Legal requirements for starting a gaming company in Costa Rica

In his latest guide, iGaming consultant Ron Mendelson, Fast Offshore, outlines the essential legal requirements for starting a gaming company in Costa Rica.

Costa Rica has become an attractive destination for entrepreneurs looking to establish gaming companies due to its favorable regulations, low operational costs, and strategic location. However, setting up a gaming business in Costa Rica involves adhering to specific legal requirements and regulations.

1. Incorporation of a Costa Rican company

• Legal Entity Formation: The first step to starting a gaming company in Costa Rica is incorporating a local company, typically a Sociedad Anónima (S.A.) or a Sociedad de Responsabilidad Limitada (S.R.L.). These entities offer limited liability protection to shareholders and are the most common structures for foreign entrepreneurs.

• Minimum Share Capital: Costa Rican law does not mandate a minimum share capital requirement for these entities, making it relatively easy to set up a company.

• Resident Agent Requirement: Your Costa Rican company must appoint a local resident agent, usually a lawyer, to act as a legal representative and handle any legal matters.

2. Corporate governance and structure

• Board of Directors: For an S.A., you must appoint a board of directors consisting of at least three members: a president, a secretary, and a treasurer. The same person cannot hold more than one of these positions.

• Resident Requirements: At least one of the directors must be a resident of Costa Rica, although it is common practice to appoint a local nominee to fulfil this requirement.

• Shareholders: The company must have at least two shareholders. Shareholders can be individuals or corporate entities, and their nationality is not restricted.

3. Obtaining a data processing license

• Understanding the License: While Costa Rica does not issue a specific gambling license, gaming companies in the country must obtain a Data Processing License (Licencia de Procesamiento de Datos). This license allows the company to conduct online gaming activities such as online casinos, sports betting, and other iGaming operations.

• Application Process: To obtain a Data Processing License, you must submit an application to the Costa Rican government. The application must include detailed information about the company, its owners, and the nature of the gaming operations.

• Compliance with Local Laws: Although Costa Rica does not have stringent gambling laws, your gaming company must still comply with local data protection regulations and ensure that the company operates legally within the jurisdiction.

4. Banking and financial requirements

• Anti-Money Laundering (AML) Compliance: Costa Rica has strict AML regulations, and your gaming company must adhere to these standards. This includes implementing robust KYC (Know Your Customer) procedures, monitoring transactions, and reporting any suspicious activities to the relevant authorities.

• Tax Obligations: Although Costa Rica is known for its favourable tax regime, gaming companies must file annual tax returns and pay applicable taxes. It is advisable to consult with a local tax advisor to ensure compliance with all tax obligations.

5. Hiring employees and labor laws

• Employment Contracts: Costa Rican labor laws mandate that all employees, including those working for gaming companies, must have written employment contracts. These contracts should outline the terms of employment, including salary, benefits, and working conditions.

• Social Security Contributions: Employers in Costa Rica must register their employees with the Costa Rican Social Security Fund (Caja Costarricense de Seguro Social or CCSS) and make monthly contributions. These contributions cover employee health insurance, pensions, and other social benefits.

• Labor Law Compliance: Your gaming company must adhere to Costa Rican labour laws, including regulations on working hours, overtime pay, and employee rights. It is essential to stay updated on changes in labour legislation to avoid legal issues.

6. Intellectual property protection

• Trademark Registration: Protecting your gaming brand is crucial, and one of the first steps is registering your trademarks in Costa Rica. This will prevent other businesses from using your brand name, logo, or other identifying marks.

• Copyrights and Patents: If your gaming company develops proprietary software or unique gaming content, consider registering copyrights and patents to protect your intellectual property. Costa Rica is a member of international intellectual property agreements, providing robust protection for your assets.

• Domain Name Registration: If your gaming company operates online, securing a .cr domain name can help establish your presence in Costa Rica. Registering your domain name early is advisable to prevent others from claiming it.

7. Adherence to data privacy regulations

• Data Protection Laws: Costa Rica has specific laws governing personal data collection, storage, and processing. Your gaming company must comply with these regulations, particularly when handling sensitive information such as customer financial data.

• Customer Data Security: Implementing strong data security measures is essential to protect customer information from breaches and cyber-attacks. Compliance with international data protection standards like GDPR can enhance your company’s reputation and trustworthiness.

8. Advertising and marketing regulations

• Responsible Gaming Practices: Costa Rica encourages responsible gaming; your marketing materials should reflect this. Avoid targeting vulnerable groups or encouraging excessive gambling through your advertising campaigns.

• Advertising Content: Ensure that all marketing content complies with local regulations, including truth in advertising and the prohibition of misleading or false claims. It is advisable to have your advertisements reviewed by legal professionals familiar with Costa Rican law.

• Sponsorship and Promotions: If your gaming company plans to engage in sponsorships or promotions, ensure these activities comply with Costa Rican regulations. This includes obtaining any necessary permits and adhering to rules on prize giveaways.

9. Ongoing legal and regulatory compliance

• Annual Reporting: Your Costa Rican gaming company must submit annual financial statements and reports to the relevant authorities. This is a critical part of maintaining your company’s good standing.

• Regulatory Updates: Stay informed about changes in Costa Rican laws and regulations that may affect your gaming business. Engaging with local legal counsel or a compliance specialist can help you navigate any legal challenges.

• Renewal of Licenses and Permits: Ensure that all licenses, permits, and registrations are renewed on time. Missing deadlines can result in fines or the suspension of your company’s operations.

Conclusion

Starting a gaming company in Costa Rica offers numerous advantages, including a favorable business environment and relatively straightforward legal requirements. However, it is essential to understand and comply with the specific legal obligations to ensure the smooth operation of your business. Following the guidelines outlined above, you can establish a successful gaming company in Costa Rica while avoiding potential legal pitfalls. If in doubt, consulting with local legal experts and service providers like Fast Offshore can provide valuable assistance throughout the process. Contact us today!