Online gambling establishments in any jurisdiction, wherever they operate, must follow the rules of that jurisdiction. They are subject to multiple layers of regulations that they must comply with simultaneously:

  • Their licenses, which apply only to a specific list of countries and territories where gambling activities can be conducted with this license.
  • Local gambling regulations, which are in effect in a specific country or political block.
  • The rules of the country/block that regulate business activities, business ethics, taxation, and accounting in general.

At the same time, each gaming parlor has its own set of internal rules and regulations according to which it operates.

In addition to all this, if gambling establishments violate certain rules, they may be fined, ranging from small to very substantial, and in some cases, key employees of the company may even face criminal liability.

This is what makes the regulatory framework for online gambling so serious and complex, yet necessary to comply with. In this article, we examine the key aspects of compliance with legal requirements for gambling establishments.

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Regulatory Framework

Depending on how the reader defines the word “jurisdiction,” the number of countries and territories with different gambling laws can be counted in various ways. If we define licensing requirements for online gambling by geographic areas that have any active or developing gambling laws or regulations, then as of 2024, the following jurisdictions can be identified worldwide:

  1. Europe: Germany, Italy, Spain, Denmark, Sweden, Alderney, France, Isle of Man, Gibraltar, Malta, the UK, Belarus, Belgium, Ukraine, Netherlands, Portugal, Ireland, Greece, Finland, Norway, Austria, Estonia, Lithuania, Latvia, Guernsey, Georgia, Iceland, Luxembourg, Romania, Serbia, Switzerland, and Montenegro.
  2. North America: Mexico, Canada, the USA, Antigua and Barbuda, Kahnawake, Puerto Rico, and Panama.
  3. South America: Brazil, Colombia, Argentina, Chile, Peru, and Uruguay.
  4. Asia: Macau, Singapore, Philippines, Japan, South Korea, India, Vietnam, Cambodia, Kazakhstan, and Armenia.
  5. Oceania: Australia, New Zealand, and Papua New Guinea.
  6. Africa: South Africa, Kenya, Nigeria, Ghana, Uganda, and Tanzania.
  7. Caribbean: Curaçao, Bahamas, Barbados, Jamaica, Saint Kitts and Nevis, Dominican Republic, and Belize.
  8. Arabian Peninsula: Dubai and Israel.

There are officially 198 recognized countries in the world as of the date of writing this article. All of them can be roughly divided into 6 categories based on their legal stance on gambling:

  • No legal framework for gambling or an undefined status (98 countries)
  • Almost no regulation or very episodic regulation (18 countries)
  • Superficial/general regulation (18 countries)
  • Moderate regulation, most aspects covered by legislation (33 countries)
  • Very strict regulation, down to the smallest details (17 countries)
  • Complete legal prohibition of gambling (14 countries).

It is important to understand that each of the aforementioned jurisdictions has its own regulatory body responsible for gambling, as defined by law. To save you time, we have not listed the names of all these bodies in the mentioned jurisdictions. If you need this information and cannot find it on the Internet on your own, please contact us, and we will assist you. Our company also consults on other practical issues of starting a gambling business: launching a new casino, obtaining a license, developing gambling software, and more.

All the described jurisdictions differ in how they regulate various aspects of gambling:

  • Requirements for obtaining a gambling license, its cost, the period it is issued for, and how it is renewed
  • Taxation
  • Punter rights and information protection, AML and KYC procedure requirements, the legal age for gambling (which might vary for different types of games)
  • Rules, permissions, and prohibitions on advertising gambling and its services
  • Regulation of online and offline casinos, sports betting, lotteries, raffles, and bingo. Also, these can be governed by a single document and body or by different bodies and documents
  • Requirements for various aspects of the operation of gambling houses (e.g., whether they need to license the RNG mechanism, whether it must be proprietary or external software, whether top executives need to be licensed to work in this area and approved to manage the company, and many other aspects).

The way a country regulates gambling is largely influenced by historical and practical reasons: public attitude towards gambling, technological development, business climate, economic and political development, societal needs, religious system, etc.

