Online gaming licenses: why, where, and how to get them in 2021

Getting an online gaming license is an essential step in starting an online casino or sportsbook business. Some operators may find the application process daunting, but in the long run it’s well worth the time and money. Keep reading to find out why prospective operators should apply for a license — as well as how and where to do it.

Regulation of online gambling varies from country to country, but in almost all of them, getting a gaming license is one of the first things for new operators to consider when thinking about how to start an online casino. Some operators may balk at the application and licensing fees, but the benefits of a license far outweigh the costs. 

Successful businesses plan ahead. When a new casino operator looks into their long-term prospects, they’ll find that aside from granting legal stability, an online gaming license is a ticket to cooperation with financial institutions and quality game developers, as well as a sign of a trustworthy reputation that players will respect.

Online gaming licenses: why, where, and how to get them in 2021 0
Governments in many countries require operators to obtain a license from their domestic regulators. However, there are also a number of offshore jurisdictions that issue gambling licenses, letting online casinos and sportsbooks reach an international audience. Malta, Curacao, Gibraltar, the Isle of Man, and the Mohawk Territory of Kahnawake all offer licenses to organize gambling activities. 

Why get an online gambling license?

New operators inevitably look at the cost and requirements of getting an online gaming license and ask themselves if applying is even worthwhile. Application fees, licensing fees, and taxes can put a strain on a casino’s budget and chew into profit margins. And that’s if you manage to get the license in the first place — many jurisdictions have tough, bureaucratic application processes that new operators find discouraging.

We offer consultancy services and complete package solutions for gambling license acquisition that include:

  • Gambling jurisdiction and business advisory
  • Gambling business corporate structure incorporation
  • Opening bank accounts
  • Gambling license application

But in the long run (and you should be in the business for the long run) the benefits of getting an online casino license far outweigh the disadvantages. Black market operators will hit serious roadblocks on the way to growth and expansion.

Most banks and financial institutions will refuse to process transactions related to gambling if the casino is unlicensed. Licensing authorities usually carry out background checks to ensure the applicant has no criminal record; banks view licenses as a guarantee their institution won’t be used for money laundering. 

The same goes for the most prominent payment service providers in the industry — no license, no deal. As players’ payment method preferences evolve along with the exploding popularity of cryptocurrencies, it’s getting more and more critical that online casino platforms support a range of traditional and innovative new payment methods. In all likelihood, the payment service provider your platform needs will need you to have a license before starting cooperation. 

To bring in new players, retain loyal ones, and expand into new markets, online casinos need a diverse portfolio of premium-quality game content. From fresh twists on classic fruit slots to electrifying versions of live dealer games, the best game developers in the industry are constantly releasing new content designed to grab players’ attention and hold on to it. However, like banks and payment service providers, game developers will very often only cooperate with licensed casinos — sometimes only with platforms licensed by the same regulator. 

Aside from the limits imposed on their business development, unlicensed casinos also face legal instability. Depending on the jurisdiction where your business is incorporated, there are a range of legal ramifications for organizing unlicensed gambling activities, including fines and prison time. The site could also be blocked by authorities, and the business’s assets could be frozen. 

Player acquisition and retention areessential. Licensed operators are able to advertise their platforms in accordance with the regulations of the jurisdictions where they operate. These can be sometimes restrictive, but it’s a far cry from not being able to advertise at all. 

Last, an online casino’s most valuable asset is its reputation. The license is the first thing players will check before signing up. Players who have been around the block a few times and no longer find bonuses and free spins impressive will base their decision to sign up for a casino on reviews left by fellow players — and having a license is the first step towards making sure those reviews shine. 

All in all, having a gaming license opens up opportunities that an online casino needs in order to grow. Licensing fees may be high, but a well-run online casino or sportsbook should easily afford them.

Online gaming licenses: why, where, and how to get them in 2021 1

Where to apply for an online gaming license

While regulators in many countries require operators to hold a local license, there are a number of jurisdictions around the world that issue licenses which enjoy international recognition. Operators often get started or expand their operations by getting licensed in one of the following jurisdictions:

Curacao 

The Caribbean island of Curacao is one of iGaming’s oldest regulators, having started to issue licenses in 1996. The island’s modern infrastructure and business-friendly tax rates make it a popular location for international industries. The Curacao Gaming License has become highly sought-after, especially for new operators.

Curacao’s system has two types of license — a master license and a sub-license. New operators apply for a sub-license from a master license holder (the four master license holders have been fixed since 1996). Master licenses are valid for five years at a time and sub-licenses are valid for as long as their master license is valid. 

