Gambling licenses: what are they and how to choose a jurisdiction for your online gambling business

A gambling license is an official permit from the state (represented by the gambling regulator) that allows an operator to provide gambling services to players.

A gambling license means that the operator complies with the requirements of national regulation and is not in breach of legislation. As a rule, the operator must have a registered legal entity to pay the license fee, have internal mechanisms to prevent money laundering and terrorist financing, implement the necessary principles of responsible gambling, etc. It should be noted that the issuance of a gambling license does not mean a non-bounded possibility to operate in this jurisdiction. As a rule, licenses are issued for a certain period and can also be cancelled due to a breach of legislation or non-compliance with local regulations.

Obtaining a license does not cause additional questions from the players, as they can be confident in the safety of such an operator – the existence of control by the state. Such trust on the part of players is based on the fact that the operator does not mislead them and all winnings will be paid. In addition, the principle of responsible gambling allows both players and operators to restrict access to gambling, if there is reason to believe that the player spends too much time participating in gambling or loses too much money.

From the state's point of view, having a gambling license is an opportunity to control the market and receive additional income (taxes from operators). In addition, the license is an opportunity to block offshore operators (who have yet to obtain a local license), but offer their services in the jurisdiction.

Gambling license regulation is different in each jurisdiction – different legalised verticals, different license fees, different taxes, etc. Therefore, many operators want to obtain flexible gaming licenses (Curacao, Malta, Isle of Man, etc.).

A licensed operator can operate openly without sanctions from the regulator (except in case of breach of legislation after obtaining a license) and build a sustainable business model.

As a rule, the legislation of a particular jurisdiction allows operators who have a license to advertise their business (with restrictions). Such advertising allows the involvement of more players who learn about the operator through advertising.

In some jurisdictions, licensed operators may sponsor sporting events. The operator's brand will be displayed during the broadcast of the sports event. Viewers of the sporting event will be able to learn about the operator and even take part in its games.

The major reform of Curacao's license regime has been a hot topic in the industry last year and this year. It is too early to conclude as the draft regulations have not yet been published. The latest news based on an inspection by a government body in the Netherlands, suggests that LOK will be adopted by 30 June 2024. However, to date, there is no definite news on the finalisation of the LOK adoption process.

The LOK's foundation was straightforward:

The first changes could already be felt by sub-license holders. They had to apply to the GCB portal by 30 April 2024 for a transit license to continue to operate with this license. According to plans, once LOK is adopted, such a transit license will automatically be transformed into a direct license from the state and the regulator.

In December 2024, the Ministry of Finance of Curacao issued a guide with the estimated cost of license fees:

1. B2C

• Application fee – 4,600 EUR + one-off Due Diligence fees between 125 and 250 EUR per person (depending on role).
• Annual fee – 48,000 EUR.
• Monthly fee – 4,000.
• Domains – 250 EUR per annum per domain – unlimited number.

2. B2B

• Application fee – 4,600 EUR + one-off Due Diligence fees between 125 and 250 EUR per person (depending on role).
• Annual fee – 24,600 EUR.

Advantages of Curacao gambling license:

• Timeframe for obtaining a license: the timeframe for obtaining a license is quite fast (if it does not change after the LOK is adopted), which allows the operator to enter the gambling market quickly
• Ease of regulation: the legislation that governs the gambling license is quite clear for the operator
• Availability of markets: The Curacao license allows the operator to operate almost all over the world, except for restrictions in specific jurisdictions.

Disadvantages of Curacao gaming license:

• Uncertainty: As mentioned earlier, the Curacao legislation is still under amendment and the new LOK law is still not yet in place.
• Reputation: For some regulators, the presence of a Curacao license may raise doubts about the legality of the operator.
• Restricted markets: Markets such as the US, UK, Australia and others prohibit operators with a Curacao license from operating, which may result in reduced business revenues.

Maltese regulations comprehensively cover consumer (B2C) and supplier (B2B) gambling markets.

B2C Licenses: These cover all recognized online verticals:

1. Online casinos (Type 1)
2. Fixed-odds betting (Type 2)
3. Betting pools, betting exchanges, poker, and similar P2P games of skill (Type 3)
4. Certain games of skill, such as fantasy sports (Type 4)

Lotteries fall under online casino licenses but remain a state monopoly. B2C licenses are valid for 10 years.