As a result of such significant differences between countries worldwide, gambling houses entering a particular market must comply with local standards. This requires studying and implementing corresponding changes in their business processes. It is rarely possible to simply copy a business model from one jurisdiction to another unless both jurisdictions have no legally defined status for online gambling establishments and gambling in general—in this case, the same legal approaches can be used (98 such countries exist today, as mentioned above).

Licensing requirements for online gambling vary in different jurisdictions

Licensing Requirements

The requirements of various licensing and regulatory bodies differ with respect to both gambling operators and the creation of a legal landscape in the controlled territory. They establish the following rules:

  1. General industry standards, business practices, and requirements for all operators (also distinguishing them by sectors: online gambling, sports betting, bingo, lotteries, and raffles).
    1. The licensing process and criteria that gaming parlors must meet.
    1. Requirements for the marketing process and its implementation.
    1. Rules for bonuses, bets, and games.
    1. Financial protocols.
    1. Accompanying rules and services.

When it comes to software regulation and licensing, requirements often include:

  • RNG and RTP mechanisms
  • Software code quality
  • Server architecture
  • Testing and auditing of software and the entire technological infrastructure of gaming parlors used to support gameplay.

To describe all the nuances of licensing requirements for each jurisdiction, it would be necessary to write not just a standalone article but a full-fledged handbook containing regulatory documentation for each jurisdiction and a detailed analysis (that would be something around 3,000-5,000 pages).

Therefore, in this article, we will only highlight some aspects of individual jurisdictions. If you want a full consultation on licensing issues in a specific jurisdiction you need, we will be happy to provide you with consulting assistance and support. Please contact us for this.

  1. Romania.

The regulatory body is ONJN (National Gambling Office of Romania). Before studying the licensing requirements in this market, you should find a Romanian translator, as all available documentation is currently only in Romanian. In this market, you need to obtain a license and pay a 20% income tax if you want to offer services in sectors such as bingo, casinos, poker, video slots, and fixed-odds sports betting.

There are 3 types of licenses depending on whether you are an operator, a game provider, or a lottery organizer. The company owning the gambling parlor must register as a legal entity in Romania or the European Union, submit annual tax and financial reports, have the approved internal regulatory documentation related to the gambling services it provides, provide proof of ownership of the software used to provide B2C services to punters, and undergo an annual audit. The cost of getting a 10-year license and its first-year maintenance is €45,500; for each subsequent year, it is €35,000. After expiration, a new 10-year license must be obtained, paying the issuance fee again.

In Romania, there are both general advertising laws and specific restrictions on gambling advertising set by Emergency Government Ordinance No. 77/2009 and Methodological Norms.

  • Kahnawake.

The jurisdiction of Kahnawake belongs to Quebec, Canada. It is one of the most popular gambling jurisdictions in the world.

There are 4 types of licenses here:

  • For data centers and server companies providing services to retail customers
  • For gambling establishments offering gambling services
  • For live dealer games
  • For managers who will perform key operational management functions in the gambling house (in other words, if anything happens, these persons will be primarily held accountable).

To obtain a Kahnawake license, the applicant must be a legal entity registered in Canada or other territories acceptable under the licensing requirements, have the adopted internal regulatory documents covering key aspects of gambling, submit documents on key directors and managers, undergo a check by the regulatory body (Kahnawake Gaming Commission) for ethical standards, transparency, and good reputation, and obtain an initial trial license for 6 months. After successful business operation during this period, a permanent 5-year license is issued.

The cost of obtaining a license is $65,000, and its annual maintenance (from the second year) costs $20,000 plus $500 for annual renewal. The cost includes a $5,000 manager license fee, so if the manager is replaced, this amount must be paid again. However, even with an unchanged licensed manager, an annual renewal fee of $3,500 for their license must be paid.

The advantages of the Kahnawake license are:

  • Zero corporate tax (all gambling earnings of a gaming parlor obtained in this jurisdiction and beyond are not subject to corporate tax)
  • Relatively quick licensing process
  • No separate licenses for different types of games offered in gambling establishments—the establishment itself is licensed, not the games therein.
  • Malta.

