Though Cοsta Rica holds a status of a major hub for the gaming sector in Latin America, this state doesn’t actually regulate iGaming operators. But there are options to set up a legal online iGambling firm here. The solution for this would be acquiring a special gaming license in Costa Rica. Read on to figure out how it is possible.
Costa Rica as a gaming hub
In terms of gaming, Costa Rica has particular law. All games like craps, roulettes, and lotteries that are easy to categorize as games of pure chance were officially outlawed by the 1922 Gambling Law, but the following provisions paved the way for a legalized field. By now, physical casinos can run activities within hotels, providing slots, tables, and card games, while betting is under a state monopoly and requires a license.
When it comes to iGambling, things are somewhat different. In line with the relevant interpretation of the laws, this activity is deemed as when the fin. actions between players and operators are processed rather than where the οperator is domiciled. This can be explained as while it is impossible to obtain an Internet gambling license in Costa Rica, the state officials put up with the operation of οnline businesses domiciled in the state as long as their financial operations aren’t processed by domestic banking institutions and they don’t provide their offers to Costa Rican citizens.
The terms for a license
Actually, the abovementioned permit isn’t authorization for games of chance: given the fact that there is no iGaming authorization, the majority of operators acquire a data prοcessing license in Costa Rica (DPL license in Costa Rica) and act as call centers.
Businesses are required to get registered with the Ministry of Commerce, Industry, and Economy, and request a data prοcessing permit in the municipality where their business is set up (a presence of a physical office is mandatory). As these authorizations are granted by regional authorities — rather than a central office, the requirements for obtaining one may largely differ subject to the domicile of the entity.
Albeit, the most typical papers for a data prοcessing license are as follows:
- Those proving the corporate identity of the entity;
- ID of owners applying for a license, alongside certification of residence from the Immigration Department if the applicants are ex-pats;
- Land use right (for example, office space rental agreement);
- Evidence of compliance with fiscal obligations.
Advantages of operating an online gaming firm
The main benefit of having a Costa Rican eGaming firm is the lack of taxation on profits. But, by Costa Rica gaming license obtaining, businesses fall within the tax rates applied to call centers. They depend on the company’s headcount:
- If the company employs up to 50 employees, the tax rate is 57 base salaries with approx. tax burden of 41,500 USD.
- If the company employs 51-99 employees, the tax rate is 87 base salaries with approx. tax burden of 63,350 USD.
- If the company employs 100 or more employees, the tax rate is 113 base salaries with approx. tax burden of 82,280 USD.
*Under the term “base salary” we mean a government-defined unit that differs each year.
With the lack of taxation on gambling gains, these numbers are not high for the industry. Due to this factor, the country enjoys the status of a first-choice center to set up an iGambling firm from an economic perspective.
Also, since the state has not yet adopted both a regulative mechanism and a supervisory authority, operators do not fall within the marketing and responsible gaming restrictions in place most elsewhere. However, AML regulations are applicable for this type of activity.
Cons of running an online gaming firm
Despite the range of benefits, however, not everything that looks precious or true turns out to be so. Operating from this jurisdiction can have restrictions that can end up failing an online gambling operator.
First things first, nonsufficient regulation and lack of a relevant gaming license Costa Rica make it hard to secure transaction services from well-regarded foreign services and networks. Whilst the growing usage of crypto assets may facilitate this problem, now the quantity of players relying on fiat and traditional payment ways is significantly bigger compared to tech-savvy crypto holders. As without depositing there are no Internet games, firms must ensure they developed a strong business model in place to carry out transactions with players to avoid the risk of ending their venture before it even begins operation.
If you are interested in how to get a Costa Rica gaming license, please contact our specialists.
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