Anyone who opens an online gambling business faces the question of obtaining a license. But what is a gaming license, and why do you need to get one?
A gambling license is a document that allows you to legally operate an online casino or sportsbook. Getting it is a key point in the process of launching an iGaming business. But why is obtaining a license so important, and where can you get one? Keep reading to find out. We will also explore the best licensing jurisdictions for gambling operators and the requirements you need to fulfill to obtain a license. Let’s dive in!
Who needs to get a license?
Absolutely any gambling project needs to be licensed. Online casinos, platforms for betting on real or virtual sports, crypto casinos, websites for games with live dealers, poker rooms, and so on. All these projects can operate legally only under a license from one of the regulated jurisdictions.
But what about those operators who skimp on obtaining a license and operate illegally? Indeed, unfortunately, some entrepreneurs still make this mistake. We categorically do not recommend following their example, because running an online gambling platform without a license can lead to serious legal and reputational consequences. Let’s figure out what exactly the risks of illegal operation are.
Why shouldn’t you run a casino without a license?
Depending on the jurisdiction and the severity of local laws, illegal online casino owners face various troubles. Let us list the main problems of unlicensed operators.
1. Legal problems
Even in gambling-friendly jurisdictions where the industry is strongly supported, operating without a license is illegal. Running an unlicensed iGaming business can result in fines, website blocking, and, in some countries, criminal charges and prison sentences for the owner.
2. Problems with opening bank accounts and integrating payment systems
Famous banks and payment system providers prefer to work only with licensed operators. At the same time, illegals have a chance to cooperate only with much less respected and reliable financial organizations. This can negatively affect both the financial security of the platform and its reputation in the eyes of players.
3. Problems with purchasing official games
Top online casino game developers only work with licensed websites. The importance of quality games for an iGaming website is self-evident.
4. Lack of player trust
Today, experienced players only trust online casinos with a gambling license. This is extremely important, because the presence of this document gives the player guarantees of the safety of their funds and personal data. Thus, by saving on a license, you will lose a significant part of the potential audience of your website. Is it worth it?
5. No access to the global gambling community
Representatives of the gambling industry are doing their best to support legal and responsible gambling. For this reason, the attitude towards illegal operators in this community is not the friendliest. By choosing to work without a license, the owner of an online casino deprives himself of the opportunity to become part of the global gambling community, make useful contacts and participate in large-scale industry events.
Thus, although licensing your iGaming project seems complicated and expensive, it will undoubtedly pay off in the long run.
How to get a gambling license?
This is the most frequently asked question about gambling licenses. Many might say there is no universal answer because each jurisdiction does have its own licensing procedures and requirements for operators. However, there are common stages in the licensing process that all applicants must invariably go through, regardless of the country.
1. Research and planning
Start by researching different jurisdictions and their requirements. Choose the one that best suits your business model, budget, and target market.
2. Prepare a business plan
Create a detailed business plan that outlines your gambling operations, financial projections, and marketing strategies. This will be crucial for your application.
3. Gather required documentation
Collect all necessary documents, including proof of identity, financial statements, and corporate structure details. Each jurisdiction will have a specific list of required documents.
4. Set up a company
Establish a legal entity in the jurisdiction where you are applying for the license. This might involve registering a company and setting up a local office (optional).
5. Compliance with technical standards
Ensure your gaming platform meets all technical standards, such as fair play algorithms and secure software. You might need certification for your random number generator.
6. Implement AML and KYC policies
Develop and implement robust Anti-Money Laundering (AML) and Know Your Customer (KYC) policies. These are critical for regulatory compliance and protecting your business from illegal activities.
7. Pay licensing fees
Pay the required application and licensing fees. These fees vary by jurisdiction and cover the cost of processing your application and maintaining your license.
8. Submit the application
Complete the application form and submit it along with the required documents. Be thorough and accurate to avoid delays in the processing of your application.
9. Undergo background checks
Expect comprehensive background checks on all major stakeholders. Authorities will verify the integrity and financial stability of the business and its operators.
10. Await approval and prepare for inspection
After submission, the licensing authority will review your application and may conduct inspections or request additional information. Be prepared for this phase and respond promptly to any inquiries.
Navigating the licensing process can be complex, but it is a crucial step for the success of your iGaming business. By following these stages diligently, you ensure that your operation is legal, reputable, and ready to thrive in the competitive online gambling market.
Now let’s move on and figure out what are the most common requirements for iGaming operators.
Gaming license requirements
Obtaining a gambling license involves meeting several critical requirements. Here are the most basic ones:
1. Background checks
Comprehensive background checks on owners, directors, and key personnel to ensure they have a clean criminal record and a reputable experience in business.
2. Business plan
Submission of a detailed business plan outlining the proposed gambling operations, financial projections, target markets, and marketing goals.
3. Proof of financial stability
Evidence of sufficient financial resources to support the operation and maintenance of the gambling business, including bank statements and financial guarantees.
4. Technical standards compliance
Certification of the gaming platform’s technical standards, including secure software, fair play algorithms, and a random number generator (RNG).
5. AML and KYC policies
Implementation of robust Anti-Money Laundering (AML) and Know Your Customer (KYC) measures to prevent money laundering and financing of terrorism.
