The types of online casino licenses

In order to legally provide gaming services associated with sports betting, lotto, poker and bingo, an online casino owner must obtain a license. Its absence challenges the successful work of an online platform, due to the fact that the operator is unable to open a bank account or even put any games on their site. That is because one has to make a contract with gambling software provider for that, which cannot be done without a license. Besides, a gambling license often comes with reduced tax rate and other benefits.

The types of online casino licenses

However, obtaining a license does not mean that any country will now welcome a new operator because the legal systems of some countries (almost all of the US states, Poland, France and others) forbid online casino games, in whole or in part. Well, luckily, the situation in the US has been changing drastically as of late. More and more states are starting to see the potential of licensing online casino operators. Thanks to the recent changes in the legislation, all individual US states are allowed to make their own decisions regarding the legalisation of online gambling. Over 15 states have already made online casinos legal and established local gambling authorities to control and regulate them. 

However, local legal regulations may be inconsistent, and a country which had no issues with online casinos before may enact a law that blocks the activity of gambling sites on its soil. For example, until February 2017, Australia was being a favored place for online casinos of all stripes since the Australians were considered to gamble the most, spending about $8 billion a year according to a research made by Australasian Gaming Expo in 2018. This huge amount of money was going to foreign casinos bypassing the local budget. The new legal system, in particular Interactive Gambling Amendment Act 2017, prohibited the work of foreign casinos without a special Australian license, resulting in lots of gambling businesses leaving the country.

A gambling license enhances players’ trust and addresses concerns about slots “rigged” RTP (Return To Player) percent and non-payment of big winnings. The reason is that a licensed casino regularly has its random numbers generator audited, and a compliance certificate is given based on the results of the examination. Generally, gambling websites have licensing info in a footer, and experienced players at their first visit always scroll down to see the jurisdiction where the site was licensed.

Online casino owners face a difficult choice of a reliable jurisdiction, which provides licenses that are valid in many countries. As of today, the choice is not rich, and gambling business owners undergo licensing in one of the following countries and territories:

Curacao

Curacao

The advantages of this small Caribbean island are zero percent tax on casino profits, fast licensing process (usually about 1.5-2 months) and low ongoing expenses. A casino owner has to place computing power (servers) in the Curacao territory. Online gambling industry forms a great part of the island’s budget, which is why Curacao has such an appealing tax system. There is a 2% corporate tax rate and an appealing master license cost that does not exceed  $150,000 but allows license holders to run all gambling verticals under a single license. 

Kahnawake

Kahnawake

Canada is famous for its very tolerant attitude towards gambling in terms of legislation. In 1996, Kahnawake Gaming Commission was created, which, among other things, provides licenses for online casinos. In fact, the Kahnawake Gaming Commission has four types of gambling licenses issued according to the regulations concerning interactive gaming. For those who want to provide interactive gaming services (online casinos) from the hosting facility in Kahnawake, the regulator issues the so-called Client Provider Authorization license. The first annual license fee is $40,000, software inspection costs $15,000 and annual license renewal fee is $10,000.

Malta

Malta

Malta Gaming Authority provides two types of licenses (B2B and B2C) for a period of five years. Those operators who obtained a prestigious Maltese license are on the UK Gambling Commission’s ‘white list’, which allows them to offer their services to British players. The operators have to adhere to a number of requirements, such as filing financial statements, ensuring players’ personal data safety and creating a Responsible Gaming Policy.

The licensing procedure is conducted in several stages: the Authority considers an application—this takes 3-4 weeks—and then the casino obtains a temporary license for a period of six months. After that, based on the results of a thorough analysis, a five-year gambling license is given. In accordance with the new taxation rules, which came into effect on January 1, 2018, online casinos with “B2C – Type 1 Gaming Services” license (slots, board games, live games) pay annual taxes of 1.25% if their profit does not exceed €3.000.000, 1% for a profit of up to €4.500.000, 0.85% for a profit of up to €5.000.000, 0.70% for a profit of up to €7.500.000 and 0.55% for a profit of up to €10.000.000.

Gibraltar

Gibraltar

In order to get a Gibraltar license, online casino owners have to prove their financial solvency, provide a business plan and be ready to perform transactions (winnings payouts, players’ credit card data processing) exclusively through Gibraltar’s banks. License holders pay 1% of their annual profit, but no less than £85.000.

The United Kingdom Gambling Commission

The United Kingdom Gambling Commission is one of the largest gaming authorities in the world. To obtain a license from the UKGC, companies need to provide detailed information, such as a business plan, proof of financial stability and funding, proof of no criminal conviction, and many more. Remote casino license holders need to pay a gaming duty between 15% and 50% of the gross gaming yield depending on how big the GGR is. Also, the license cost has been going up lately. Namely, from October 1, 2021, the DCMS outlined an increase in annual fees for remote operating licences by 55%. 

Alderney Gambling Control Commission

The Alderney Gambling Control Commission was established in May 2000 to regulate all forms of gambling in Alderney and ensure electronic gambling activities are free from crime and monitored at all times to protect the vulnerable groups. The applicants should provide necessary documents and pay initial deposits for the internal control system checks during the registration process. The deposits go from £5,000 to £10,000. Also, the license fees for category 1 eGambling licence is £17,500, while the renewal costs £35,000. Note that these sums depend on the gross gaming yields, previous licensing activities, and other factors. 

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Apart from the jurisdictions above, online casino owners can also obtain a license from the UK, Alderney, Macao, Belgium, Denmark, Isle of Man and some other countries. Getting a license will help a gambling operator to work in compliance with laws and regulations, attracting players by complete transparency, financial transactions safety and fairness of the gambling process. Licensing leads to players’ loyalty. A client of a licensed casino is always sure that every reels’ spin, every blackjack deal is always determined by random number generator system where there is no space for any fraud and software manipulation.

Igor Rumyantsev
Igor is the Head of Banking and Licensing Department at GamingLicensing who has over 15 years of experience in the industry. He is responsible for game and payment system integration, iGaming product licensing, and B2B certification. Igor is an expert in the gambling sector and game licensing. He keeps a close watch on industry trends and is always open to new ideas that can improve GamingLicensing’s services and help our clients.

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