nline gambling is booming, and as a result, we are seeing more and more entrepreneurs look to set up their own online gambling platforms. The process typically requires incorporating a company, licensing, adherence to compliance requirements, opening a bank account, and partnering with payment processors. But what do you need to know before you start the process? Having worked in the sector for over 23 years, these are the key points every entrepreneur should know before they take their first steps.
Not each license is created equally
Many jurisdictions offer licensing for online gambling businesses, but they are each very different. Just because a jurisdiction you like the look of offers licensing doesn’t mean it’s suitable for your needs. Similarly, a jurisdiction you may have never customarily considered may be the perfect fit. There are jurisdictions to suit every budget, level of experience, and type of gambling on offer. Some are more suitable for big, established brands, whereas others are great for startups and smaller sites.
When choosing the jurisdiction to get your license in, you need to consider various factors. These include your budget, where your clients are located, how quickly you need the permit and your plans.
While there isn’t a one-size-fits-all license that will suit everyone, typically, we suggest Kahnawake as a good, all-purpose licensing option. It has a good reputation, is well priced, has limited bureaucracy, and is flexible enough for those who want to grow and expand. Before deciding on the best jurisdiction to get licensed in, it’s best to talk it through your trusted corporate service provider.
Regulation is not a joke
Online gambling is a highly regulated industry. There are the license rules, anti-money laundering compliance, and various other matters to consider. To be compliant takes a lot of work. There are policies to be drafted, training to be given, audits to be undertaken, and changing regulations to be adhered to. Failure to be compliant can result in criminal charges, having the license revoked, and bans from working in the sector in the future. It can also have a devastating impact on your reputation and carry hefty financial penalties.
Following regulations is a necessity. Yes, sometimes it can be tempting to cut corners, but the benefits of doing so never outweigh the repercussions.
Not all jurisdictions are suitable for your needs
Many online gambling operators will opt for offshore gaming company incorporation and licensing. This is because most of the time, conditions aren’t favourable in their domiciled jurisdiction. Going offshore gives entrepreneurs the chance to be flexible and pick the best location for them. Some offshore jurisdictions offer zero or very low tax while still being in line with international law. Others provide privacy for beneficial owners, while some have quicker and more cost-efficient setup times.
There are also times when the standing of jurisdiction may change, impacting your ability to do business there. Recently, Malta was placed on the FATF grey-list, meaning it will be under enhanced monitoring for non-compliance with anti-money laundering standards. Malta was once a leading jurisdiction for online gambling companies, but this will likely change in light of the new designation. Always stay up to date with developments in your industry. And if in doubt, speak to your corporate service provider.
Choosing the right partner is key
There are lots of corporate service providers out there touting their business. Don’t just pick the one with the lowest prices or the fanciest looking website- go for the one with experience and who works with transparency. Some providers entice clients with low prices but fail to add on the costs of various necessary services until the final invoice is issued. It’s also a good idea to demand a breakdown of costs.
Another essential part of choosing a provider is making sure their customer service is up to scratch. See which channels of communication they offer and note how quickly they acknowledge and respond to your inquiries. Ideally, they should be transparent about who they are, provide multiple ways to get in touch and respond within hours. Anything less than this is poor customer service and may cost you dearly during your business relationship.
Opening a bank account can be challenging
Online gambling is considered a high-risk industry. This is because it takes place online, remotely, with card payments, and has a high ratio of chargebacks. For these reasons, some banks can be hesitant to open accounts for online gambling companies. But there are solutions! Several offshore banks will provide accounts for gambling companies, but it does take some extra work. Typically, the client must be introduced to the bank by a trusted corporate service provider. Additional due diligence is required, as is a commitment to keeping chargebacks below a certain level.
Good customer service is essential
If you want to keep your license and your bank account in good shape, you must provide excellent customer service to your players. Give them multiple ways to contact you, provide assistance in various languages, and don’t leave them waiting. It’s important to commit to solving issues and disputes quickly and with fairness. If you do this, you are less likely to have a complaint made to the licensing authority and to have chargebacks on your bank account.
To find out more about starting an online gambling company or for information on any of the above points, Fast Offshore’s team are on hand to provide you with expert advice and guidance.