If you wish to start an online gaming business, you need to come up with the right decision on where you want to obtain your gaming license. There are some important factors to consider before you determine to opt for a license from a particular licensing jurisdiction, namely: which countries your online gaming business is going to operate in; and how much money you can afford to invest in a gaming license.
There are a number of gaming license jurisdictions such as Alderney, Malta, Curacao, Isle of Man, Gibraltar, Costa Rica, etc., which have their own rules and procedures for gaming license application. In this article, we will thoroughly examine the pros and cons of Malta and Curacao gaming jurisdictions:
Malta as a gaming jurisdiction
Malta Gambling Authority was the first EU member that introduced a comprehensive regulation of online gambling in 2001, and since 2004, it has been the main European gaming license issuing authority for providers and operators of online casino games, sports betting, poker and lotteries.
Online casinos licensed under a Malta Gambling Authority can offer services to players in over 180 countries. It is easier to list the countries where the Malta Gambling License cannot be used: USA, Turkey, Iran, Iraq, Syria, Indonesia, Malaysia, Macau, China, Hong Kong and Australia. Some European countries are barred too: Portugal, Austria, Belgium, the Czech Republic, France, Spain, Italy, Slovenia, Lithuania, Estonia, and Denmark.
Malta has a number of advantages to gaming companies that seek to register their business there. The country offers a secure, stable and well- regulated environment for all gaming types, and it has a strong reputation for ensuring compliance, keeping criminal elements out of gaming industry, and preventing money laundering. MGA also offers registered gaming companies a wide range of contracts to avoid double taxation in another jurisdiction(s). Maltese financial and banking system is quite sound and robust, which makes it a reliable option for investments.
There are two categories of gaming licenses offered by Malta Gaming Authority, depending on whether you are an online gaming provider, or an online software supplier: a B2C gaming license issued to an operator to provide gaming service to players, and a B2B gaming license issued to gaming solutions providers to supply their products to gambling operators.
Malta Gambling Authority applies different regulatory frameworks for different types of games. These four types are differentiated by the authority in the following way:
- Type 1: Online games of chance such as slots, baccarat, blackjack, roulette and other casino games that are played against the house and their results are chosen by a random generator.
- Type 2: Online games of chance such as sportsbook that is played against the house and the result depends on the outcome of the sports event or competition. Player’s risks are vested with an operator who manages player’s odds.
- Type 3: Online games of chance such as bingo and poker rooms whereby players play against each other and operators’ revenues are earned by commissions, or other charges per stakes made or prizes won.
- Type 4: A B2B gaming license for online gaming software vendors to provide their platforms and hosting facilities to gaming operators. It is possible to have license types 1, 2 and 3 on type 4 license, whereby a license holder of types 1, 2 and 3 operates its games on the software and through the equipment under type 4 license.
Gaming operators can apply for multiple licenses that are issued for a duration of ten years at a time.
Not a cheap bargain
Some downsides that make gaming operators think twice before opting to have a Malta gaming license are high taxation, multiple license fees and a lengthy licensing procedure that may take up to 18 months to get.
For example, just a fee for issuing a new license of any type, and a fee for renewal of a license will cost €5,000.00. In addition, MGA charges an annual license fee that amounts to €25,000 for license types 1, 2, and 3, and €10,000 for type 4 license. If a licensee holds several types of licenses (1, 2 or 3), an annual combined fixed fee is calculated and applied on Gross Gaming Revenue.
There is also a so-called compliance contribution fee, which is based on Grosse Gaming Revenue and their rates are applied in accordance with the license types. For example, for type 1 license an Annual Compliance contribution is set to Minimal €15.000 and Max €375.000, depending on the gaming revenue.
There is a gaming tax, and it is applied to different license categories in the following way:
Type 1 – €4,660.00 per month for the first six months and €7,000.00 per subsequent month;
Type 1 on 4 – €1,200.00 per month;
Type 2 – 0.5% on the gross amount of all bets accepted;
Type 3 and Type 3 on 4 – 5% of real income;
Type 4 – No tax applied for the first six months of operation, €2,330.00 per month for the subsequent six months, and €4,660.00 per subsequent month for the entire duration of the license.
Also, do not forget that Malts has 18% VAT.
Another point that also makes some operators hesitate before choosing to obtain a gaming license from Malta is the requirement that online sportsbook/casino operations must set up a company resident in Malta, and meet share capital requirements of €100,000 for companies operating type 1 or 2 license; and € 40,000 for type 3 or 4 license holders.
Curacao as a gaming jurisdiction
Curacao was a pioneer country that legalized online gambling in 1996. Being a part of the Kingdom of the Netherlands, Curacao is an island in the southern Caribbean Sea and the Dutch Caribbean region, about 65 km north of the Venezuelan coast.
Along with Malta, Curacao is also a very much popular jurisdiction for online gambling companies, as it offers some very attractive options for remote gambling business.
The Curacao license can be legally used in any jurisdiction other than the following where it is expressly forbidden under Curacao law: Aruba, Bonaire, Curacao, France, The Netherlands, Saba, Statia, St. Maarten, Singapore and the USA.
In some jurisdictions such as Bulgaria, Cyprus, Poland, Hungary, Slovakia, UK, Norway, Russian Federation, Mexico, Australia and Canada, you will have to have a local gambling license along with Curacao in order to operate an online business.
Curacao Internet Gaming Authority (CIGA) is the online licensing authority in Curacao.
The first major advantage of obtaining Curacao license for your online gaming business is that one license covers all types of gaming activities: poker and online casino, sports betting and poker, and an operator does not need a separate license for every type of gaming activity, as in the case with Malta.
Many online operators also prefer Curacao because the licensing procedure is relatively easy and quick, and taxes are low. The gaming tax in Curacao is just 2% applied on net profits, and the licensing procedure may only take as little as two weeks
Curacao licenses actually represent sub-licenses to online gaming companies by responsible Master license holders. Master license holders are allowed to grant sub-licenses to any gaming companies applying for a license. A sub-license comes with all the benefits of a master license, with the only exception that it cannot be leased out as another sub-license.
There are four master license holders in Curacao, and they are Cyberluck Curacao N.V. (Curacao-eGaming) #1668/JAZ, Gaming Curacao (GC) #365/JAZ, Curacao Interactive Licensing N.V. (CIL) #5536/JAZ and Antillephone NV #8048/JAZ.
These master license holders offer all-inclusive packages to newcomers in the gambling market. Typically, the packages would include a sub-license, business license, hosting and other services for a fee that is often cheaper than managing to set up an online operation on your own.
The fees for a “master” gambling license in Curacao include about $34,000 setup fee and then $5,600 per month for the first two years. After that, the operator can negotiate with the government of Curacao for fees going forward.
The licensing costs for the online gaming sub-license consist of €4500 – annual license fee, €1000 – a one-time application fee; and €250 – e-zone application and yearly fee.
Among the disadvantages of obtaining a gaming license from Curacao are lower standards lacking significant quality control with a focus on quantity rather than quality; CIGA does not really intervene in disputes between players and operators; difficult to market in some jurisdictions; and, opening a bank account for online gambling and processing payments is much more complex with