In this article, iGaming industry consultant Ron Mendelson explores the Costa Rican model and compares it with Malta, Curaçao, and Anjouan, discussing the advantages and limitations of different types of operators.
When considering where to establish an iGaming company, jurisdictions like Costa Rica, Malta, Curaçao, and Anjouan each present unique options. Costa Rica, in particular, operates without a formal gaming license, instead allowing companies to set up a Costa Rican company with the objective specified as iGaming. This model benefits certain types of operators, especially startups and crypto-based businesses.
1. The Costa Rican Model
Structure and Legal Framework
Costa Rica stands out for its lack of a specific gaming license. Instead, iGaming companies in Costa Rica are registered as businesses with the stated objective of providing online gaming services, typically registered as “entertainment services” or similar categories. Although no formal gaming regulatory authority exists in Costa Rica, the government permits companies to operate if they follow local business laws and do not offer gambling services to Costa Rican residents.
This lack of licensing has advantages, particularly for companies that want to avoid the regulatory overhead and high fees in many other jurisdictions. As a result, Costa Rica is a common choice for crypto-based operators and smaller startups looking for a more straightforward entry point into the industry.
Benefits for Crypto Operators and Startups
Costa Rica’s permissive environment is attractive to crypto operators. Since the jurisdiction does not impose strict licensing requirements or demand a high upfront investment, crypto companies can focus on developing their business without significant financial or regulatory constraints. Costa Rica’s legal system also generally allows flexibility in how companies manage crypto transactions, an advantage for companies aiming to use decentralized finance or offer crypto-based betting options.
Startups also find Costa Rica appealing for its relatively low setup costs, fast company formation, and straightforward compliance requirements. By choosing Costa Rica, they can focus on growth rather than spending heavily on regulatory hurdles.
2. Malta
Structure and Legal Framework
Malta is recognized as a premier jurisdiction in the iGaming world and has established a well-respected regulatory framework overseen by the Malta Gaming Authority (MGA). The MGA issues different licenses depending on the gaming activity, such as casino operations, sports betting, or lottery services. Malta’s rigorous licensing process requires thorough background checks, capital requirements, and ongoing compliance.
Benefits for Established Operators
Malta’s strong reputation benefits established brands that want high legitimacy and access to European markets. Due to its comprehensive regulations, Malta is especially suitable for companies with significant financial resources or those seeking to maintain a premium brand image. Malta’s licensing is more costly and time-intensive than other jurisdictions, making it better suited to larger companies with a bigger budget.
Furthermore, Malta’s commitment to regulatory standards is advantageous for companies seeking partnerships with top-tier payment processors, banks, and software providers who require assurances of high compliance levels. For well-known names or large companies with established reputations, Malta is often the jurisdiction of choice for its credibility, stability, and acceptance within the EU.
Drawbacks for Startups
While Malta’s reputation is solid, the cost and complexity of its licensing process can be a barrier for startups or lower-budget operators. The strict regulations may also limit the flexibility that companies often seek.
3. Curaçao
Structure and Legal Framework
Curaçao has historically been a popular jurisdiction due to its relatively affordable licensing and simple regulatory process. Curaçao’s licensing process is faster and less costly than Malta’s, which has made it a preferred choice for many mid-range operators.
However, Curaçao is undergoing regulatory changes to improve oversight and compliance. These changes are expected to bring Curaçao’s licensing structure closer to the standards of European jurisdictions, which may involve more stringent requirements and higher costs for operators.
Benefits for Mid-Range Operators
For businesses that want a cost-effective option but still seek a degree of legitimacy, Curaçao remains an attractive choice. The licensing costs are lower than in Malta, making it accessible for mid-range operators with some budget but aren’t prepared for the high cost of a European license. Curaçao also offers a relatively straightforward setup process, which allows operators to enter the market quickly.
Challenges and Risks Due to Regulatory Changes
As Curaçao adapts to meet international regulatory standards, compliance requirements are expected to increase. For operators already licensed in Curaçao, this shift may mean adjusting business practices and incurring additional costs. Companies considering Curaçao as a licensing jurisdiction should weigh the potential impact of these changes on their operations.
4. Anjouan
Structure and Legal Framework
The island of Anjouan offers one of the most affordable and fastest licensing processes for iGaming operators. The Anjouan license is known for its low setup costs, minimal documentation requirements, and relatively quick issuance. This makes it appealing for startups and lower-budget operators seeking to launch their business with minimal upfront investment.
Benefits for Startups and Small Operators
Anjouan’s affordability and rapid licensing process are well-suited to startups, emerging companies, and low-budget operators. The initial licensing costs are among the lowest in the industry, and the compliance requirements are relatively straightforward. This allows new operators to enter the market quickly and focus on growing their business rather than managing extensive regulatory obligations.
For operators aiming to test new business models, such as offering niche gaming experiences or targeting specific markets, Anjouan provides a low-risk environment for innovation.
Drawbacks and Limitations
However, Anjouan’s reputation does not carry the same weight as Malta or Curaçao, but this is fast changing as it cements its place on the international scene.
Conclusion
Where to establish an iGaming company depends mainly on the operator’s goals, budget, and target market. Costa Rica’s flexible, non-licensing model is ideal for crypto-based companies and startups seeking to enter the market with minimal regulatory burdens. For established brands and those seeking a prestigious license, Malta offers unmatched credibility and access to the European market, though at a high cost.
Curaçao provides a balanced option for mid-range operators, offering a reputable license without the extensive requirements of Malta, though pending regulatory changes may impact its appeal. With its low cost and fast licensing process, Anjouan is an excellent choice for startups or companies operating on a tight budget, though global partners may accept it less.
Each jurisdiction offers unique advantages and drawbacks, and Fast Offshore can help you navigate these options to select the jurisdiction that aligns best with your business model and growth plans. By assessing your operational needs and long-term goals, you can choose a jurisdiction that provides flexibility, credibility, and affordability for sustainable success in the competitive iGaming industry.
Original article: https://www.yogonet.com/international/news/2024/11/25/86476-comparing-costa-rican-gaming-companies-to-other-jurisdictions
