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Costa Rican Gaming Company Licensing: What You Need to Know

Monday, 7 October 2024

Thanks to its favourable regulatory environment, business-friendly policies, and low operating costs, Costa Rica has emerged as one of the most popular destinations for iGaming operators worldwide. Although Costa Rica does not have a specific gaming license like some other jurisdictions, its legal structure allows businesses to operate online gaming companies under general corporate frameworks. This article provides a comprehensive guide to what you need to know about establishing and operating a gaming company in Costa Rica.

1. Absence of a Dedicated Gaming License

One of the most unique aspects of Costa Rica's gaming industry is that the country does not issue a specific gaming license for iGaming operations. Instead, businesses can register as a general corporation with an objective that allows them to engage in gaming activities. This means that rather than applying for a traditional gaming license, you’ll be setting up a Costa Rican corporation through which you can operate your gaming platform.

While this structure has its benefits, it also means that gaming companies are not technically regulated by a Costa Rican gaming authority. However, operators must adhere to other laws related to corporate governance, tax, and anti-money laundering (AML) regulations.

2. Legal Framework for iGaming Companies

Costa Rica’s legal framework allows iGaming companies to operate in a relatively free environment, but there are some fundamental rules and regulations that businesses must observe:

  • Gambling is prohibited for residents: Online gaming companies operating in Costa Rica are not allowed to offer their services to Costa Rican residents. This means that while the company can be based in Costa Rica, its target audience must be international.
  • Corporate structure: To establish a gaming company in Costa Rica, you must incorporate a local business entity, usually a Sociedad Anónima (S.A.) or a Sociedad de Responsabilidad Limitada (S.R.L.). Both structures offer limited liability for shareholders or owners but differ in governance and operational flexibility.
  • Tax and financial obligations: While Costa Rica offers various tax advantages, gaming companies must still comply with local tax laws, including corporate tax filings. The country does not impose gaming-specific taxes on operators, which makes it more financially attractive than other jurisdictions.

3. Key Advantages of Operating in Costa Rica

Costa Rica offers several advantages, making it an attractive destination for gaming companies. These include its stable political environment, robust infrastructure, favourable tax regime, and relatively straightforward business setup process. Below are the main benefits of operating in Costa Rica:

a. Tax Advantages

Costa Rica is known for its advantageous tax structure for iGaming companies. The country does not impose any specific gaming taxes or fees on operators, and only income generated within Costa Rica is subject to taxation. Since online gaming companies operating in Costa Rica cater to international markets, their income is generally considered foreign, meaning they can often benefit from the country's territorial tax system. This creates a significant advantage for companies looking to minimise their tax liabilities.

b. Ease of Business Setup

Setting up a gaming company in Costa Rica is relatively straightforward. It typically involves registering a corporation, obtaining the necessary permits, and setting up the company’s operations, including opening a bank account, acquiring office space, and hiring employees if necessary. The entire process usually takes one to two months, depending on the complexity of the business and the documentation required.

In addition, no special permits or licenses are explicitly required for gaming operations, further simplifying the process. This ease of business setup makes Costa Rica an attractive option for startups or operators who want to enter the iGaming market quickly and efficiently.

c. Political Stability and Business-Friendly Environment

Costa Rica has long been regarded as one of the most politically stable countries in Latin America. Its democratic system and commitment to the rule of law extend to the country’s business environment, which is supportive of foreign investment and offers protection for investors and business owners.

The government actively encourages foreign direct investment (FDI), and there are few restrictions on foreign ownership of businesses. This and the country’s favourable legal and tax environment create a secure, business-friendly atmosphere for gaming operators.

d. Access to High-Quality Infrastructure

Costa Rica boasts a well-developed infrastructure essential for running an online gaming company. The country has high internet penetration rates, modern telecommunications systems, and a reliable power supply, making it an ideal location for technology-driven industries like iGaming.

Additionally, Costa Rica’s proximity to both North and South America makes it an attractive hub for international businesses. The country’s time zone (GMT-6) is also advantageous for gaming companies that must cater to American and European players.

4. Key Considerations for Gaming Operators

While Costa Rica offers a host of advantages, gaming operators must consider some important considerations when setting up in the country.

a. No Regulatory Oversight for Player Protection

One of the potential drawbacks of operating a gaming company in Costa Rica is the need for more regulatory oversight, specifically for iGaming. Without a dedicated gaming authority to oversee online gambling activities, there are no official mechanisms in place for player protection, responsible gambling measures, or dispute resolution. Operators must, therefore, be prepared to implement their own responsible gaming policies and ensure they meet the expectations of their target markets regarding fair play, customer support, and security.

b. Compliance with International Regulations

While Costa Rica’s lack of a specific gaming license can be an advantage for operators in terms of flexibility, it also means that companies must ensure compliance with international regulations, particularly in countries where gambling is heavily regulated. Operators may still need to obtain local licenses in specific markets to offer their services legally and avoid potential legal complications.

c. Corporate Responsibilities

As with any business, running a gaming company in Costa Rica comes with specific corporate responsibilities. This includes keeping up with tax filings, maintaining proper accounting records, and adhering to local labour laws. Companies must also appoint a local registered agent and maintain a local address for official communications.In addition, businesses are required to file annual reports and keep corporate governance documentation up to date.

Conclusion

Thanks to its favourable tax environment, political stability, and ease of business setup, Costa Rica has established itself as an attractive hub for online gaming companies. While the country does not offer a specific gaming license, operators can still establish legal businesses and offer their services to international markets.

For businesses seeking a cost-effective and flexible jurisdiction to run their iGaming operations, Costa Rica offers an excellent alternative to more traditional licensing jurisdictions. To find out more about starting an iGaming company in Costa Rica, Fast Offshore can help. We have over 27 years of experience in the sector and are on hand to advise and assist every step of the way.

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