Setting up an Online Casino
Setting up an online casino or betting systems is one of the most lucrative online businesses. Suffice to say that 95% of the turnover of payment systems is comprised of betting and gambling payments. Furthermore, a significant amount of software for such businesses has been developed and is commercially available, and technically the question of “how to create a casino website” can be addressed even by a relatively small team of programmers.
These facts make this line of business very attractive. Unfortunately, Russian legislation (and not only Russian) prohibits the creation of online casinos within the Russian Federation. Moreover, the law is written in such a way that it implies that even foreign companies should not conduct such activities within the borders of Russia. This is where various legal subtleties come into play.
Create an Online Casino or Lottery?
Two Big Differences
Firstly, it’s important to distinguish between “setting up an online casino” and “setting up an online lottery”. Lotteries are not prohibited.
The fundamental difference between a lottery and a casino lies in the temporal aspect of the event being wagered upon. If the event is in the future (and the law deems that the organisers can influence it), it is considered betting or gambling. However, if the event has already transpired, but its outcome remains unknown to the participants, it falls under the purview of a lottery, which is permissible. As is evident, the legislation itself allows for varying interpretations, a fact readily exploited by representatives of domestic state bodies. Consequently, organising an online lottery often encounters the obstacle of formally proving that the website is not a casino.
Secondly, Russian legislation lacks a clear definition of the location where an internet company conducts its business. Common sense dictates that if all elements of the business are moved abroad, proving that the activity was conducted “on the territory” becomes impossible.
Third Interesting Point: Choosing a Jurisdiction for a Betting Licence
The third interesting point is choosing a jurisdiction for obtaining a betting licence. Today, Curacao, Malta and, surprisingly, the UK offer the most interesting conditions. Unfortunately, the taxation of betting activities there is such that it is simply not profitable to pay all taxes. The cost of a licence varies, and the rights depending on the type of betting also differ significantly. There is also a corruption component. Therefore, the question arises of operating under a licence with the transfer of 99% of profits as royalties to some offshore jurisdiction.
Fourth Question: Choosing an Offshore Jurisdiction and the Type of Licence/Agreement
The fourth question is, of course, the choice of such an offshore jurisdiction and, of course, what kind of licence or agreement (for the payment of royalties) it will be. In this case, the question arises of the relationship between the state that issued the betting licence and the specific offshore jurisdiction – a betting licence can be revoked for doing business with companies from the blacklist.
Fifth Question: Choosing a Licence (or Agreement) as a Basis for Royalty Payments
The fifth question is the choice of licence (or agreement) as a basis for the payment of royalties. Here, it probably makes sense to recommend using the right to use some software.
Our services
The list of issues and their interrelations can be continued further. However, it is extremely difficult to independently build a legally, fiscally, and technically sound business model without extensive knowledge in several areas at once. As a solution to this issue, we offer you a paid consultation, during which experienced specialists will not only answer almost all your questions but also offer to develop a general scheme and outsource certain stages of your project implementation. If you want to create an online casino, we can offer you the development of the following issues:
■ Development of legal, tax, and technical schemes of business conduct
■ Establishment of the necessary structure of legal entities
■ Obtaining betting licences and software rights
■ Opening accounts in foreign banks and connecting Internet acquiring
■ Technical audit of the system developers’ activities
■ Advice on international tax planning
Dear Sirs. There are very few companies in Russia that provide similar services for the creation of online casinos. But only we provide a full range of services and are able not only to create a turnkey online casino but also to further administer and support it in all aspects of its activities. Contact us.