B2B Licenses: There are two subtypes:

1. Games Supply License: For entities like game developers
2. Platform-Related Software Supply License: For entities like white-label solution providers

Costs:

• Application Fee: EUR 5,000 for any license type (both B2C and B2B)

B2C License Fees:

• Type 1 to Type 3: EUR 25,000
• Type 4: EUR 10,000

Compliance Contributions (based on operator’s revenue):

• Online casinos: EUR 15,000 to 375,000
• Fixed-odds betting: EUR 25,000 to 600,000
• Betting pools, betting exchanges, poker, and similar games of skill: EUR 25,000 to 500,000
• Certain games of skill (Type 4): EUR 5,000 to 500,000

B2B License Fees:

1) Games Supply License:

• First year: EUR 25,000
• Following years: EUR 25,000 to 35,000 (Type 1 to Type 3) or EUR 10,000 p.a. (Type 4)

2) Platform-Related Software Supply License:

• First year: EUR 10,000
• Following years: EUR 3,000 to 5,000

Compliance contributions do not apply to B2B providers.

Advantages of Malta Gaming License:

• Reputation: Malta's license has a good reputation among regulators from other jurisdictions
• Opportunity to get access to the EU market. The Malta license allows to speed up the process of obtaining local licenses in other jurisdictions.
• Regulatory stability: Maltese legislation does not change frequently, which creates regulatory and business certainty for the operator.
• Tax incentives: Malta offers competitive tax rates and incentives, making it financially attractive to operators.

Disadvantages of a gambling license in Malta:

• Cost: the cost of license fees is higher than license fees in other jurisdictions.
• Strict reporting requirements: Malta, as an EU country, implements all EU Directives and Regulations, including in the gambling industry. As a result, the reporting requirements may be higher than in other jurisdictions.
• Timeframe for obtaining a license: The timeframe for obtaining a license in Malta may be longer than in other jurisdictions. This may hurt those operators who want to enter the market quickly.

The Isle of Man license covers all B2C verticals, including:

1. Casino games (e.g., slots, live-studio games)
2. Bingo
3. Lottery
4. Sports (e.g., fixed-odds betting)
5. Pool betting

In addition to B2C licenses, OGRA offers:

1. Sub-license: for operators working exclusively with a technology provider holding a full OGRA license. Players register with the sub-licensee but access games from the full OGRA licensee’s server.
2. Network Services License: for B2C operators offering services to players registered with non-Isle of Man-licensed operators on an Isle of Man server without re-registering player details.
3. Software Supply License: subject to the conditions in connection with those services specified in the licence.
4. Token Based Software Licence: subject to the conditions in connection with those services.
5. Full License: one licence covers all gaming verticals, poker, bingo, sportsbook, slots, casino, mah-jong, esports etc. as well as new ideas and unique games.

Costs:

• Application administration fee: Approx. EUR 6,200 (for all types)

Annual fees:

• Network Services License: Approx. EUR 61,700
• Full License: Approx. EUR 43,200
• Sub-license: Approx. EUR 6,200
• Software: Approx. EUR 43,200
• Token Based Software Licence: Approx. EUR 61,200

Benefits of an Isle of Man gambling license:

• Regulatory stability: Legislation does not change frequently, creating regulatory and business certainty for the operator.
• Tax incentives: The Isle of Man offers competitive tax rates and incentives, making it financially attractive to operators.
• Less competitive license: compared to other licenses, the Isle of Man license is not as popular with operators, which can speed up the process of obtaining a license.

Disadvantages of an Isle of Man gambling license:

• Cost: the cost of license fees is higher than license fees in other jurisdictions.
• Reputation: for some regulators, the presence of an Isle of Man license may cast doubt on the legitimacy of the operator.

The UK license covers all B2C verticals, including:

1. Casino games (e.g., slots, live-studio games)
2. Bingo
3. Slots machines
4. Lottery
5. Sports (e.g., fixed-odds betting)
6. Pool betting
7. Software

The types of UK gambling licenses are as follows:

• An Operating License (granted by the GC)
• A Personal Management License (granted by the GC)
• A Personal Functional License (granted by the GC)
• A Premises License (granted by a local licensing authority)

License Fees:

Advantages of a UK Gambling License:

• Strong reputation: the UK Gambling Commission (UKGC) is one of the most respected regulatory bodies in the industry, increasing confidence in licensed operators.
• Access to a large market: the UK is one of the largest and most profitable gambling markets in the world, offering significant business opportunities.
• Player confidence: The UKGC's strict rules ensure a high level of player protection and fair play, building consumer confidence.
• Regulation: the UKGC provides comprehensive guidance and support to operators, helping them to comply and adopt best practices.

