Why Online Casinos Need Licenses: Overview of Popular Jurisdictions and Their Impact on Game Security and Player Trust

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Casino Licensing: A Key to Legitimacy and Trust

A casino license is essentially a permit allowing gambling activities to take place. In the case of land-based establishments, such a document is issued by the Ministry of Finance, Tax Service, or a specially created governmental body overseeing gambling activities in the country where the casino is located. However, with online casinos, things get a bit more complex due to the internet blurring the boundaries between countries. Yet, over the past 20 years of online gambling's existence, clear rules have been established in this sphere.


Purpose of Licensing

Licensing specific types of activities is done by the government to establish unified rules of conduct for companies in the market and regulate their relationships with customers. Licenses are typically issued for entrepreneurial activities involving heightened risks for consumers, mostly of a financial nature, such as organizing gambling activities. In this case, official authorities act as guarantors that the entrepreneur will strictly adhere to the existing laws. Otherwise, they would be denied the right to operate in the specified sector.

By obtaining a license, an online casino operator effectively indicates the legitimacy of their operations on the internet.

The list of countries where this permission is valid is determined by the jurisdiction of the issuing authority and the peculiarities of national legislation regarding online gambling. Usually, one license allows operation in multiple markets; otherwise, the operator would need to obtain permits to operate in each country separately.

Having a license demonstrates to players the operator's serious approach to their business. In most cases, licensed casinos are characterized by fair payouts and stable market performance. On such sites, players' rights are protected by the licensor. If a player has any complaints about the casino's operations, they can turn to the regulator, who has the authority to make decisions that all parties involved must adhere to.


Who Issues Licenses

Among the most common licenses for online casinos are those issued by regulators in Curacao (Netherlands Antilles), Malta, and the United Kingdom. The best casinos often do not limit themselves to obtaining just one license, allowing them to target the widest possible audience.

The requirements of regulators from different countries towards operators vary significantly, which also affects the casino's image. For instance, an experienced gambler would prefer a site operating under the license of the UK Gambling Commission over a casino licensed in Curacao.

Online casinos are free to choose the jurisdiction of their gambling regulator. However, they are not allowed to operate in countries where gambling is prohibited. Players need to carefully examine all documents, consider the reputation of the licensor, requirements for gambling platforms, and dispute resolution principles.

Many casinos prefer the economical option - acquiring the cheapest license with minimal tax rates. But such regulators do not prioritize consumer safety and impose minimal requirements on online casino owners. Sub-licensing is also common, where the right to conduct business is granted not by a governmental body but indirectly through companies holding master licenses. In this case, oversight over operators' actions is weaker.

For example, the Ministry of Justice of Curacao has issued master licenses to several companies, which now sublicense the creation of online casinos to operators from other countries. However, the Ministry of Justice does not deal with player issues and does not monitor contentious situations; formally, these tasks are handled by companies with master licenses. In practice, they often turn a blind eye to operators' violations, which devalues the Curacao license even on fair online casino sites.

This does not mean that all casinos licensed in Curacao engage in fraud, but in fact, independent audits are conducted very rarely, and the honesty of the business remains solely on the owners' conscience. Gambling commissions in Malta and the United Kingdom take a much more serious approach to supervising online casino operators.


CuraƧao

The most popular jurisdiction with favorable conditions for casino owners and low tax rates. Permission is granted for all types of gambling activities (lotteries, sports betting, slot machines, etc.).

Among the advantages for operators and disadvantages for players, we can list the ease of obtaining this license.

Permits are issued quickly, with minimal requirements for platforms. It is difficult for players to seek protection from the regulator. Moreover, some operators, using such permission, employ non-original software on their sites.

The operator's annual costs do not exceed $10,000 at the initial stage and $5,000 when renewing the license.


Malta

A Maltese regulator's license indicates the operator's serious approach to organizing gambling activities. The commission has an impressive list of requirements for online casinos and issues licenses only after an independent audit of the site. The jurisdiction's advantages include:

  • Impeccable reputation;
  • Applicable to EU countries;
  • Clear monitoring of fraudulent activities and money laundering;
  • Protection of operators and players.

Disadvantages for operators include high tax rates, difficulty in obtaining, mandatory opening of an office in the country, and providing monthly financial reporting.

The cost of a permit depends on the type and ranges from $10,000 to $25,000. Together with intermediary expenses for application submission, account opening, and other payment actions, the initial investment amount increases to $20,000 - $35,000.


United Kingdom

The UK has strict gambling legislation and high requirements for gambling websites.

Having a license from this jurisdiction instills increased trust among players because along with the permit, the site will necessarily include the results of checks on all gambling games. Moreover, each game will be covered by certificates, guaranteeing the protection of online casino clients' interests.

When issuing a casino permit, it will be mandatory to check for compliance with the following rules:

  • Responsible gaming - operators must restrict access to games for minors and individuals experiencing addiction;
  • Fair and transparent gaming - every bet is checked, and any player complaints are thoroughly investigated;
  • Activity must not become a source of funding for illegal activities in any form.

Every online casino is regularly inspected by the Gambling Commission, and in case of minor violations, sanctions are applied to operators. These could be warnings or fines, the size of which can reach several hundred thousand pounds sterling. In case of several serious violations, the license can be suspended temporarily or permanently. Non-original software cannot be used on internet casino sites, and playing on these platforms is as safe as possible.

The development of online gambling is moving towards the legalization of online casinos in most countries worldwide. This will lead to the emergence of national regulators and licenses. In this case, the legitimacy of attracting an audience from a particular country to the casino site will depend on the operator's possession of a permit from the respective state's gambling commission.

CountryName of regulatorYear of foundation
Isle of ManGambling Supervision Commission Isle of Man1962
CuraƧaoCuracao E-gaming Licensing Authority1996
CanadaKahnawake Gaming Commission1996
MaltaMalta Gaming Authority2001
UKUK Gambling Comission2007

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