Curacao is steadily moving ahead with its new licensing regime which hopes to better regulate remote casinos under its jurisdiction. While the legislation has not been implemented yet, we have a basic understanding of what it will entail.
While new policies and better oversight have been lacking in Curacao and the codification of requirements are welcomed, most existing and prospective Curacao licence holders want to know what it is going to cost them to run their casino out of Curacao.
While the final licensing costs are not yet known, we have an indication of what these will be from the Saint-Genis-Laval Curaçao Gaming Control Board (GCB) who are currently offering sub-licenses under the old legislation (pretty much as a Master License Holder (ML)).
The GCB are offering the sub-license at 100,000 ANG per annum which is approximately €45,000. Comparing this to other ML holders the same license is offered at between €6,000 and €12,000 per annum. If we take this as an indication of what the new regimes license costs are going to be, then we are looking at a 650% increase.
What is our opinion on this?
Curacao is traditionally an “incubation” licensing regime and over the past 20 years we have assisted hundreds of startup casinos get on their feet. We believe that the introduction of new regulations is critical in order to provide guidance to new operators who have traditionally struggled with the lack of codified requirements (think responsible gambling). With the lack of legislative guidance, the onus has fallen on the shoulders of the Master License holders and the local trust companies to figure out.
What makes Curacao unique is that the license cost is low, however, the management cost of the license and vendors services is high (payment providers, Trust management companies, banks, legal costs) compare to regulated jurisdictions.
And the new licensing regime does not necessarily mean that Curacao companies are going to get better banking and payment processing opportunities because these traditionally come out of the EU who has a vested interest in protecting its market. In our years of experience we hqve to recognise that the EU has an embargo on non-eu licensed gaming companies looking for services in the payment, banking space.
Now if the license cost increases by 650%, the burden on the Curacao casino is going to grow to as high as €100,000 per annum. While this is not an issue to large Curacao casinos, the vast majority will find this unworkable and will lead to an exodus from Curacao.
This is what we predict will happen:
- Smaller companies are going to move shop.
- Startups are going to look at alternative jurisdictions to incubate their ideas.
- Lesser known licensing jurisdictions will start to grow and develop, much like Curacao did 20 years ago.
- Payments will be more difficult for these companies so we will start to see an exponential growth in Crypto only gaming. These companies will start to operate out of Costa Rica.
- The Curacao market is going to shrink.
Local Curacao Trust companies are going to suffer the most as they are positioned to lose a lot of business which means they are going to be forced to either offload staff or hike up their fees. Increasing already expensive fees will be cause for more gaming companies to leave and so a downward trend is likely to result.
A better arrangement?
In our opinion, the proposed changes are poor and could be better implemented. Simply increasing a licence fee by 650% shows a lack of understanding of the market and how economics works. A smart government wants every dollar to move through the local economy which they earn taxes on each time it changes hands which is not what this proposal champions.
In addition to this the proposed fee structure punishes the smaller casinos, and does not take enough from the larger casinos.
A smarter way would be to aggregate the licence cost based on company turnover much like what is done in Ireland where the license costs between €10,000 and €200,000.
Curacao would do well to implement a similar system which would preserve its start up market, and allow larger more successful casinos to contribute more towards the licensing economy and at the same time ensure the local economy grows and prospers.
If you are looking for assistance with a license under the new Curacao regime, get in touch!