Obtaining a gambling license from Malta allows you to provide services in a wide range of countries, especially within the EU. Unlike Kahnawake, specific types of games offered by gambling establishments are licensed based on their nature:

  • Skill-based games (including regular computer games that are included in periodic tournaments)
  • Games where the revenue is the operator’s commission for providing a platform to punters (e.g., poker rooms)
  • Gambling games based on random numbers (classic gambling)
  • Games where the basis is not RNG but independent events (sports or lotteries).

In Malta, a corporate tax of 5% on income must be paid. The licensing authority is the Malta Gaming Authority (MGA).

To obtain a license, as in previous cases, one must submit approved internal regulatory documents concerning the organization of gambling in the gaming parlor, pass a business reputation check, and submit information about key individuals managing the venue. The managers themselves are not subject to licensing. The parent company must have an authorized capital (from €40,000 to €240,000, depending on the type of license requested). It is necessary to have a legal entity in Malta or the EU, a registered office in Malta, and hire at least 4 people as company staff.

The application fee for a license is €5,000. The issuance fee for the license, depending on its type, ranges from €10,000 to €25,000. The annual renewal fee ranges from €3,000 to €35,000, depending on the type of license and the gambling venue’s annual revenue. Various other fees, ranging from €50 to €1,500, apply to various related legal actions within the framework of licenses or interaction with MGA. Additionally, a monthly service fee to MGA must be paid, which depends on the revenue of the house of gambling, expressed as a percentage of revenue (from 0.4% to 4%), depending on the type of license and revenue level. This monthly service fee ranges from €15,000 to €600,000.

According to Malta Gaming Authority requirements, online gaming parlors must undergo an independent audit within 90 days of receiving an audit notification from MGA.

We have reviewed 3 jurisdictions out of many existing ones. If you need more details on the ones discussed or an in-depth look at other jurisdictions, we will be happy to consult with you—please contact us!

An important point is what happens if a betting club operates without any license at all.

In this case, it faces a high (almost 100%) likelihood of encountering negative consequences such as:

  1. Legal. These are divided into administrative (fines and prohibitions on activities, up to the technological blocking of the website/application, office searches and sealing, and orders to cease operations) and criminal (arrest and trial of key individuals in the company’s registration jurisdiction or placing them on international wanted lists).
    1. Loss of trust and reputation both with the licensing authorities and among clients when they find out. Moreover, it is generally challenging for unlicensed gaming venues to build a client base, as modern punters look for houses of gambling with a license.
    1. Inability to perform financial gambling operations and banking transactions where licensing information is required. For example, it will be impossible to open an account in a local bank, as well as in a number of international banks. However, not every bank in the world is too strict on it, allowing companies to open accounts without requiring a gambling license, provided the company does not explicitly state its involvement in gambling.
    1. Inability to enter international capital and gambling markets.
    1. Punters engaging with unlicensed gambling establishments face the risk of unfair gaming and business practices, and, as a result, they can easily lose their money, fail to withdraw winnings, and lose any disputes with the gaming club.

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Compliance and Responsible Gaming

An integral part of the international legal landscape is the practice of responsible gaming. Its implementation is expected in any gambling establishment, and the vast majority of licensing jurisdictions include it among the necessary documents for obtaining a license.

