Despite its status as a major hub for the booming iGaming industry in Latin America, Costa Rica doesn’t actually regulate — nor license — online gambling operators. And yet, there are ways to establish a fully legal online gambling company in Costa Rica. Curious to know how? Keep reading.
Costa Rica as a gambling jurisdiction
When it comes to gambling, Costa Rica is unlike any other jurisdiction. All games of chance were formally made illegal by the 1922 Gambling Law. However, subsequent regulations and government interpretations opened the door to a legalised sector.
Are there casinos in Costa Rica? Today, land-based casinos can operate within hotels, offering slots, and other casino games, whereas betting is subject to a state monopoly.
As for online gambling, the story is somewhat different. According to the current interpretation of the law, online gambling takes place where the transactions between player and operators are processed, rather than where the operator is based. This means that even though it isn’t possible to obtain a gambling license in Costa Rica, the government tolerates the operation of online gambling businesses based in the country as long as their transactions aren’t processed by local banks and they don’t offer their services to Costa Rican residents.
The Costa Rican gambling license that isn't a gambling license
As authorities in Costa Rica offer no official online gambling license, most Costa Rican operators just have to register a company and acquire a data processing license to provide online entertainment.
Operators have to register with the Costa Rican Ministry of Commerce, Industry, and Economy. Part of registration is including proof of where their business is established (a physical presence is required). This allows the operator to base his online gambling operations in Costa Rica in the absence of any specific regulatory frameworks for online casinos and betting shops.
A Costa Rica gaming license (or, more accurately, data processing license) provides an excellent opportunity for start-ups to pilot test their business concept before committing significant resources to licensing. It allows them to trial their software, website, and the popularity of their platform with their target audience, before taking their business to the next level.
How to start a gambling company in Costa Rica
The first step for establishing a business in this jurisdiction is to register a company. The entire process, including the preparation of a package of documents, typically takes approximately three weeks.
Some of the most commonly required documentation for company registration includes:
- Certification of the legal status and corporate identification of the company.
- ID of natural applicants, plus certification of authorised residence from the Immigration Department if the applicants are foreigners.
- Proof of right to use of the land (i.e. office space rental contract).
- Certification of fulfilment of previous tax obligations.
Once you have registered your company in Costa Rica, you will then need to apply for a data processing license. The following steps are involved in this process:
- Ensure that all requisite registration documentation is available, including a business plan and identification documentation for shareholders and directors.
- Provide proof that your company has established internal anti-money laundering and countering the financing of terrorism (AML/CFT) procedures and policies that comply with the applicable legislation.
- Submit the electronic license application, completed in Spanish, to the local municipality.
- The local municipality will conduct an inspection to verify that your business complies with the applicable general business standards and criteria. The entire process, which involves the preparation of all documents, typically takes approximately five business days.
Costa Rica gambling license cost
Due to the absence of a gambling license in Costa Rica, there are, of course, no licensing fees or official taxes on gambling. However, there are still costs associated with establishing an online casino in Costa Rica. The price of a gambling company in Costa Rica can vary depending on the specific requirements and services required.
The cost of obtaining a data processing license in Costa Rica is dependent upon the nature of the business and the specific requirements. The average fee for the first year is approximately $7,000.
Pros of operating an online gambling website from Costa Rica
Costa Rica’s primary advantage for iGaming operators is the lack of taxes on gambling revenue, along with flexibility in regulatory obligations, making it a uniquely appealing jurisdiction for online gaming businesses. Here’s a full list of advantages of doing iGaming business in Costa Rica:
- Global Market Access: Costa Rica isn’t seen as an offshore jurisdiction, allowing businesses to work with third parties in the USA and EU markets.
- Minimal oversight: The absence of strict regulatory oversight provides flexibility, with fewer restrictions on marketing and responsible gambling requirements compared to other regions.
- Ideal for business testing: Costa Rica’s lenient regulatory approach allows operators to test different gaming models without the burden of extensive regulations.
