The client asked us to help him organize his gambling business. He has developed his own virtual game, assuming acceptance of monetary rates, as well as a marketing strategy, after that he needed understanding how to implement his start-up while remaining in the legal field.
Since the legislation of Ukraine prohibits gambling (including on the Internet), our task was to find another jurisdiction for obtaining a gaming license, which mandatory requirements were accessibility and simplicity of the procedure for obtaining a license, as well as a low tax burden, since the client did not have experience in this sphere, and the profitability of the future business still had to be checked.
In fact, the project turned out to be complex, since it supposed the organization of gambling business from scratch. The process of its implementation included the following stages:
1. registration of a legal entity, which in practice resulted in the business structuring;
2. registration and transfer of copyright to the developed software;
3. opening a bank account and concluding agreements with the providers of payment systems for the ability to conduct transactions (accept cash rates, make payouts of winnings);
4. software certification;
5. preparation of the documents (including a business plan and internal policies) for obtaining an authorization document (license).
Returning to the choice of jurisdiction, after carrying out lots of work to collect and analyze information (information from official websites, communication with licensing authorities, agents and lawyers), we made choice in favour of the most appropriate jurisdiction for the client – the island of Curaçao. The local legislation has a number of advantages that are important for starting business. Among them:
- the possibility of obtaining a sublicense which is simpler and more affordable than the procedure for obtaining a basic license;
- lack of separation of licenses for the types and classes;
- complexity of services, that is, you pay for the license, but you get hosting additionally, technical support and server storage (according to the laws of Curaçao, the server where the information about the players is stored should be physically located on the island);
- absence of territorial restrictions (the license allows to offer the services to the residents of all countries, except for Curacao itself);
- loyal tax regime (when registering a company in a special economic zone, the income tax rate is only 2%).
However, we have faced with a serious problem of this jurisdiction, namely – the impossibility to open a merchant account for direct card acquiring in the name of the gambling company. The solution to this problem is
to create a two-level structure, which is possible in two versions:
1. The operator company, which has received the sublicense of Curacao, establishes a subsidiary company in the European jurisdiction, on which the merchant account is opened then.
2. The shareholder of the operator company that obtained the sublicense of Curacao is a legal entity of the European jurisdiction. In this case, the merchant account is opened in the name of the company-shareholder.
Since our client had already had a company registered in the European jurisdiction, we recommended using it as the founder of the company in Curacao and opening a merchant account in its name.
The very process of obtaining a sub-license consists of submitting a package of required documents, conducting an audit by the service provider, and directly issuing an authorization document. The main documents are:
- Constituent documents and a certificate of registration of the company in Curacao.
- Copies of the documents proving the identity and residence of shareholders, beneficiaries, directors and officers (representatives). These can be passports and utility bills.
- Reference letters from the banks and lawyers / accountants for each of the beneficiaries, shareholders, directors and officers (representatives).
- Confirmation of the right to own / use the intellectual property (software license agreement).
- Certificate of the software compliance with the requirements of the technical standard. Certification is mandatory in Curacao only when using a random number generator in the game. It is conducted by the third independent party on the standards of the software for remote gaming of the UK Gambling Commission.
- Application for a sublicense, which includes:
review of planned business activities (business plan);
description of the platform and services that are planned to be licensed;
information about the partners, franchises and divisions;
list of domains to be used;
internal regulations and policies for posting on the site.
Summing up, I want to say that the organization of business in the sphere of electronic gambling is quite complex and time-consuming process that requires the involvement of the qualified specialists.