Each master license holder sets its own requirements and fees, but there are a few features common to all of them. Most importantly, the sub-license allows the holder to organize all kinds of casino gaming and sports betting, whereas some other authorities require an additional license for each kind of activity the licensee wants to offer.

The Curacao gaming license has a number of advantages that make it a particularly common choice among first-time operators. 

  • Less expensive than other jurisdictions 
  • Licenses can be available in as little as six weeks 
  • 0% corporate income tax and 2% net gains tax 
  • Compliant operators can pay in cryptocurrencies 
  • Less complicated process than some other jurisdictions
  • One license covers all online gambling activities

Curacao licensees do face some restrictions. They are forbidden from accepting players from the USA, France, the Netherlands, and Curacao itself, among other countries. But all in all, the Curacao gaming license is the first choice of many new operators. 

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Malta

The Mediterranean island of Malta is known as the home of European iGaming. The Malta Gambling Authority (MGA) license is one of the world’s most prestigious, and enjoys recognition throughout Europe. Compared to Curacao, the Malta gambling license is more expensive, and usually chosen by more established operators looking to break into the prosperous European market. 

Unlike Curacao, Malta offers four classes of license, each of which allows the holder to organize a different kind of activity. Licenses are valid for 10 years.

Type 1

Allows operators to organize games of chance where the result is determined by a Random Number Generator (e.g. slots).

Type 2

Allows operators to organize games where the outcome is determined by the result of an event (e.g. sports betting).

Type 3

Allows operators to organize games of chance that generate revenue by commission based on stakes (e.g. poker).

Type 4

Allows operators to organize controlled skill games with a result based on aggregated statistical performance (e.g. fantasy sports).

A regulatory restructuring in 2018 streamlined the taxation system, removed the need for current license holders to apply for separate licenses, and waived the monthly compliance contribution for the first 12 months of a casino’s operation.

Malta is home to SiGMA, one of the largest and most renowned international iGaming exhibitions, and due to its status as an international hub of the online gambling industry, the island has become home to every type of iGaming professional you might need.

The MGA is known for having a rigorous licensing process.

  1. Fit and proper check.
  2. Business planning check (MGA ensures the viability of the applicant’s business plan). 
  3. Operation and statutory requirements check (incorporation documents, verticals, terms and conditions, policies and procedures, financial reserves — €100,000 for licenses 1 and 2, €40,000 for licenses 3 and 4). 
  4. System review (applicant begins operations and a qualified refers checks that all is in order). 
  5. Compliance check (within 90 days of going live, a compliance auditor confirms that the operator is adhering to regulations).

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Kahnawake

The Mohawk Territory of Kahnawake in Quebec is home to the Kahnawake Gaming Commission, which has been issuing licenses since 1999. Operators apply for a Client Provider Authorization, which enables them to organize all kinds of casino gaming and sports betting — except for live casino games, for which the KGC offers a Live Dealer Studio Authorization. Additionally, operators will need a Key Persons Permit for at least one of their critical personnel. 

The KGC license offers a few clear incentives for operators; the corporate tax rate is 0%, with no additional gaming tax. The reduced financial burden can be especially helpful during a casino’s first few years of operation as it builds up its player base. The initial license is valid for 6 months before the project is reviewed. If the project satisfies authorities and there isn’t a substantial number of player complaints, the next license, valid for five5 years, is issued. Due to the KGC’s commitment to fair and transparent gaming, the Kahnawake gaming license has a good reputation among players.

The KGC has a five-step licensing process. 

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Gibraltar

Gibraltar is an overseas British territory that issues licenses which are respected around the world. The Licensing Authority issues six kinds of license, and operators need a separate license for each product they wish to offer.

Licenses offered by the Gibraltar Licensing Authority:

  • Remote Gaming B2C Operator 
  • Remote Betting B2C Operator 
  • Other Remote B2C Gambling Products 
  • Gambling B2B Support Services 
  • Non-Remote B2C Gaming Operator 
  • Non-Remote B2C Betting Operator 

The advantages of the Gibraltar gaming license include a straightforward pricing structure, an outstanding reputation, and reliable governance. Online gaming and betting businesses also find the low tax rates appealing; taxes are 1% of revenue, capped at £425,000 with a minimum of £85,000. 

The Gibraltar license is a less common choice for new or inexperienced operators; the Licensing Authority traditionally only considers applications from established operators with licenses from other jurisdictions, significant finances, and a solid business plan. 

Applicants must also provide information about key personnel, and verify that the business will be controlled from Gibraltar. Gambling products should be certified and compliant with Gibraltar’s regulations. 

