Complex online gambling regulations in the offshore world

ONLINE GAMING LICENSE – Obtaining an online gambling license abroad may seem simple at first glance, but there are many complexities involved in different countries and jurisdictions. With online gambling revenues expected to reach over $100 billion worldwide by 2026, competition between operators such as Casino greencomplying with appropriate protocols and legal requirements to offer online gaming services in various markets.

This guide covers key aspects of understanding overseas gambling licensing, the complex legal landscape, the challenges facing operators and tips for navigating the regulations.

Definition of foreign online gambling

Although terminology varies from country to country, “foreign online gambling” generally refers to online gaming sites, services, operations and infrastructure that are located outside the jurisdiction where most players are based. For example, a casino site licensed in Curaçao but primarily serving the Canadian market will typically be considered foreign.

Benefits of being abroad

Basing your online gambling company abroad has several main advantages:

• Tax incentives – Many jurisdictions, such as Costa Rica and the Isle of Man, offer low corporate tax rates, sometimes below 2%. This is much less than on land markets.
• Relaxed regulations – Some countries simply have less stringent gaming rules, allowing for more flexibility.
• Anonymity – Directors and owners can maintain greater privacy while abroad.
• Lower operating costs – Things like payroll and real estate expenses are often drastically cheaper.

However, increased freedom at sea comes with its own set of challenges…

Navigating the legal landscape

The biggest difficulty with offshore licenses is that the regulations vary significantly from country to country and from market to market. What may be perfectly acceptable in one place may result in serious fines or criminal charges in another. For example, while sports betting is fully regulated in much of Europe, it remains largely prohibited in most areas of the United States.

This complex legal landscape means that reputable gaming sites must comply with the rules that apply in every jurisdiction in which they operate, not just where they are licensed. It is necessary to implement geo-blocking technology to limit access from places where certain activities are illegal.

Types of offshore licenses

There are two main license structures for offshore online gambling:

• Local License – The company covers and bases key operations, such as technical infrastructure and support, in the jurisdiction in which it is licensed. For example, a gaming license in Curaçao requires servers and offices to be physically located there.
• International License – The license itself allows you to serve players worldwide, without requiring a local operational presence. This category includes gaming licenses in Malta, where companies can only operate online.

Many reputable regulatory bodies offer one or both options.

Understanding taxes

Although corporate tax rates in overseas markets may be low, gaming companies still have to pay consumption tax and gaming tariffs. They also often have to collect taxes from players to pass on to revenue-generating jurisdictions.

For clients around the world, properly handling global taxation becomes extremely complex:

Country	Tax amount
Great Britain	15% gaming tax
Ireland	2% gaming tax
Germany	5% consumption tax
Italy	24% tax on gross gaming revenues

The table below shows sample tax rates in different countries. The stakes are constantly changing as governments update gambling laws.

Choosing the right location

With so many complex factors to consider, choosing the optimal offshore licensing jurisdiction is crucial but difficult. Companies must consider regulations, taxes, reputation, operational costs and more.

Here are some of the most popular jurisdictions and the most important advantages and disadvantages of having foreign online gambling platforms based there:

• Curaçao – Known for its reasonable startup costs and simple licensing process, but lacks a strong regulatory authority.
• Malta – Respected EU regulator, but relatively high fees and taxes.
• Isle of Man – Very well regulated but mandatory local presence rules.
• Costa Rica – Tax incentives but legal uncertainty over new online gaming bans.

Testing the waters

Given the risks associated with regulatory change and compliance, some companies prefer to start with temporary licenses to assess whether offshore operations are viable in the long term.

For example, the Kahnawake Gaming Commission based in Canada offers both:

• Customer supplier authorization – trial license for 1 year
• Full game license – no expiration upon renewal

This may enable operational costs and regulatory hurdles to be properly assessed before a permanent offshore license is approved.

The future of regulations

Although complex, global online gaming regulations have come a long way and should continue to be modernized. The seascape in 10 years will probably look completely different than it does today. However, by arming themselves with the right knowledge on how to navigate this complex web of international regulations, responsible operators can build sustainable offshore businesses.

The key is to always stay up to date with policy changes, both when issuing licenses and servicing player markets. This guide should provide a helpful foundation to get started. But before you proceed, be sure to consult with gaming legal experts to answer your specific questions and scenarios.

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