdiction where there are no regulatory requirements can impact activities and credibility. A valid license is typically required to accept payments from players online via credit card and other payment methods, and licensees will be able to operate legally in a greater number of countries without restrictions.

Ron Mendelson is the Director of Costa-Rica based International Business & Corporate Services consultancy firm, Fast Offshore. With ... (+ Info)

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nline gaming sales are up and projections are looking promising as we move into Q3 of 2020. As more people get online and the use of mobile devices increases, numbers of those looking for online casinos, slots, and betting will grow exponentially. 

It, therefore, comes as no surprise that more and more entrepreneurs are looking to open an online casino or platform. The main thing that needs to be considered before this can happen, is licensing. 

As we know, the world of iGaming is heavily regulated due to several risks. These include fraud and money laundering, but many jurisdictions manage to strike a good balance between encouraging the industry and protecting themselves and gamblers. 

Governments around the world have started to update, amend, and introduce new legislation to regulate the industry. In the long term, these changes are positive as with a growth rate of 10% per year anticipated, checks and balances need to be in place.

Different jurisdictions, different rules

There are two types of a regulatory approach to online gambling: those that regulate and those that don’t. Some have created national frameworks that nurture the industry while ensuring ethics are adhered to. These include Curacao, Malta, Kahnawake, Jersey, and Gibraltar. 

There are other countries that do not regulate the sector. This means companies can operate there legally, without a license. However, these companies won't be functional as online payment processors and software providers do not generally serve unlicensed, unregulated and unsupervised online gaming operators, making it virtually impossible to operate under these terms.

But why do I even need a license?

In 99% of cases, operating without a license would mean you are operating illegally. This leaves you open to prosecution and the risk of being shut down. It is therefore in your best interest to operate legally and to ensure you are in line with applicable laws. If you decide to operate in a jurisdiction where there are no regulatory requirements, this can impact your activities and credibility.

There are 6 main reasons why your iGaming business should be licensed:

1) A license will allow you to operate legally in a greater number of countries, without restrictions

2) Companies licensed in some offshore jurisdictions can benefit from low or even zero tax

3) Having a license shows credibility and encourages players to trust you

4) Your customers can see that you are reputable and that a complaint or dispute resolution system would be in place and available to them

5) To accept payments from your players online via credit card and other reputable payment methods, a valid license is typically required

6) To work with reputable software and hardware providers, you will have to show them your license or evidence that you are operating legally.

Self-regulation

Satisfying the licensing requirements is only half of the job. You need to ensure that you remain compliant through the means of effective self-regulation. Ethics, responsible gaming, and a zero-tolerance policy to underage gambling should be at the core of your ethos. Be sure not to let things slip, once you have your online gambling license in hand.

Opening a new business takes a lot of time, effort, and money. If licensing is a step that is skipped, it jeopardizes not just this business, but any future ones as well. Careful consideration needs to be given to which is the correct licensing jurisdiction for you. It is worth getting the advice of a professional to ensure that it is a suitable jurisdiction for your business, financial, and fiscal needs as well.

There are many things you need to tick off the list when you open your online betting, casino, gambling, or eSports betting platform. Picking the right jurisdiction and getting yourself licensed should be the biggest and most important decision you make.

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