Instead of charging annual license renewal fees — and all the fees that come along with application processes — the Licensing Authority charges a single lump sum; remote operator licenses cost £100,000 for a five-year license.

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Isle of Man

The Isle of Man is a British Crown Dependency in the Irish Sea. The Gambling Supervision Commission started to regulate online gambling in 2001, and currently issues several types of license based on the class of company (B2C licensees can organize all types of gambling activity).

TheIsle of man does not have a blacklist of forbidden markets, but licensees are expected not to enter markets where gambling is prohibited. The low gaming tax of 0.1% to 1.5% of GGY and lack of a capital gains tax likely stem from authorities’ focus on supporting the private sector. The government also supports blockchain. 

Applicants must satisfy a series of requirements. 

  • The company must be incorporated in the Isle of Man.
  • The company must have two resident directors and a designated official or operations manager. 
  • B2C licensees must register players in servers on the Isle of Man. 
  • Potential licensees must pay an application fee of £5,000 (€5,700). 
  • All games, RNGs, and gambling systems must be approved. 
  • Key persons and those with over 5% stake in the company will be subject to due diligence checks.

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How to apply for an online gambling license

Every licensing authority has its own application process. Generally, you can count on paying fees, filling out lots of paperwork, and waiting for at least two or three months. 

Some of the most common requirements include:

  • Background check
  • Business plan 
  • Proof of sufficient funds
  • Software checks
  • Compliance checks
  • Incorporation within the licensor’s jurisdiction
  • Server location (often must be within the licensor’s jurisdiction)

Often, licensing authorities enforce certain standards that the platform software must adhere to, so it can help your chances of a successful application to cooperate with a licensed, reputable software provider. 

Applying for an online casino or sportsbook license is no walk in the park — and there’s no guarantee of getting the license in the end. Even a minor mistake on an application form can spoil the whole process and send the applicant back to square one.

To avoid wasting time and money, it’s a very common practice for potential operators to seek jurisdictional advice and services from a legal team with experience in the field of iGaming licensing.

How much does an online gambling license cost? 

Every licensing body has its own set of fees and taxes. The tables below show some of the fees levied by several prominent regulators. 

Malta 

Application fee for a new license

€5,000

Application fee for license renewal

€5,000

Key function certificate

€50

Transfer of a qualifying interest

€1,500

Application fee for material supply certificate

€1,000

Non-refundable fixed annual license fee types 1, 2, and 3

€25,000

Non-refundable fixed annual license fee type 4

€10,000

Compliance contribution

Schedule of fees depending on revenue. Read more here.

Isle of Man

Application fee

£5,000 (approx. €5,600)

Annual license fee

£35,000 (approx. €39,000)

Tax

Gambling Yield less than £20 million (approx. €23 million) — 1.5%

 

Gambling Yield greater than £20 million but less than £40 million (€45 million) — 0.5%

 

Gambling Yield greater than £40 million — 0.1%

Kahnawake

Application fee

$35,000 (€29,000)

Key persons application fee

$5,000 (€4,130)

Annual licensing fee

$20,000 (€16,500)

Annual Key Person permit fee

$1,000 (€825)

CPA renewal 

$5,000 (€4,130)

Key Person permit renewal

$2,500 (€2,000)

Gibraltar

License fee

£100,000 (€114,000) for a five-year license

Taxes

1% Revenue tax. Minimum: £85,000 (€96,800). Maximum: £425,000 (€484,100).

How do you choose an online casino license?

There are a number of factors to take into account when choosing a jurisdiction. Some of the things you’ll have to consider include:

  • Licensing fee
  • Your level of experience
  • How many licenses you’ll need 
  • Administrative costs 
  • Taxes
  • International recognition
  • Licensing requirements for other companies you’ll be cooperating with
  • Type of operation you’ll be running (Casino gaming / sportsbook / other)

How can Slotegrator help you get an online gaming license?

Simply choosing a licensing jurisdiction is difficult enough to begin with. With all the different factors that operators have to weigh — business model, products you intend to offer, licensing fees and taxes, restricted markets — the choice can be immediately overwhelming.

Even after a new operator has settled on a jurisdiction, mountains of paperwork and an often bureaucratic application process can leave potential operators frustrated and confused — not to mention disappointed, if a minor-slip on one of their many forms snowballs into total rejection.

Our jurisdictional and advisory services can help at every step of the way. Starting with figuring out which jurisdiction best fits your business structure and goals, our legal team then takes over and handles the application process on your behalf, leaving you free to focus on business development and making sure you won’t put a foot wrong. 

Get in touch today to take the first step towards a successful online casino or sportsbook.

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