Disadvantages of a UK gambling license:

• License costs. UK license fees are expensive, with significant fees and operating costs.
• Strict regulation: the UKGC has strict compliance and reporting requirements, which can be resource-intensive and challenging for operators.
• Timeline for obtaining a license. The licensing process can be time-consuming, which can delay the start-up of operations.

In addition to the licenses described above, operators can, on the one hand, obtain a local license in a particular jurisdiction or obtain other types of flexible online licenses.

The Kahnawake Gaming Commission offers a comprehensive gambling license covering various online gaming verticals. Here are the key details:

B2C Licenses:

1) Interactive Gaming License:

• Held exclusively by Mohawk Internet Technologies since 1999.
• Only one such license is issued at any time.

2) Client Provider Authorization (CPA):

• Covers all known gambling verticals except for live-studio games.

B2B Authorizations/Permits:

1) Casino Software Provider Authorization:

• Required to supply software to CPA holders.

2) Live Dealer Studio Authorization:

• Issued to CPA holders interested in offering live studio games.

3) Key Person Permit:

• Issued to individuals managing and operating within CPA holders.

License Fees:

1) CPA:

• Application Fee: Approx. EUR 36,900 (includes first annual fee; refundable if not granted)
• Annual Fee: Approx. EUR 18,500
• Renewal Application Fee: Approx. EUR 4,600

2) Casino Software Provider Authorization:

• Application Fee: Approx. EUR 36,900 (includes first annual fee; refundable if not granted)
• Annual Fee:
• Approx. EUR 18,500
• Approx. EUR 2,700 per third-party online gaming operator listed
• Renewal Application Fee: Approx. EUR 4,600

3) Live Dealer Studio Authorization:

• Application Fee: Approx. EUR 32,000 (includes first annual fee; refundable if not granted)
• Annual Fee: Approx. EUR 18,000
• Renewal Application Fee: Approx. EUR 4,600

4) Key Person Permit:

• Application Fee: Approx. EUR 4,600 (includes first annual fee; refundable if not granted)
• Annual Fee: Approx. EUR 900
• Renewal Application Fee: Approx. EUR 4,600

Also there are new licensing regimes in Anjouan and Tobique.

These costs typically include application fees and annual renewal fees. Additional costs may arise from regulatory compliance, legal advice and operational adjustments to meet regulatory standards.

Each jurisdiction has different requirements and conditions for gaming license costs, as mentioned at the beginning. Local legislation or the position of the regulator should be checked for accurate information.

The time taken to obtain an online gambling license may vary depending on the jurisdiction and the complexity of the application. These times are approximate and may depend on the completeness and accuracy of the application, the speed of the applicant and the workload of the regulator.

Operating a gambling business without a license is generally illegal in most jurisdictions. Engaging in such activities without the appropriate license may result in serious sanctions from both the regulator and the state. To ensure compliance, it is important to obtain the necessary licenses from the relevant regulatory authorities before opening a gambling business.

Among such negative effects can be conditionally distinguished:

• Sanctions. If an operator operates on the market without a license, this may be the basis for its inclusion in the regulator's blacklist, fines and/or criminal liability.
• Reputational damage. Operators without a license may suffer reputational damage after attention from the regulator, which may result in the operator having more difficulty in legalising its business. Also, the lack of a license may cause players to distrust such an operator, and as a consequence, such players will not participate in the operator's games.
• Problems with payment agents. Payment agents may not enter into agreements with unlicensed operators, making it more difficult for the operator to make payments.

An offshore casino license is a legal permit issued to an online gambling operator by a jurisdiction outside the country in which the operator operates. This license allows the operator to legally operate an online casino, often benefiting from favourable regulatory conditions, tax incentives and lower operating costs.

Offshore jurisdictions known for issuing such licenses include places such as:

• Curacao
• Malta
• Isle of Man
• Anjouan and others

These licenses are crucial to ensuring the legitimacy and credibility of online casinos, providing a framework for regulation, player protection and dispute resolution.