Practical Guide for Starting Your Online Gambling Business
As a result of the ongoing global pandemic, people are forced to stay home and refrain from social interaction. Spending more time at home has also increased the average screen time on phones, computers and TV. According to many studies, online gambling is the biggest winner compared to other industries during lockdowns. A mass number of sport bettors and casino players have shifted to online betting in order to satisfy their gambling requirements.
Even though in many countries lockdowns are easing up due to people being vaccinated, the gaming industry is still expected to continue its upward growth trend. According to Juniper Research “It is estimated that the global online gambling industry will be worth an impressive $1 trillion by 2021
.” Right now, Europe holds the most significant market share, as most EU countries are gradually legalizing online betting.
Many people have taken advantage of the situation and have already started developing their own online casino. An increasing number of clients come to us for assistance and advice for setting up their own online casino. Some are knowledgeable in certain aspects of the industry but others not as much. Nevertheless, they all have the same goal: to build their own casino operations and we are here to make it a reality!
Below we will discuss the fundamentals of setting up your online casino, and cover key aspects including the legal structure, payments system, tax implications as well as how to create the website and gaming software.
Choose a Curacao E-Gaming Licence
Curaçao offers the most widely used, quickest to obtain, and affordable licence. Curaçao provides one eGaming licence type that covers all games and services of skill, chance, sports betting and wagering related services. There is no need to apply for various types of E-Gaming licenses, like Malta which offers 4 different types of licenses which are costly to set up and manage and above all take a lot of patience to obtain!
Curacao licence is the most appropriate as it allows targeting 95% of the countries globally.
The Curacao Ministry of Justice has issued only 4 Master Licenses to date which have the ability to independently issue license to online casinos (called sub-license). These 4 Master Licensors are controlled by the Curacao Gaming Control Board.
Clients interested in obtaining a Curacao sub licence are required to go through a Curacao Corporate Service Provider (CSP) to incorporate the company which will apply for the license. During licensing we cooperate with our trusted Curacao CSP which is authorized to talk directly to the Master Licensor.
A Curacao license costs around €20.000, which include the registration of the Curacao company, issuing of sub license (for 1 year), local hosting and server space (if applicable) as well as management and administration of the company (for 1 year).
I Only Need a Curacao Company to Achieve My Dream Casino?
Not really; you will need a two company structure. As we will explain later on, the most important part of a casino is being able to accept payments from users and keep your money safe in a bank. By having only a Curacao company you will not be able to access any Electronic Money Institutions (EMI) or Merchants Payment Processors, and without them you will end up with a casino website, which will not be able to accept money.
Our proposed two company structure consists of a Curacao company, holding the primary e-Gaming IP licence, together with an EU holding company for facilitating the processing of payments. An EU company is needed for engaging in and meeting the requirements of the EU based third party suppliers, including Payment Processing Platforms (PSP) and banks.
In Which EU Country Should I Register the Second Company?
The best jurisdiction for registering a payment agent for an online casino is one that has a low tax rate, is compliant with OECD, has experience with such arrangements and ensures compliance is maintained so that you cannot lose your licence or your access to banking. But most importantly, one that offers access to a plethora of payment providers.
After a lot of research we have found the most suitable EU country for that purpose to be Cyprus!
Cyprus is an EU member country and it has one of the lowest corporate tax rates of the developed world. It allows access to payment systems and its regulatory body accepts these set-ups. Due to ongoing regulatory scrutiny, it is now impossible for offshore companies in jurisdictions such as Curacao to open accounts with merchants without an EU processing company. Therefore this crucial element called a payment processing agent is needed in order to accept payments on your website. A processing agent is a company that is part of the structure and receives a fee (to satisfy local tax rules). For merchants to accept the Curacao Egaming structure (Curacao and Cyprus) it is important to have physical resident directors in the EU company opening the accounts and both companies must have the same Ultimate Beneficial Owner (UBO).
Profit Distribution from Cyprus to Curacao
To make it more clear, the Cyprus company will be acting as a processing entity to access Payment Service Providers (PSPs) and Banks as well as settling invoices for expenses on behalf of the Curacao company. The Curacao company tax will be 0% and the tax in Cyprus is 12,5%, applicable on the net income of the Cyprus entity, not the Curacao.
Hence, all the income in this structure passes through Cyprus, but flows directly to Curacao. Of the total income, 4% is invoiced as management fee and 1% as a processing fee by the Cyprus company, which is then taxed at 12.5%. Profits in Curacao are taxed at 0%. From there, your profits can be freely distributed without taxes on dividends.
The Cyprus company will sign an Agreement for Services, as well as an Agency Agreement with the Curacao Company estabilishing the business relationship, and having the responsibility for all transactions and operations of the Curacao Company.
We Take a Look at the Role of Merchants and EMI
Electronic Money Institutions (EMI) are more flexible when dealing with high-risk customers like Curacao Egaming. High risk businesses go through extended due diligence procedures not just during on boarding but also while conducting business and for this reason EMIs charge a higher fee for account maintenance and money transfers.
In order for your business to be able to accept and process online payments through credit cards and other types of electronic payments, you need a merchant account. A merchant account is an agreement between your online casino, a merchant bank and a payment processor for the settlement of credit card and/or debit card transactions.
The basics of merchant processing are simple enough, you sign up with a merchant payment provider so that you can accept credit cards, debit cards and other forms of payments (prepaid voucher, QR codes etc) from customers. In order for us to recommend optimum merchant solutions to your needs we need to know which countries you are planning to target. It is vital to have the right payment solutions for your customers.
One way to make your customers feel at ease when it comes to depositing funds, is to make use of segregated accounts. This type of security measure reassures that your customers’ funds are kept in a separate account, an independent entity will keep them so that they won’t be used to run your business. If the type of security you offer to your customers is basic then they will think twice before registering with your service.
Another important factor that should be taken into consideration with regard to satisfying the needs of your customers, is to offer various payment options. Along with credit card payments, you can also offer debit card options and cryptocurrency, as well as emoney wallets like PayPal or EMIs. Last but not least, one of the best attributes that an online gambling merchant account could offer to its customers are swift and seamless withdrawals.
How to Develop the Actual Online Casino
Now that we have explained our proposed structure, you have probably noticed that there is a missing piece from the puzzle. In order to get an approved IP E-Gaming license you need to have a ready made gambling software and website ownership.
We are pleased to announce that we partner with software casino development companies, which will assist you with setting up your own online casino and achieve maximum results. You can choose from 3 types of solutions - White Label, Turnkey and Custom. If you are looking for a White Label you can choose from pre-defined templates that include slots, bonuses and payment methods.
The White Label provider will be responsible for the set-up and operations at the technical level, while you can take care of branding and marketing. Nevertheless, you still have the ability to remove any games and add new ones as well as choose to have any other company to do the marketing, integrate a CRM system of your choice, or engage a separate company to provide Back office and IT support which our partner can also provide. A White Label solution is considered one of the best options in terms of cost and time efficiency.
Regarding Turnkey casino platforms, you are given the ability to customize it so that you can have a casino website which is independent and adaptable. Turnkey solutions offer a set of customised features such as unique design layout, distinctive interface, straightforward navigation panel and more.
Finally, the Custom solution or in other words self-service, allows you to have a tailor-made casino, this way you can build your own casino by receiving from our partners custom design.
Get Internet incorporate to Build Your Own Online Casino!
We have all you need to start and run a successful online casino business and we help you choose and implement optimum solutions and, ultimately, reduce the stress involved in doing the right things at all times and meeting requirements and deadlines.
Are you planning start you own online gambling business? Then contact us now by using the form below to discuss your Project!