Licensing: A cost of doing business

By Rebecca Forrest, Business Development Manager, Amber Gaming

The gaming industry’s regulatory environment is constantly evolving. Following a number of international pressures and the introduction of industry minimum standards and best practices, the majority of regulated jurisdictions have actively increased efforts into strengthening regulation and associated scrutiny and will continue to do so.

In conjunction with heightened media and political focus, this has placed a huge emphasis on the growing gap between those jurisdictions who have moved forward to adapt to the international pressures of regulatory supervision and those who have not.

This emphasis is evident throughout the gaming community. Players are keen to ensure they register with businesses who are licensed within a jurisdiction which regulates and therefore values player and consumer protection rights. Supporting businesses such as financial institutions, payment processing and banking providers also feel the pressure. With grumbles of negative experiences and operational roadblocks, they are becoming increasingly wary of which operators abide by international standards of regulation and are licensed within tier 1 jurisdictions, versus those who are not.

This awareness has, in some cases, had a detrimental impact on the day-to-day running of business with operators who are licensed and operating in jurisdictions such as Curacao where there can be little in the way of regulatory oversight (particularly in respect of AML/CFT requirements). As a result, these operators are experiencing operational difficulties in securing long-term relationships to support their day to day business and future expansion aspirations.

What does this mean?

As a regulatory environment, jurisdictions such as Curacao have historically worked well for a range of businesses including both start-ups and long-established businesses due to its reasonable licence costs, time efficiencies and flexible approach to regulation.

In today’s environment, however, these advantages are outweighed by the fact that businesses there are struggling to operate. With little regulatory structure in regard to key industry aspects such as AML, player protection and responsible gambling, the onus is on operators to implement and adhere to international industry standards without any third-party oversight or regulatory scrutiny.

As a result, even where operators are actively implementing compliance frameworks to adhere to industry best practice, there is no supervisory function which provides supporting businesses with the security they need to accept the higher risk of gaming business.

Without securing key business support such as banking relationships, payment processing, amongst others, the operation cannot operate successfully. A business needs security to be able to expand and grow.

In recognition of the pressures felt by its licensed businesses, Curacao authorities are seeking to draft and implement regulatory measures and requirements for licensees (for example the requirement to appoint an MLRO, amongst others). However, arguably the reputational damage may already be done. Going forward, Curacao licensed operators will likely need to bear the cost of such regulatory burdens without receiving the recognition that other Tier 1 jurisdictions are able to avail from.

In light of this, many operators are considering whether it is time to find and migrate their business to an alternative licensing jurisdiction which provides the overarching regulatory environment and ecosystem for their requirements.

So where next?

These operators need to find a home which has a robust and internationally recognised regulatory body and strong reputation, to provide them with the opportunity to grow and expand within their existing markets but also internationally.

It almost sounds too good to be true but there is another jurisdiction that should be of key consideration; the Isle of Man.

The Isle of Man offers a robust regulatory framework and as one of the first markets in the world to introduce legislation designed to support gaming business and protect customers, it holds an internationally well-regarded reputation within the gaming industry. The Island’s regulator, the Isle of Man Gambling Supervision Commission (“GSC”) are extremely pragmatic, supportive and welcoming to operators wishing to call the Island their home.

As a result, the local business ecosystem is strong with a large number of banks, payment processing, legal, hosting, software and platform providers being locally based on the Island and supportive of the gaming industry as a whole. This supportive environment, along with the island’s reliable, first class technical and communications infrastructure provides the long-term solution businesses need to thrive.

The Isle of Man offers one type of online gambling licence to cover all business to consumer (“B2C”) activity (such as casino, sports betting, pari-mutual and lottery). At a fee of £35,000 per annum, this is slightly more expensive than those markets such as Curacao, noted above. However, the higher licensing price and the subsequent cost of implementing and adhering to regulatory and compliance frameworks are a cost of doing business and are significantly outweighed by the ability to secure operational relationships, increased industry credibility and ultimately the reputation of your business to support the long term aspirations and ensure the best footing for your business to succeed. And as with anything in life, you get what you pay for.

Amber Gaming are a local service provider who offer a comprehensive set of services to support and guide your business through every step of obtaining an Isle of Man online gambling licence. For more information, contact the team here.

Visit our eGaming page to find out more about licensing in the Isle of Man.