Introducing Curacao – your next e-gaming home
This article outlines our method for overcoming some of the structural obstacles for nonresidents attracted by the positive features for e-Gaming enterprises operating out of Curacao but who will face some difficulties when setting up the necessary payment processing infrastructure. Throughout, we will be referring to the informatic diagram below that sets out graphically as a schematic of the targeted structure.
The independent Caribbean island nation of Curacao used to be part of the Netherlands Antilles. Since 2010 Curacao has had an independent constitutional government but is nominally still part of the Kingdom of the Netherlands. This means that Curacao holds the unique status of being part of the EU without actually being in Europe. That gives Curacao enjoys many of the benefits of EU membership without the heavy taxing.
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Curacao Gaming Company + EU Payment Agent structure example
The Curacao Gaming Commission has strong links with the Netherlands and is a respected regulator of online gambling in the gaming industry. The application process for a gaming license is straightforward. Curacao licenses are in high demand, and they are relatively inexpensive and require low-cost annual maintenance.
Curacao has its own gaming authority – the Curacao Internet Gambling Association established in 2002 under the Curacao Gaming Control Board.
Curacao is one of the oldest and most popular gaming locations in the world. It currently has more than 450 licensed online casinos. Curacao has the longest record of any jurisdiction in the online gambling sector, running since the National Ordinance on Offshore Games of Hazard in 1996, which legalized online gambling, leading to the issue of licenses.
The Curacao gaming license is available only to companies that are based in Curacao. It is one of the most affordable in the established gaming jurisdictions, with a base cost of around €21,500. One license covers all games such as online casinos, slots, sports betting, eSports, lottery, and games of skill and chance.
What is a Curacao gambling license?
There are two kinds of Curacao gambling license. Master licenses are valid for five years, and only four master licenses have been issued since 1996. Sub-licenses are linked to a single master license and are valid as long as the master license remains valid. It’s not possible any longer to apply for a master license. Both licenses permit the conduct of all kinds of gambling activities.
Do you need a license?
The question is just not relevant to Curacao. Instead, it’s necessary to understand the benefits of a proper gaming license in general. In the first place, it removes worries about repercussions that arise from an unlicensed gaming site, which can be severe monetary fines or even jail terms. There is always the prospect that the casino will be shut down entirely by authorities until it meets the specified regulation in the jurisdiction where it is located.
Secondly, operating the financial transactions requires access to reliable banking services, and particularly to payment service providers. Many reputable banks refuse to deal with e-gaming site operators that don’t have a license in a recognized and reputable jurisdiction such as Curacao.
Thirdly, running the e-gaming operations requires access to high-risk merchant account providers that offer the latest, efficient and effective payment and internet services as well as software packages. These service providers are generally wary of unlicensed gambling site operators because of the safety risk and the lack of payment surety. They will either demand funding up-front, or escalate their charges, or both.
What are the benefits of a Curacao Gaming License?
A reason why Curacao attracts online casino operators is the low level of tax. What in other jurisdictions will attract a long list of different taxes and fees that operators must pay, in Curacao, will only amount to a 2% net gains tax. Along with that there is the low initial license and the relatively modest application and renewal fees.
There are very few negative aspects. The one limitation is that a Curacao gaming license operator cannot accept players from a few countries such as the USA, France, the Netherlands, and Curacao itself.
Overcoming some difficulties for Curacao nonresidents
Curacao companies trying to establish the necessary financial structure with bank accounts and the merchant account facilities necessary to accept online payments have encountered significant obstacles for many years. Regulatory scrutiny and their classification as a ‘high risk’ enterprise limit their ability to accept payments from some jurisdictions. The solution is to create a structure combining the local Curacao e-gaming company, which has the license, with a merchant account located somewhere in the EU, which recognizes the validity of Curacao e-gambling licenses without having also to impose the ancillary financial restrictions. In a few of the cases we have dealt with, it has involved setting up the banking and merchant account facilities in the UK or Cyprus, with online gaming activities based in Curacao, as well as credit card processing and the movement of funds between customers and the e-gaming operator.
Setting up the infrastructure for an e-gaming business in Curacao
For any e-gaming companies there are five essential “must-have” components:
- A company registered in Curacao that is the holder of a sublicense for e-gaming
- A bank account that caters for high-risk payment processing companies
- A merchant account/payment service provider (PSP) designed to optimize i-gaming payment processing
- Associated EMI (Electronic Money Institution) accounts that channel the PSP transactions
- A holding company somewhere in the EU banking domain as the legal entity that sets up and controls the necessary financial accounts – bank (which is not mandatory), EMI and merchant / PSP.
General guidelines for creating e-gaming payment infrastructure.
Many banks lack knowledge of the online gaming industry and regulations, so they are hesitant to open accounts for e-gaming companies. Financial institutions often impose strict requirements on e-gaming companies before allowing them to open high-risk merchant accounts in Europe.
As e-gaming companies are considered high risk, they are often rejected by banks and instead have to work with a high-risk payment processor familiar with the i-gaming industry and already provides gaming merchant services. One of the main reasons banks and payment service providers reject e-gaming companies as new gaming merchant account customers is the issue of chargebacks. Banks also consider e-gaming companies high risk because of the danger of disputes over bonus claims and the risk of gambling addictions.
A central feature that must be offered is smooth and simple payment processing for online gaming, acceptance of deposits, ensuring safety and privacy, and guaranteeing those account holders can withdraw quickly and easily.
For these services, an effective payment processing agent as part of the structure of processing payments for the website offering the online gaming services is definitely required. Most e-gaming operators have experienced difficulties finding a reliable service provider of bank accounts and merchant account facilities necessary for credit card transaction processing.
Curacao presents some specific advantages in this area, along with general corporate advantages like low tax rates on corporate and gaming profits (see below). Because Curacao is nominally a part of the EU, its license is recognized by all European banks. That creates the opportunity to set up the corporate banking structure inside Europe with an EU-based payment processing agent providing high-risk merchant account payment processing. Although it falls outside the EU taxation regulations, it has been accepted as conforming to the Code of Conduct for business taxation as well as compliance with other global standards like CTF and AML.
Gaming businesses need to have the proper payment solutions for their customers. Online gaming companies must have a gaming merchant account in order to accept card payments but maintaining a merchant account comes with a price.
Not all payment processing services accept clients from the e-gambling industry. Gaming is considered high risk because of the heavy traffic, high transaction volume, vulnerability to fraudulent activity and chargebacks. Gaming websites have to use a service to process incoming bets and payouts to their players. Gaming payment processing services must provide real-time identification of fraudulent transactions and fast card payments from players worldwide in multiple currencies.
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