- Favorable tax environment: No taxes are levied on gambling or sports betting in Costa Rica, and there’s a zero tax rate on revenue generated outside Costa Rica, providing a significant advantage for international operations.
- Ease of setting up a business: Costa Rica’s business-friendly framework minimizes bureaucratic hurdles, making it simpler for companies to establish operations. Businesses can be set up swiftly due to the straightforward regulatory requirements and minimal administrative steps.
- Affordable fees: Costa Rica has no annual license fees, keeping ongoing operational costs low. The absence of a paid-up capital requirement reduces the upfront investment needed to start a business.
- Stable economy: Costa Rica’s steady economic environment supports long-term growth, enhancing business security and investment appeal.
Cons of operating an online gambling website from Costa Rica
Operating in Costa Rica involves certain restrictions that could prove detrimental to the success of an online casino operator.
1. Lack of license:
Due to the absence of a full-fledged gambling license in Costa Rica, it can be challenging to collaborate with international organizations and top-tier payment processors, who sometimes require that their partners be licensed. Without a license, operators are often unable to integrate traditional fiat payment systems. While cryptocurrencies offer a partial solution, most players still prefer fiat currencies.
2. Lack of regulation:
The absence of regulatory oversight is an attractive proposition for operators who are less attentive to compliance. However, players tend to favor licensed casinos in markets with clear regulations and player protection measures, making Costa Rican casinos less attractive to more knowledgeable users.
3. Deteriorating reputation:
The lack of robust regulation has resulted in the deterioration in the reputation of Costa Rica-based casinos. Some operators prioritize short-term profits over the creation of a reliable and secure platform for users, which has negatively impacted the industry's image.
How can Slotegrator help you?
If you’re keen to start your iGaming business, Slotegrator can help you establish a company in your jurisdiction of choice — whether Costa Rica or elsewhere — and acquire all the necessary licenses. We also offer a crypto-ready online casino platform that allows you to target tech-savvy players worldwide. To get more information about our products and services, just click the button below.
Also, if you are interested in learning about Costa Rica and the other gambling jurisdictions of the region, you can download our free eBook, “iGaming in Latin America”.
Do you need a gaming license in Costa Rica?
Online gambling activities in Costa Rica are not specifically licensed, but casino operators must register as legal entities and adhere to relevant laws and regulations. These include anti-money laundering (AML) and counter-terrorist financing (CFT) requirements. The country's streamlined regulatory framework makes it an appealing choice for online casinos and gambling operators, offering the flexibility to operate within a relatively transparent and lightly regulated environment. In order to operate an online casino business, companies will need to acquire a Costa Rican data processing license.
Is it possible to open a bank account for a gambling business in Costa Rica?
Opening a bank account for an iGaming company in Costa Rica can be challenging due to the limited cooperation between local banks and gambling-related businesses. While the “gambling license” in Costa Rica allows for official business operations, banks often avoid engaging with this sector. In such a situation, the assistance of professional lawyers from Slotegrator can simplify the process and increase the chances of successfully opening an online casino in Costa Rica.
Can a foreigner own a gambling company in Costa Rica?
It is possible for foreigners to set up an online casino or gambling company, though you don't technically need a gaming license to do so. However, it's essential to understand the local laws and regulations governing gambling in Costa Rica. This is necessary to ensure your company can operate successfully in the online gambling market.
What are the tax obligations for Costa Rican iGaming operators?
Companies with a casino license in Costa Rica that are focused on the international market are exempt from paying income tax on profits earned outside the country. This makes Costa Rica an attractive option for operators who want to reduce tax liabilities without going through the steps of acquiring a license, as is the case in other countries.
Is gambling legal in Costa Rica?
Gambling is restricted in Costa Rica. Gambling companies based in Costa Rica and holding a data processing license are permitted to offer their services only to players based outside the country. This means that local online casinos in Costa Rica cannot offer gambling services to citizens of the country. However, even given these restrictions, a casino license in Costa Rica represents a particularly attractive proposition for international businesses.
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