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What is online gaming license and how much does it cost

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Yevhenii Yatsyshin, Senior Associate, Inteliumlaw

Yevhenii Yatsyshin, Senior Associate at Inteliumlaw: Your Trusted Legal Advisor. With a wealth of experience in legal practice, Yevhenii brings invaluable insights and expertise to our team

Table of contents

What constitutes an online gambling license?

An online gambling license typically constitutes a formal document or certificate issued by a regulatory authority, granting permission to an organization or, in rare cases, individuals, to operate remote gambling activities legally.

Who is required to possess an online gambling license?

An online gambling license is required by any individual or organization that wishes to legally operate an online gambling platform. This includes entities involved in various forms of online betting and gaming activities, such as:

  1. Online Casinos: Operators that offer virtual casino games, including slots, table games, and live dealer games.
  2. Sports Betting Websites: Companies that provide online betting options for various sports and events.
  3. Online Poker Sites: Platforms that host online poker games and tournaments for real money.
  4. Bingo Sites: Online venues offering bingo games.
  5. Lottery Operators: Entities that manage online lotteries, including traditional lotteries and instant win games.
  6. Game Developers: In some jurisdictions, developers who create gambling software or games may also require a license or certification, particularly if their games involve real-money wagering.
  7. Affiliates with Revenue Share Models: In certain jurisdictions, affiliates who promote gambling services and earn a revenue share from it may also require a license.
  8. Payment companies: In some countries, companies specializing in processing payments for gambling businesses might need to obtain a gaming license. This license serves as an assurance of their trustworthiness and a measure to safeguard their clientele.

Benefits of holding a Gaming License

  1. 1. Legality: It ensures that the gambling operation is legal and compliant with the laws of the jurisdiction.
  2. 2. Credibility: A licensed operation is seen as more credible and trustworthy by players, partners, and financial institutions.
  3. 3. Market Access: The license allows for legal access to target markets and can be essential for advertising and promotion.
  4. 4. Banking and Payment Processing: It facilitates smoother banking relationships and access to a wide range of payment processing services.
  5. 5. Player Trust: Players are more likely to trust and deposit funds with a licensed gambling platform.
  6. 6. Investor Confidence: Investors and stakeholders are more likely to support a licensed and regulated business.
  7. 7. Responsible Gambling: The license often comes with guidelines to promote responsible gambling, enhancing the overall industry reputation.

Criteria for Obtaining a Gaming License

The general requirements and criteria for obtaining an online gambling license typically include:

  1. 1. Incorporation: Establishing a legal entity in the jurisdiction where the license is sought.
  2. 2. Business Plan: Presenting a comprehensive business plan detailing operations, target markets, and financial projections.
  3. 3. Financial Stability: Demonstrating financial stability, often including proof of capital or financial reserves.
  4. 4. Background Checks: Undergoing rigorous background checks for owners, directors, and key personnel to ensure no criminal links.
  5. 5. Software and Technical Compliance: Ensuring that gambling software meets technical fairness standards and security requirements.
  6. 6. Anti-Money Laundering (AML) Policies: Implementing effective AML measures and Know Your Customer (KYC) procedures.
  7. 7. Responsible Gambling Measures: Establishing practices to promote responsible gambling and player protection.
  8. 8. License Fees: Paying applicable licensing fees and ongoing regulatory charges.
  9. 9. Operational Readiness: Demonstrating the operational capability to run the gambling platform efficiently.
  10. 10. Regulatory Compliance: Adhering to the specific laws and regulations of the licensing jurisdiction.

What are the general steps of the process of acquiring an online gaming license?

Acquiring an online gaming license typically involves the following general steps:

  1. 1. Research and Selection: Research and select a suitable jurisdiction based on business needs, target markets, and regulatory requirements.
  2. 2. Legal Entity Formation: Incorporate a legal entity in the chosen jurisdiction, if required.
  3. 3. Gather Documentation: Collect and prepare necessary documents, including personal and financial information of owners and key personnel, business plans, and proof of capital.
  4. 4. Technical Compliance: Ensure that gaming software and platforms meet the technical standards of fairness, security, and responsible gaming as required by the licensing authority.
  5. 5. Apply for the License: Submit a formal application to the regulatory authority along with the required documentation and application fees.
  6. . Undergo Vetting: Participate in a due diligence process, where the regulatory body conducts background checks and financial audits.
  7. 7. Meet Compliance Requirements: Implement necessary policies and infrastructure, including AML, KYC, and responsible gaming measures
  8. 8. License Approval and Payment: Upon approval, pay the licensing fee and any other required charges.
  9. 9. Operational Setup: Set up operational aspects like banking, payment processing, and customer support.
  10. 10. Launch and Ongoing Compliance: Launch the gaming platform and ensure ongoing compliance with the licensing terms and regulations.

How to correctly select a jurisdiction for an obtaining of online gambling license?

Selecting the right jurisdiction for obtaining an online gambling license requires careful consideration of various factors. It’s crucial to assess the reputation and credibility of the jurisdiction in the online gaming industry, as well-respected jurisdictions enhance trust among players and business partners. Consider where your target audience is located; some licenses are more suitable for specific markets. Understanding the regulatory requirements is essential, as some jurisdictions have stricter regulations than others. Evaluate the taxation structure and licensing fees, as some jurisdictions offer favorable tax rates or incentives for gaming businesses.

