When it comes to choosing an online casino, game selection, bonuses, and customer service take center stage. These are important aspects to most players, which is why they’re heavily scrutinized. Online gamblers are attracted to casinos with lots of games, big bonuses, and knowledgeable customer support.
However, there are other less-visible factors that play an important role in one’s online gaming experience. Licensing is one of these aspects.
Few players consider licensing to be a top priority when deciding whether to deposit at an internet casino. They may ensure that a casino has a license, but they could care less about which jurisdiction it comes from.
As you’ll find in this discussion, though, the jurisdiction says plenty about the license and a casino’s overall reputation.
What Is an Online Casino Licensing Jurisdiction?
An internet casino licensing jurisdiction is a place where online casinos can obtain gaming licenses. A license can cover a state, country, or larger region (e.g. most of Europe). Licensing allows an online casino to legally operate within the parameters of the given jurisdiction. It also offers the casino a physical location to house their offices.
Companies can obtain licensing for other areas of gaming, including sports betting, poker, and bingo. But the focus of this post is on internet casinos.
For example, the island-state of Malta is a licensing jurisdiction. But the Malta Gaming Authority (MGA) is the authority that reviews applications and issues licenses.
How Does One Licensing Jurisdiction Differ from the Next?
Multiple online casino licensing jurisdictions exist throughout the world. But each one differs in terms of its standards, laws, application process, and fees.
Here are examples of online gaming jurisdictions:
- Alderney (Alderney Gaming and Control Commission)
- Antigua and Barbuda (Directorate of Offshore Gambling)
- Belize (Computer Wagering License Board)
- Costa Rica (government)
- Curacao (E-Gaming Licensing Authority)
- Cyprus (Ministry of Finance)
- Denmark (Danish Gambling Authority)
- Gibraltar (Gibraltar Gaming and Betting Association)
- Isle of Man (Gambling Supervision Commission)
- Italy (Agenzia Delle Dogane e Dei Monopoli)
- Kahnawake (Kahnawake Gaming Commission)
- Malta (Malta Gaming Authority)
- New Jersey (Division of Gaming Enforcement)
- Panama (Gaming Control Board)
- United Kingdom (UK Gambling Commission)
A jurisdiction’s gaming control board creates a set of standards and rules that the licensees must follow. These rules cover everything from accounting practices and auditing to customer complaints and eligible games.
Not all internet casino licenses carry the same prestige. Some jurisdictions require a more-stringent application process, therefore giving them higher stature.
These same authorities also hold their licensees to a loftier standard. They’re willing to punish an operator that violates gaming laws, uses predatory advertising, or mistreats customers.
The UK Gambling Commission (UKGC) is regarded as the gold standard among licensing jurisdictions. They feature a strict application process and have many protections in place for gamblers. Any casino with a UKGC license is likely to have a good reputation.
Many other licensing bodies don’t require the same standards for online casinos. These “rubber stamp” jurisdictions are mainly interested in getting as many operators as possible so they can generate more revenue for the government.
Antigua, Belize, Costa Rica, Curacao, and Panama are among the less-heralded licensing bodies. You can’t rely on licensing alone when dealing with online casinos in these jurisdictions.
How Do Online Casinos Obtain Licensing?
The process of obtaining an online casino license differs based on the governing body. Generally speaking, though, everything begins with contacting a lawyer from the state/territory/country that offers the desired license.
A local lawyer who’s familiar with the process can guide companies through everything involved with obtaining a license. Their help is especially important during the application process, where a company must prove that it’s worthy of licensing.
Proving this becomes especially crucial in respected jurisdictions like the UK, Denmark, Gibraltar, and New Jersey. These licensing bodies all expect applicants to have detailed financial info, strong leadership, and fairly clean legal records.
Many jurisdictions have standards in place to prevent criminals and scammers from successfully applying for a license. In turn, criminals don’t want to waste application fees for a bid that will likely be rejected.
Any company that passes the application process and receives a license can proceed to the finer details of setting up their operation. They’ll also need to have enough money on hand to cover the necessary fees, which I’ll discuss next.
Prestigious Licensing Jurisdictions Usually Require Higher Fees
Fees are a big part of getting an online casino license. These costs differ greatly depending upon where a company applies.
Antigua is one of the cheapest jurisdictions to operate. They charge $15,000 for the application process, $75,000 to obtain a licensed once approved, and a $5,000 annual renewal fee.
The UK is one of the most-expensive countries to run an internet casino. Their application and annual renewal fees are quite cheap at £2,933 apiece (for less than £2 million in profits).