6. Internal controls and auditing
Establishment of strong internal controls and agreement to regular independent audits to ensure transparency and integrity in operations.
7. Data protection and privacy
Set a range of measures to protect customer data and ensure confidentiality.
8. Application and licensing fees
Payment of required application and licensing fees, which can vary significantly between jurisdictions.
Meeting these requirements ensures that gambling operators maintain high standards of integrity, security, and fairness, providing a safe and reliable environment for players.
How to choose the right jurisdiction?
Choosing the right jurisdiction is an extremely important decision that will affect all aspects of your gambling business’s future. It is essential to thoroughly study all the nuances and select a location that aligns perfectly with your goals, capabilities, and preferences.
What should you pay attention to when choosing a licensing jurisdiction? Here are 5 fundamental factors to consider:
1. Fees and taxes
First, make sure that the costs associated with licensing and operating a business in a jurisdiction are within your financial capabilities. Find out the application and licensing fees, as well as the annual and renewal fees. Also familiarize yourself with the country’s tax policy, because this will directly affect your income and the success of the project.
2. License coverage
You need to choose a jurisdiction whose license will allow you to operate in the specific markets you have chosen. Do not forget that gambling legislation is different in each country; in some locations there are restrictions or prohibitions. It is important to ensure that operating with your license will be considered legal and will not incur legal consequences.
3. Application procedure
The procedure for obtaining a license also differs in each jurisdiction. Somewhere, the requirements for operators are soft and straightforward; in other countries, strict compliance with rigid standards is required. Study the rules and conditions for obtaining a license in all jurisdictions you are interested in to choose the best solution for your business.
4. Consideration time
Another important factor is the timing of obtaining a license. In some countries, this procedure takes up to six months, while in others you can receive a permit in a few weeks. The choice depends only on how soon you plan to enter the market and how critical compliance with these deadlines is.
5. Reputation
It is important to consider the reputation of the licensing jurisdiction, as it reflects on the licenses it issues and, consequently, on the license holders. The higher the status of the license, the more trust there is in the projects working under it. However, keep in mind that the most reputable jurisdictions also impose the highest requirements on applicants.
6. Benefits for operator
Notice how gambling-friendly the jurisdiction’s government is. Often, local authorities strive to support the industry and stimulate its development with various measures. Such measures include tax benefits for gambling companies, a simplified process for obtaining a license, grants for operators, and so on.
In the next section we will consider 5 most prospective gambling licensing jurisdictions in 2024.
The best licensing jurisdictions
Malta
Malta is one of the most respected and popular jurisdictions for gambling operators. The Malta Gaming Authority (MGA) provides a well-regulated environment, ensuring high standards of player protection and fair play. Operators licensed in Malta benefit from the country’s robust legal framework, unquestionable reputation, and access to the European market. The licensing process is thorough but rewarding, offering significant advantages in terms of credibility and operational efficiency.
Curacao
Curacao is known for its cost-effective and relatively straightforward licensing process. The island offers a single Curacao gaming license that covers all types of gambling activities on the Internet, making it an attractive option for new operators. While it does not provide the same level of player protection as some other jurisdictions, Curacao remains a popular choice due to its affordability and speed of licensing. By the way, today the gambling legislation of Curacao is undergoing significant changes, which are intended to strengthen the jurisdiction’s reputation in the international arena.
Anjouan
Anjouan, a part of Comoros, has emerged as a brilliant option for obtaining a gambling license. The Anjouan gaming license offers operators a swift and cost-effective route to legal compliance, with relatively low regulatory burdens. Although it is less well-known than other jurisdictions, it provides a solid foundation for startups looking to enter the online gambling market quickly and easily.
Costa Rica
Costa Rica offers a flexible and inexpensive option for online gambling operators. Although Costa Rica does not issue formal gambling licenses, you can legally launch an iGaming project there. To do it you only need to register a legal entity in the jurisdiction. The country’s favorable tax regime and straightforward regulatory requirements make it a preferred choice for many operators, especially those targeting Latin American markets.
Isle of Man
The Isle of Man is renowned for its stringent regulatory standards and comprehensive player protection measures. The Isle of Man Gambling Supervision Commission (GSC) ensures a high level of integrity and fairness in the industry. Operators licensed here benefit from the jurisdiction’s strong reputation, advanced infrastructure, and supportive business environment. The licensing process is rigorous, reflecting the jurisdiction’s commitment to maintaining high standards.
Choosing the right licensing jurisdiction is crucial for the success of your iGaming business. Each jurisdiction offers unique advantages and caters to different needs and budgets.Whether you prioritize cost, speed, or regulatory rigor, these top five jurisdictions provide a range of solutions to help you launch and grow your online gambling venture successfully.
If you’re still unsure about the best jurisdiction for legalizing your gambling project or need assistance in obtaining a license, reach out to the specialists at LicensingAid.
How can LicensingAid help you?
LicensingAid specializes in assisting gambling businesses. The primary focus of the LicensingAid team is to help operators obtain licenses. Additionally, the company offers the following services:
- Company registration;
- Bank/ merchant account opening;
- AML compliance;
- Trademark registration;
- Design consultancy;
- Legal advice.
If you have any questions or are ready to start your journey into the world of gambling, contact LicensingAid for your first free consultation.