Ensure the jurisdiction has a robust banking infrastructure and allows for easy access to payment processing services, which are crucial for gambling operations. Choose a jurisdiction with a stable legal and political environment to ensure long-term operational security. Consider the timeframe for licensing, as some jurisdictions offer faster processing times. Check the technical and operational standards required by the jurisdiction and ensure your platform can comply with these standards. Availability of local service providers like lawyers and consultants can be beneficial, as some jurisdictions offer better support and have more expertise in the gambling sector. Finally, think about your long-term business goals and potential market expansion. The chosen jurisdiction should align with your growth strategy. Consulting with legal and industry experts who can provide insights and guidance

Types of gaming licenses

The types of online gambling licenses vary across the world, and they are often categorized based on the types of gaming activities they cover:

  1. 1. B2C (business-to-customer) online gambling license: This type of license is for companies that directly offer gambling services to end consumers. It covers the operation of online platforms where players can engage in activities like casino games, sports betting, poker, bingo, and lotteries. Companies holding a B2C license are responsible for direct interaction with players, including player registration, handling player funds, ensuring fair play, and adhering to responsible gambling practices. Essentially, a B2C license allows a company to operate its own branded gambling website or app and deal directly with players.
  2. 2. B2B (business-to-business) online gambling license: This license is for businesses that provide products and services to other gambling businesses rather than to players. It includes software developers creating gambling software, platform providers, game providers, payment processors, and other service providers in the gambling industry. Companies holding a B2B license supply the technology, games, or services that B2C operators use on their platforms. They don’t interact with the end consumers but work as key suppliers and partners to B2C licensed operators.
  3. 3. Comprehensive Gambling License: Some jurisdictions offer a comprehensive or umbrella license that covers multiple forms of online gambling under one license.
  4. 4. Affiliate License: In certain jurisdictions, affiliates promoting gambling services also require a specific license

One may also divide online gambling licenses based on the jurisdictional scope:

  1. 1. Jurisdiction-Specific Licenses: Issued by a specific country or jurisdiction, allowing operations within that area (e.g., the UK Gambling Commission License, local licenses in continental Europe).
  2. 2. Offshore Licenses: Issued by jurisdictions with more favorable gaming laws, often used by operators targeting international markets (e.g., Curacao, Malta, Isle of Man, Anjouan).

Gambling license cost

Online gambling license cost varies widely depending on several factors including the jurisdiction, type of license, and the specific requirements of the regulatory body. Here are some elements that contribute to the overall cost:

  1. 1. Application Fees: Most jurisdictions charge a non-refundable fee for processing the license application.
  2. 2. Licensing Fees: Upon approval, there is often a licensing fee that needs to be paid to acquire the license. This can be a substantial amount.
  3. 3. Annual Renewal Fees: Many licenses have an annual renewal fee to maintain the license.
  4. 4. Regulatory Compliance Costs: Meeting the regulatory standards, including software audits, implementing responsible gaming measures, and other compliance-related expenses can add to the cost.
  5. 5. Corporate Costs: If the jurisdiction requires local incorporation, there might be costs associated with setting up and maintaining a company, including legal and accounting fees.
  6. 6. Taxes and Levies: Some jurisdictions impose taxes or levies on gaming revenues or profits.
  7. 7. Operational Costs: Costs related to setting up and maintaining the gambling operation, including technology infrastructure, payment processing, and staffing. To give a rough idea, obtaining a license can range from tens of thousands to hundreds of thousands or millions of dollars. For example, in jurisdictions like Malta or the Isle of Man, initial licensing fees and annual renewals can be relatively high, while in jurisdictions like Curacao, the costs might be lower but other operational costs could add up.

FAQ

Online casino license cost varies significantly by jurisdiction and can range from tens of thousands to hundreds of thousands of dollars. This cost includes application and licensing fees, and may also encompass regulatory compliance expenses, corporate costs, and annual renewals.

No, casino license costs are not consistent across jurisdictions. They can vary widely depending on the specific requirements, regulatory environment, and fees imposed by each jurisdiction.

Yes, there are additional online casino license costs beyond the initial license fee for an online gambling license. These can include ongoing annual renewal fees, costs associated with regulatory compliance, software audits, taxes, operational expenses, and potentially costs related to maintaining a local presence or company in the jurisdiction.

The cost of a gambling license is shaped by a variety of factors. Different jurisdictions have their own fee structures and tax rates, which can significantly impact overall costs. The type of license, whether it's for B2C or B2B operations and the specific gambling activities covered, also plays a role in determining the cost. Jurisdictions with stricter regulatory environments may require more comprehensive compliance measures, adding to the expenses. Initial application fees, the actual cost of obtaining the license, and any annual renewal fees differ across regions. Additional expenses can arise from meeting and maintaining compliance standards, including costs for third-party audits. If setting up and maintaining a company in the jurisdiction is necessary, this can add to the costs, as can general operational expenses related to infrastructure and staffing. Legal advice and consulting services during the application process also contribute to the overall expenditure. Lastly, some jurisdictions impose taxes or levies on gaming revenues, which can further affect the total costs involved in obtaining and maintaining a gambling license.

The cost for the cheapest online gambling licenses generally starts from around $10,000 to $20,000. Jurisdictions like Curacao or Anjouan are known for offering more affordable licensing options, and initial costs in such jurisdictions can fall within this range. However, it's important to note that this is a rough estimate and additional costs for legal advice, compliance, operational setup, and ongoing fees can significantly increase the total expenditure.

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