The list of responsible gaming practices includes:

  1. The ability for a punter to self-exclude from gaming through the gaming club’s interface or another website associated with that club. The exclusion can be set for a specific period or permanently. It serves as a tool for additional self-control when a person is aware of their lack of willpower and cannot simply stop playing, much like a smoker cannot easily quit smoking.
    1. Setting limits on deposits, bets, and playtime. These limits can be set for specific periods: day, week, month, or year.
    1. Reality checks. Notifications will appear in the interface at specified intervals to inform the punter of the time spent gambling. This allows them to snap back to reality and avoid excessive gaming.
    1. Providing links on the gaming club’s pages to online and offline resources that help people with gambling addiction. This gives individuals the opportunity to seek help if they feel the need for it.
    1. Verification of the punter’s identity and age during registration, profile completion, and AML & KYC procedures.
    1. Responsible marketing that does not target vulnerable strata of the population or minors.
    1. Financial controls as a mechanism for both the gambling establishment and punters, integrated into the interface: such as deposit and betting limits.
    1. Implementing a system for monitoring transactions and addictive behavior in punters.
    1. Training the staff of the gaming parlor.
The legal landscape for online gambling must be explored and implemented to operate without fines

Anti-Money Laundering (AML) Regulations

The anti-money laundering policies implemented in online gaming venues must include the following procedures:

  1. Sufficient identification of the user’s identity, according to the current legislation of the specific jurisdiction or the betting club’s license, before processing any payouts (whether winnings or deposited funds wagered in the club a number of times).
    1. Identification of the source of funds (when there are reasonable doubts or for all transactions, depending on the license requirements and how FATF regulations apply to the specific jurisdiction). Punters are asked to provide documents verifying the source of funds, the legality of their origin, and the payment of taxes.
    1. The receipt and payout of funds should ideally be made not only to the same person but also using the same payment method. If the payment method allows for deposits to the gaming parlors but not withdrawals (e.g., prepaid vouchers or single-use payment cards), then each such case should be assessed and resolved individually.
    1. Customer due diligence. This procedure involves classifying clients by risk levels based on various factors, creating their risk profiles, and setting monitoring priorities for their financial transactions.
    1. Monitoring financial transactions to ensure that the client does not exhibit behavior patterns associated with various types of suspicious or fraudulent transactions. This includes deposits, withdrawals, bets, and the receipt of bonuses.
    1. Automatic reporting of suspicious and fraudulent transactions. This is implemented using software that is part of the gambling establishment’s software infrastructure.
    1. Logging and retaining all records for a specified period to facilitate internal analysis or provide data requested by various regulatory bodies, courts, and during economic crime investigations.

Everything mentioned above is part of the operational activities of gambling establishments and are primarily requirements imposed on them by licensing and other regulatory bodies.

Taxation and Financial Regulations

Compliance with accounting and taxation rules is an integral part of the gambling business, just like any other business. Depending on the chosen jurisdiction (the country of business registration and licensing), a gaming venue will pay different corporate taxes, which can vary widely, from 0% to an astonishing 90%! The 90% rate exists in Germany and can apply to certain games, such as video slots, which, with a base tax rate on profits from them ranging from 20% to 80%, can lead to a total tax rate of 90% under certain circumstances (type of slot, income from it, licensing fees, and specific tax requirements of a particular Bundesland—state in Germany).

It is not surprising that many gaming parlors prefer types of licenses that allow them to minimize their tax obligations. For example, as previously discussed, the Kahnawake license allows for a 0% corporate tax rate. Licensing and tax obligations significantly impact the financial model of a betting club because, with lower tax and licensing fees, the club has more funds left available for advertising, salaries, development, and investments.

In addition to tax requirements, houses of gambling must comply with a number of other standards:

  1. Standards of payment systems and payment operators (PCI DSS and PSP).
    1. Requirements for international payments and currency exchanges (including exchanges between fiat money and cryptocurrency). This includes establishing fair exchange rates, mitigating the risks of significant currency fluctuations at the time of transactions, and ensuring the technological infrastructure stability of the gambling venue’s systems.
    1. Requirements for protecting customer data and ensuring that no more data is requested from customers than is necessary under regulatory requirements.
    1. Requirements for how a legal entity conducts business in a specific jurisdiction: standards, reporting, auditing, ethics, and more.

