Online Gambling Licenses: Costa Rica vs Isle of Man
The online gambling industry is growing rapidly across the world. As more countries legalize and regulate online gambling activities, operators are seeking licensing in reputable jurisdictions. Two popular licensing jurisdictions are Costa Rica and the Isle of Man. But what is the difference between these two, and do you need to get licenses from both?
Overview of Costa Rica and Isle of Man Online Gambling Licenses
Costa Rica and the Isle of Man have established themselves as two of the most attractive jurisdictions for online gambling operators targeting international markets.
Costa Rica Gambling License
Costa Rica legislation does not require operators to receive a specific gambling license, hence online gambling sites based in this country are not subject to licensing, regulation, or supervision. Formally there is an option for receiving data processing license. For the sake of simplicity, under “Costa Rica online gaming license” in this article, we will understand the setup which includes the incorporation of a company in Costa Rica with the receipt of the data processing license for online gambling operations.
Key benefits
● Cost of obtaining and maintaining a gambling license in Costa Rica is relatively low
● Costa Rica does not have specific laws governing online gambling. Instead, companies operate under a "data processing license" which is less stringent than a typical gambling license Allows targeting customers internationally
● Companies in Costa Rica enjoy low taxation, and since there is no specific gambling tax, this can be financially advantageous.
Considerations
● Does not provide a strong reputation compared to more jurisdictions with existent gambling licensing framework
● Since the regulations in Costa Rica are less stringent, some players and business partners may perceive Costa Rican-licensed casinos as less trustworthy compared to those licensed in stricter jurisdictions.
Isle of Man Gambling License
The Isle of Man is a respected international licensing jurisdiction located between the UK and Ireland. Its online gambling license allows operators to legally offer internet gambling services to international markets under its Online Gambling Regulations Act, passed in 2001.
Key benefits
● Respected international licensing jurisdiction
● Allows targeting customers internationally
● Robust regulatory requirements strengthen reputation
Considerations
● More demanding license acquisition process compared to Costa Rica
● Carrying out a gambling business from Isle of Man requires more capital contribution comparing to Costa Rica
Key Differences Between the Two Licenses
While both Costa Rica and the Isle of Man online gambling license has different online gambling license regimes, there are the following notable differences operators should be aware of:
Regulation and Oversight
The Isle of Man license involves strict regulatory oversight of licensed operators. The jurisdiction employs on-site assessments and ongoing monitoring for responsible gambling, IT security, game fairness and more.
Costa Rica has less stringent regulatory control over licensees. However, Costa Rica has strict data privacy and confidentiality requirements, which can be beneficial for operators.
Taxes
A major benefit of the Costa Rican license is that licensed operators pay no taxes on gambling revenue. The Isle of Man charges a gambling duty based on an operator's gross gambling yield.
Acquiring the License
The Isle of Man has a longer, more demanding license application process compared to Costa Rica. Isle of Man applicants undergo probity investigations of all board members and must certification requirements, etc..
A company may receive the Costa Rica license without a need for stringent eligibility and compliance criteria.
International Reputation
The regulatory reputation of the Isle of Man enhances an operator's credibility in regulated markets internationally. Costa Rica does not offer the same level of recognized regulation.
Isle of Man licensees can more easily get approved for additional country-specific licenses. However, a Costa Rica license alone may not satisfy the regulations of some markets.
Do You Need Both Licenses?
While one license may legally allow you to operate your online gambling business, obtaining licenses from multiple jurisdictions provides greater freedom and flexibility when targeting international markets.
Here are key factors to consider when deciding whether to get licensed in both Costa Rica and the Isle of Man:
Target Markets
If you are only planning to target unregulated markets with limited access to payment solutions then a Costa Rica license might fit. However, for access to more payment options and for higher level of reputation an Isle of Man license might be considered.
Adding Jurisdictional Credibility
Holding both licenses can improve your credibility as a licensed operator. Costa Rica's lax regulatory reputation balances out against the Isle of Man's strong reputation.
Minimizing Compliance Risk
Relying on one license creates risk if that jurisdiction changes licensing rules or if your license gets revoked. Multiple licenses mitigate compliance risk.
