Speaking at the SIGMA Europe 2022 Regulation and Compliance Conference hosted by WH Partners, Finance Minister Javier Silvania explained the main policy objectives of the LOK.
“Firstly, gaming companies in Curacao will be held directly accountable thanks to the supervision of the Curaçao Gaming Authority (CGA),” he said. “We are also creating more employment opportunities for locals and international specialized workers. It is anticipated that additional employment will be created in IT, business support, administration, and compliance, amongst others.”
Under the existing scheme, operators wishing to obtain a Curaçao license apply to one of four master license holders. The LOK will sweep away this process replacing it with the Curaçao Gaming Authority (CGA) a central government-controlled authority. The CGA will issue licenses and carry out a supervisory role within the sector extending its remit beyond land-based gaming for which it is currently responsible.
The new legislation will strengthen the Curaçao license by imposing higher barriers to entry for the operators and align the Curaçao license closer to its counterpart licenses in EU jurisdictions. Centralizing the process under the CGA will give the government full oversight of the licensees and address more effectively important concerns about illegal gambling and Anti Money Laundering (AML). Finally, the new legislation will provide better protection for player as further conditions are set for operators. In the long term this should lead to the Curaçao license being further recognized and valued by other jurisdictions.
Commenting on the effect on license holders, Minister Silvania said: “I have heard often enough that we also shall lose operators and therefore revenue with the introduction of the new legislation. I am aware of that. My position on this matter is that we will continue to work with all bona fide organizations that want to establish themselves on our island. We certainly will not miss rogue organizations who want to hide their business activities through Curacao. Our focus is on improving our global reputation in this sector.”
“We are working hard to achieve a modernized gaming sector with emphasis on online gaming in Curaçao,” he continued. “The Government of Curacao has now taken control of the sector, one of many steps we are taking in the upcoming months to put our island on the international map as an important player in the online gaming industry.”
A new legal framework
The LOK is still in draft form, but it is envisaged that it will be a framework for the regulation of all games of chance. It will have general provisions that apply to all kinds of gaming activities – including issuance, suspension and withdrawal of licenses and responsible gambling – under the supervision of the CGA. The CGA will grant licenses to both B2C-operators and B2B-suppliers that provide critical services or goods related to games of chance, such as game providers, platform providers and payment services providers.
Online gaming and supplier licenses will only be granted to legal persons that are legally established and providing their services in Curaçao through an actual local presence. There will be a requirement that the operator or supplier provide permanent and full-time work to at least one local key person – e.g. director, manager, operations officer, compliance officer – rising to three local key persons within five years. License holders must also acquire or lease property in Curaçao for the sole purpose of carrying out the business activities. It is the intention that these measures will be introduced during a transitional five-year period and a temporary exemption will apply to start-ups.
License fees have not yet been finalized but will be competitive and affordable for operators and suppliers who are willing to operate under the LOK. They will be adjusted for start-ups provided they meet the legal definition as such. Operators and suppliers who already comply with local presence requirements will be eligible for a deduction of the license fees until the end of the five-year transition period.
The current draft of the LOK contains a transition period for operators currently operating under an existing Curaçao license. This is in line with the government’s desire to preserve existing businesses who are willing to comply with the new license requirements.
The following transition terms will commence at the time the law enters into force:
- Master license holders will continue operations under their current license for 18 months to facilitate the transition of current operators to their own license.
- Operators may continue under the provisions of the master license provided they apply for their own operator license under the LOK within three months.
- The operator may then continue for as long as the existing ‘master’ license remains valid, its relationship with the license holder remains intact and a license on the basis of the LOK has not yet been granted or denied.
- Once the CGA decides on the license application of the operator, the operator can continue its activities under its own issued license or must cease activities immediately if its license is denied.
On application the CGA will inform an applicant within two weeks whether its application is complete or requires adaptation. The CGA must take a decision within six weeks after receipt of the application to either:
- grant a normal license valid for five years if all requirements are met, or
- grant a six-month provisional license if the applicant has failed to comply with minor requirements
- deny the license application. If the applicant disagrees with a decision of the CGA, for example if the license application has been rejected, the applicant can lodge an objection with the CGA or appeal to the court. The same applies if the CGA fails to take a timely decision on the application.
- A provisional license will not be granted if the due diligence and fit and proper tests conducted on the applicant are unsuccessful.
All licenses granted by the CGA will be non-transferable nor can they be used to allow other parties to operate as a gaming operator under such license. License holders will be personally responsible for the execution of their license as well as for the obligations associated with it. This does not imply the prohibition of white labeling.
The council of ministers has approved a continuation of the process of establishing a local financial institution that will provide the gaming sector with a possibility to make local payments without the need for a bank account at a regular bank. More details on this special financial institution will follow.
Crypto currency is currently not yet regulated in Curacao and is therefore not prohibited. The LOK will contain a clause permitting the sector to make and receive payments in crypto, which will be applicable until crypto regulations enter into force.
In the interest of a smooth transition, the intention is to introduce a registration of existing operators through an online portal prior to the entering into force of the LOK. details to be published shortly. It is expected that the LOK and the national decree on online gaming will be launched in the second quarter of 2023.
Applicable taxes
Curaçao offers attractive tax facilities for companies, including online gaming operators. In this context including exemptions for investing companies in sectors including gaming for up to ten years. Conditions with regard to the scale of investment and local employment apply.
When attracting highly qualified foreign personnel, an application for the Expatriate regime can be filed with the tax authorities, resulting in wage tax exemptions for these personnel.
Sales tax is due on transactions in Curaçao. B2C services from online gaming operators to their foreign customers are in principle exempt from sales tax. This does not automatically apply to B2B transactions, but the government is currently working on a specific sales tax exemption for the online gaming sector.
