Ron Mendelson is the Director of Costa-Rica based business and financial consultancy firm, Fast Offshore.More articles by Ron†Mendelson
A guide to crypto-friendly gaming jurisdictions
Both cryptocurrency and online gambling have seen an increase of activity, interest, and adoption in the last few months. As we move towards a cashless society, more and more people are looking to cryptocurrency and virtual currencies as alternative methods of payment. Furthermore, due to significant turmoil in the foreign exchange markets, a growing number of investors are keeping their assets in different cryptos such as bitcoin, ether, and litecoin. Nowadays you can pay for your grocery shopping, settle corporate service provider bills, and pay for subscriptions with cryptocurrency. In some countries, you can even have part of your salary paid in bitcoin.
When it comes to online gambling, not only is it becoming more popular among new demographics of players but the forecasts for the future are impressive. Some analysts predict that the online gambling market could be worth more than $160 billion globally by the end of 2026. New verticals such as esports, fantasy sports and all kinds of mobile gaming are a big part of this.
A growing number of investors are keeping their assets in different cryptos such as bitcoin. (photo by Pixabay)
So what happens when you combine the two? Cryptocurrency gambling
is a new sector with potential. Attracted by cryptocurrencyís security, and immutable nature, more and more gamblers are looking to make their deposits and withdrawals in this way. Savvy entrepreneurs are noting the interest and rushing to establish cryptocurrency casinos and betting platforms.
So how do you open a cryptocurrency casino, and which are the best jurisdictions?How to open a cryptocurrency casino
When opening a cryptocurrency casino, there are a number of considerations you need to make. Firstly, you need to consider onboarding with a corporate services provider. This will allow you to evaluate all the options you have and to ensure that the decisions you make are suitable for the type of business you will be operating.Location
First things first. You need to decide where you will base your cryptocurrency casino. Typically, operators will opt for an offshore jurisdiction which can provide a better legislative environment, lower costs and taxes, better reach for customers, and other favorable conditions.
Keep in mind that not every jurisdiction is suitable for every kind of operator. You need to consider each aspect and evaluate how it will fit into your business plan. We will take a look at the leading jurisdictions, later on, as well as those that are not so friendly.Licensing
Licensing a cryptocurrency casino is not very different from licensing a regular online casino. In some jurisdictions, there are slight differences in the licensing application process, but generally, you just need to include the fact that you plan to accept cryptocurrency payments. Licensing is necessary to be able to operate legally and to open accounts, enter into certain third-party agreements, and to be compliant.
Remember, each jurisdiction has different fees, application processes, timescales, complexities, and ongoing obligations. Be sure to discuss these with your corporate services professional
, prior to filing any paperwork.Time frames
Setting up a cryptocurrency casino isnít something that can be done overnight. Company incorporation can be done quickly, but in some locations, licensing can take up to a few months. Additionally, you must factor in negotiation with third-party providers, logistics such as setting up and running an office, web/app/platform design and set up, hiring staff, marketing, amongst others.
At the business plan stage, you must be sure to consider all the various time frames as well as possible delays or force majeure events. While crypto is easier as you donít have to wait for banks to open accounts, it can still take a few months to get off the ground.Tax
Running a cryptocurrency casino doesnít mean youíre off the hook when it comes to taxation. You still need to consider your obligations and liabilities. Some offshore gambling jurisdictions donít levy any tax against operators, others do. You should also be informed on various reporting requirements such as financial statements, annual returns, and even auditing. Each jurisdiction is different so make sure you are clear on what is expected before you settle.
The cryptocurrency casino market is new and fresh and starting a platform now will give you a competitive edge. (photo by Wikimedia Commons)
The cryptocurrency casino market is new and fresh and starting such a platform now will give you a great competitive edge. However, before you go live, you need to have engaged a marketing team to create your brand and spread the word far and wide, in places your clients will see it. Website and ease of use, email campaigns, social media, promotional articles, forums, pop up ads and even sponsorships can get your name known.
Additionally, make sure to prepare online cryptocurrency tutorials for your customers, train your customer support and sales team on how to guide them thru their first crypto transactions and offer an additional bonus or benefits for those who make the jump from fiat to crypto.Compliance
Much like with taxation, using cryptocurrency doesnít mean you donít have to follow compliance regulations. While crypto may be anonymous, you still must do due diligence on your customers, as well as verify their identity and in some cases the source of funds.
You will also be required to conduct ongoing monitoring for suspicious activity as well as complying with laws and rules related to underage gambling and responsible gaming. Each jurisdiction has different compliance standards you must take them into account before deciding where to incorporate.Payments
Finally, you need to think about payments. Of course, you will accept cryptocurrency payments, but which ones will you accept? Will you accept fiat payments as well? Will you use crypto wallet integration or third-party cryptocurrency payment processors? There are many questions that need to be answered at this stage.
Explore your options, see what the competition is doing, and seek advice from an experienced advisor to make sure you pick the option or combination of options that are best for your business.
What offshore jurisdictions do you recommend?
When it comes to setting up a cryptocurrency casino, there are three offshore jurisdictions we would recommend: Curacao, Kahnawake, and Malta. Between these three, there is a suitable option for every price point, time frame, and vision.Curacao
Curacao was one of the first countries to offer online gambling licenses and itís now one of the most popular jurisdictions in the world. Its license is cost-efficient, can be obtained in a relatively straightforward manner, and there is no tax payable on online gambling revenue.
In addition to this, itís a crypto-friendly nation and there are no additional licenses needed for cryptocurrency casinos. This is a great jurisdiction for those that want to set up quickly, low price, and without too much bureaucracy. Some operators will then choose to be licensed in another jurisdiction a bit further down the line when they are ready to expand and cater to other markets.Kahnawake
In terms of price and application complexity, Kahnawake is a bit tougher than Curacao. That said, it is a jurisdiction with an outstanding reputation that takes compliance extremely seriously. It is also cryptocurrency-friendly and is home to many cryptocurrency casinos and betting sites.
Taxation is zero on revenue generated from the territory and it still offers a quick set up time and reasonable licensing costs. Kahnawake is a great choice for startups with a bigger budget or those looking to expand their client base.Malta
Malta, otherwise known as the ďBlockchain IslandĒ has also been a top jurisdiction for online gambling licensing for many years. Those that acquire a gambling license in Malta enjoy a sterling reputation, increased ease of doing business, and the bonus of operating in an EU jurisdiction.
Malta gambling license is pricey and involves a lot of paperwork and an in-person interview with the regulators. The government has just created a framework for bitcoin and crypto gambling, but again prices are high, compliance is tough, and requirements are stringent. Malta is a great location for established names or startups with significant financial backing.
For all your online gambling corporate service needs, or just general advice on where, when, and how, Fast Offshore
can help. With more than two decades of hands-on experience in a range of leading jurisdictions, we can guide you through the whole process. We are ready, and waiting to help you take your plans and dreams to the next level.