But profits are taxed at 15%, which is very high in comparison to other licensing bodies. A casino that earns £1 million in annual profits would end up paying £150,000 in yearly taxes.
In any case, an online sportsbook can’t open and operate without paying a minimum of five figures. Costs only increase in the more-prestigious jurisdictions, such as Denmark, Italy, and the UK.
The Licensing Dilemma in Online Gaming Grey Markets
Some countries have restrictive laws that are designed to discourage online gambling. The US is a perfect example. Their Unlawful Internet Gambling Enforcement Act (UIGEA) prevents American financial institutions from processing transactions for unregulated gaming sites.
However, the UIGEA doesn’t outright ban internet gambling. This opens the way for offshore online casinos to serve American players in unregulated states.
Delaware, New Jersey, and Pennsylvania are currently the only states that allow internet casino gambling. Other states like Washington and Kentucky have taken strong legal stances against the activity. But offshore casinos operate in pretty much every other state across the US.
These casinos can’t obtain elite licensing outside of Delaware, New Jersey, and Pennsylvania. They must instead go through less-respected jurisdictions like Costa Rica, Costa Rica, Kahnawake, and Panama.
Again, though, offshore licensing doesn’t automatically make a gaming site untrustworthy. Many online casinos realize that they must behave responsibly in order to draw repeat business.
Some quality internet casinos operate out of Curacao. The limited oversight in Curacao doesn’t stop these sites from adhering to high standards.
You can be more confident in a site that’s licensed in Gibraltar, Italy, or New Jersey. But don’t immediately dismiss a casino just because they have lesser licensing.
Are Unlicensed Online Casinos a Scam?
Going through the licensing process and paying fees forces companies to make a strong financial commitment to their casino. Even a site based in Belize or Costa Rica has at least spent some money and time obtaining their license.
Therefore, an unlicensed casino raises an immediate red flag. They haven’t made a financial, time, or legal commitment towards getting licensed.
Many gaming software companies and payment processors only work with licensed casinos. But cryptocurrencies – which aren’t controlled by a central government or bank – have made it easier for unlicensed casino sites to operate.
Cryptocurrencies like Bitcoin utilize peer-to-peer transactions. Cutting out the processors and government allows internet casinos to serve players without legal restrictions (aside from needing a physical location).
Much like casinos with licenses from less-heralded jurisdictions, unlicensed sites can also be reputable operations. They just don’t have a jurisdiction’s approval to provide more confidence in their gaming site.
It’s always nice if the unlicensed entity undergoes third-party auditing or is a provably fair casino. The latter refers to a cryptocurrency casino that allows players to verify fair gaming through blockchain technology. Gamblers can act as their own auditors to ensure that each bet is fair and legitimate.
You’re right to be skeptical of an unlicensed cryptocurrency casino. But you also don’t have to immediately write them off, especially if they’re provably fair, undergo third-party auditing, or have solid reviews.
Online casino licensing isn’t the most-exciting subject in the gaming world. However, paying attention to licensing jurisdictions can improve your chances of choosing a good casino.
A jurisdiction’s reputation for making their operators uphold high standards adds value to their licenses. Unsavory companies are less likely to apply for licensing in the UK, Denmark, Gibraltar, Italy, or New Jersey, because they’ll probably be rejected.
The application process can be expensive and time-consuming. Therefore, a company doesn’t want to risk their time and money in a potentially losing situation.
Of course, none of this guarantees that a site licensed in Belize, Curacao, or Costa Rica is automatically crooked. Any casino that plans on lasting knows that they must treat their players well.
The problem, though, is that you don’t have the safety net of a reliable licensing jurisdiction to fall back on. If a site pays slowly, uses unclear bonus terms, or cheats you, there are little to no repercussions.
Some countries like Canada, South Africa, and the US (mostly) don’t have much of a choice when it comes to online casinos. They don’t have regulated options to choose from, forcing them to pick sites from rubber stamp jurisdictions.
Several high-profile incidents have cropped up over the years that show the dangers of dealing with these casinos. Sites with low-quality licensing tend to have worse customer service, pay slower, and have questionable bonus T&Cs.
Ideally, you’ll be from a country or state where you have access to heavily regulated online casinos. A strongly regulated jurisdiction provides high-quality licensing and more protections for players.
But if you’re not from such a state/country, you should read plenty of reviews before depositing with a rubber stamp licensee. Thoroughly vetting these casinos reduces the chances that you’ll choose a rogue operator.