As mentioned in my previous September article, steps have been taken by the Curacao Minister of Finance, Mr Javier Silvania, to regularise the existing Curacao online gambling licensing framework. This is despite the delay to the passing of new gambling laws there (National Ordinance on Games of Chance, aka “LOK”).
In the interim period between 1 November 2023 and the LOK becoming effective, existing sub-licensee operators will need to decide on whether they: (1) continue as a sub-licensee under their existing master licence arrangement; (2) apply for their own direct licence from the 15 November 2023 via the new Curacao Gaming Control Board Portal; (3) abandon Curacao altogether and migrate to a replacement light touch .com licence jurisdiction.
This major decision will need to be based on a combination of factors including: requirements coming from critical suppliers (both gambling software and payment processors); additional costs (licence fees and Curacao presence); increased compliance (time, resources and impact on players); and whether other licensing regimes actually offer medium to long term advantages.
In the past Curacao’s laissez faire regulatory regime has served operators well but this has in the past few years created issues for them, as many key tier one suppliers have started to switch off supply, given the reputation of the jurisdiction as a haven for grey market operation. These suppliers who increasingly have to abide by their own risk profiling, find it harder to reconcile Curacao as an acceptable jurisdiction to do business with. Ironically the LOK and associated secondary legislation should bring Curacao back into line with acceptable standards of compliance and regulatory supervision. In addition Curacao is soon due its national AML assessment by Caribbean Financial Action Task Force (CFATF). Where Mr Silvania in his September 2023 address to the Curacao Sigma gaming conference, voiced his concerns about Curacao becoming a FATF grey listed jurisdiction, implying that he would do all in his power to ensure that Curacao’s AML regime would be revamped and brought into line. All of this should be positive news for suppliers, where it now remains to be seen what they will do. However it stands to reason that operators applying for their own licence and having to provide and abide by their own compliance manuals in line with newly published licence conditions, with the assurance of a system audit within 6 months of interim licence grant and regulatory supervision, should now be much more acceptable for suppliers.
Existing operators can of course just register as a sub-licensee under their existing master licence arrangement without incurring the cost and effort of their operating under their own licence. Notwithstanding this the registration process will still require them to have a Curacao company in good standing with local registered address and resident director. They will have to continue paying their master licensee, but these fees may be less that having their own direct licence with fees equivalent to €5,200 per month.
Therefore, for existing sub-licensees to switch to their own licence, there will most likely be additional costs as well as the effort of applying for the licence in the first place (no application fees will however be levied). The application procedure requires full disclosure at a corporate and personal level for qualifying persons (UBOS, directors and compliance manager). Thereafter there will be the subsequent burden of compliance including regulatory reporting, complaint handling and a system audit within 6 months from interim licence grant. Whilst this may be off putting to many, it will probably position these new direct licensees at the front of the queue when it comes to upgrading their licence to new licences issued under the LOK (expected in late 2024). This grandfathering process hasn’t been announced but its likely to be a far easier transition than a new application under the LOK regime once that comes into effect. At that time there will no doubt to a mad rush for registered sub-licences to get and meet the requirements of a likely more onerous LOK based licence within very tight deadlines if they wish to keep operating.
Finally why should existing sub-licensees even bother with the new registration process when other .com licensing jurisdictions beckon. On paper some of these provide for a similar low cost / low compliance regime as Curacao, such as Kahnawake. However this does not avoid the issue of supplier acceptance, with many tier one suppliers withdrawing from suppling to operators in non-“white listed” jurisdictions. White listed or acceptable licensing .com jurisdictions are often given as Malta, Gibraltar, Isle of Man, Alderney, Estonia and Romania. Each has its pros and cons and should be carefully considered before moving to them. However despite the expense, time and effort in the long run they do provide stable and scalable bases for long term operation.
To help make these critical choices a thorough comparative analysis of each scenario and alternative jurisdiction is recommended. This can be facilitated by subscribing and using the Advennt regulatory analysis platform, which currently maps 40 jurisdictions (and growing), including all those mentioned above.
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