Advertising and Marketing Regulations

The list of legal restrictions imposed on gaming clubs also includes requirements for advertising and marketing. These may be:

  1. Content restrictions: what can and cannot be shown in advertisements, what cannot be stated, that advertising must be honest, not misleading or deceptive, and that it should not target minors and other vulnerable categories of individuals.
  2. Restrictions on formats and advertising placement locations. For example, no ads on radio and television, or within 300 feet of a school.
  3. Restrictions on advertising times—on those media where ad timing can be controlled (TV, radio, Internet, or cable channels).
  4. What can and cannot be offered to customers as bonuses or rewards? Minimum and maximum reward sizes and playthrough requirements. The categories of punters to whom rewards may apply (newcomers or experienced punters).
  5. Which terms may and may not appear in advertisements to ensure they are not misleading.
  6. Age verification for individuals registering at a gambling establishment.
  7. Cross-border advertising. If a gaming club advertises in different jurisdictions, it must comply with the criteria of those jurisdictions if they differ.

One of the important criteria for advertising placement is that children under the age of consent should not be knowingly targeted by such advertisements. Therefore, many jurisdictions regulating gambling have numerous provisions to prevent this. For example:

  • Mandatory age verification during registration. This can be implemented as a simple click to confirm age, entering a full date of birth, or providing a scanned copy of an identifying document (passport or driver’s license).
  • No advertising placement in media and locations where it can be seen by minors. There are also requirements for the proper timing of ads (individual intervals depending on the specific jurisdiction).

Enforcement and Penalties

For failing to fully or partially comply with any requirements within the legal landscape, gambling establishments may face administrative and criminal liability:

  1. Fines. These can be fixed amounts or percentages of profit/revenue for a period.
  2. License revocation or suspension (a very bad scenario).
  3. Arrest and prison sentences for key company personnel.
  4. Civil lawsuits.
  5. Sanctions from regulatory and supervisory bodies, other than those mentioned above. For example, inability to renew or obtain a new license. Prohibition from engaging in certain activities for a period of time.
  6. Reputational risks. This could lead to the departure of punters, clients, suppliers, employees, cooperators, and collaborators.
  7. Exclusion from the market altogether. Also a highly undesirable consequence, resulting in the inability to conduct business in a specific market.

To avoid all of this, the following actions should be taken:

  1. Ensure full compliance with the current legal landscape of a specific geo.
  2. Keep track of all changes in this landscape to promptly implement them.
  3. Implement all systems that allow you to automatically monitor transactions and clients.
  4. Establish logging of important actions in the system and record keeping in case various authorities request them.
  5. Be proactive in business; don’t delay reactions to important changes until the last moment.

Jurisdictional Challenges

In the gambling market, it’s considered normal practice for a gambling establishment to operate in more than one geographic location, each with its own set of rules according to gambling jurisdiction. In such cases, the venue must take action to remain compliant with the rules set in each jurisdiction.

Differences in legislative requirements can affect virtually every aspect of a gaming club’s operations:

  • Marketing
  • Finances (payment processing and methods)
  • Punter bonuses and rewards
  • KYC and AML procedures
  • Taxation
  • Risk management
  • Language
  • Punter protection and responsible gaming principles
  • Data protection standards
  • Business behavior.

Apart from obtaining more than one license, the following actions address the mentioned jurisdictional challenges:

  1. Adapting the business to the requirements of different geographic locations.
  2. Implementing technological solutions capable of organizing operations correctly in various locations (with different settings according to the location).
  3. Hiring a specialized team of lawyers (or at least one full-time lawyer) who understand the intricacies of working in each location, monitor changes, and implement them in practice (in close collaboration with the rest of the team handling day-to-day operations of the gaming parlor), and collaborate with local regulatory authorities.
Read this article to learn more about licensing requirements for online gambling

Conclusion

As we’ve discussed in this article, the legal landscape for online gambling varies across different geographic locations, and the differences can be quite significant. These disparities extend beyond just obtaining and maintaining a gambling license to other aspects related to the legal framework. It’s not just about adjusting system settings; it involves different approaches to conducting business, its profitability in a specific jurisdiction, and ultimately, the decision of gaming venue management on whether or not to operate in a particular jurisdiction.

Stay Informed: Understand Online Gambling Legislation Today!

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