Upfront & Ongoing Licensing Costs
You must weigh the upfront and ongoing licensing costs of having both licenses against the long-term advantages. The Costa Rica license alone provides more tax benefits.
Key Considerations for Each License Type
If you decide to apply for one or both gambling licenses, consider these key considerations.
With a Costa Rica Online Gambling License
You can legally offer internet gambling services to many unregulated global markets.
No requirement to pay licensing taxes or fees.
Quick and easy application process compared to Isle of Man.
Provides limited regulatory credibility in established gambling markets.
May still require additional country-specific licensing to operate in some markets.
With an Isle of Man Online Gambling License
The Isle of Man license satisfies regulatory requirements for OECD, G20, IMF white listing.
Strict licensing and compliance standards enhance industry reputation.
Involves greater time and resource investment for acquiring and maintaining the license.
Must pay an annual fee and taxes on gambling revenue generated.
Isle of Man servers and data infrastructure may be required.
How to Acquire Each Type of License
If you decide to apply for one or both licenses, make sure you understand and follow the correct application process.
Acquiring a Costa Rica Online Gambling License
The process of setting up an online gambling operation in Costa Rica is as follows:
· Engage an adviser that will help you to register a Costa Rican company: the registration will require various legal documents, thus legal assistance will be beneficial.
· Obtaining a Data Processing License: Although not a gambling license per se, a data processing license is considered for online gambling activities. The process involves applying to the Costa Rican government by providing details about the company, its owners, and the nature of the data processing (i.e., online gambling).
· Opening a Corporate Account: You will need to open an account (fiat, or, more often, crypto) for your company. This step can be challenging due to the nature of the business and may require finding a bank that accepts online gambling-related businesses.
· Payment Processing Solutions: Due to the nature of the business and the lack of a specific gambling regulatory framework, finding payment processing solutions can be challenging. Often, companies opt for cryptocurrencies or other alternative payment methods.
Acquiring an Isle of Man Online Gambling License
Here is the process to acquire an Isle of Man license for online gambling operations:
● Engage an advisor who will assist with Isle of Man setup - Work with an expert to provide guidance on licensing requirements and the application process.
● Incorporate company - Set up an Isle of Man registered business where activity takes place and tax liabilities fall.
● Appoint key personnel - Hire qualified personnel for key roles like operations manager, finance manager, and money laundering reporting officer.
● Apply for license - Work with your appointed adviser to prepare and submit your license application with all required information.
● Satisfy due diligence investigation - Cooperate with background checks on all board members and provide evidence you meet capitalization rules.
● Get license approval - If successful, you will receive an Isle of Man online gambling license.
● Pay first annual fee - Once licensed, you must pay the initial annual fee.
● Launch gambling operations - With everything in place, you can now legally provide your gambling services to international markets.
Key Differences in Ongoing Compliance Requirements
If you are licensed in Costa Rica and the Isle of Man, you must comply with each jurisdiction’s respective requirements.
Costa Rica Ongoing License Compliance
Maintain positive suitability status and no criminal record
Create a corporate accounting and legal reporting system
Isle of Man Ongoing License Compliance
Pay the annual license fee as well as a gambling duty as a percentage of the gross gambling yield
Maintain IT security systems compliant with technical standards
Prove ongoing adherence to rules around advertising, responsible gambling, and player protection
Provide regular operations reports and submit them to auditing
Report any key changes in ownership structure, board members or operations
Failure to meet ongoing compliance can put licenses at risk of financial penalties or suspension in both jurisdictions.
Final Considerations When Choosing an Online Gambling License
● Consider your target markets and what licenses their regulations require
● Factor in upfront and ongoing licensing costs in both jurisdictions
● Understand the reputational value each license offers
● Determine whether you need servers physically located in either jurisdiction
● Assess whether you can comply with each jurisdiction's standards
● Weigh flexibility to change offerings against regulatory obligations
● Get legal advice tailored to your business model and situation
By understanding the key differences in regulation, requirements and ongoing compliance between Costa Rican and the Isle of Man online gambling licenses, you can make an informed decision about which licensing strategy is right for achieving your global operational goals and minimizing compliance risk.