This is a guest contribution by Lenny Borodin, iGaming and Licensing Executive at Prospectacy LTD. If you would like to submit a contribution please contact Bill Beatty for submission details. Thank you.
Anyone who has been to Cyprus must have noticed gambling runs deep in Cypriot DNA. Any sizeable town’s arterial street could easily have two betting shops in as many blocks. Bingo and keno parlors are also very popular, with halls getting packed to capacity on weekend nights. In the offseason, when tourist crowds subside, those places are some of the most visited establishments in otherwise seemingly deserted resort cities.
It is only logical that in 21st century this phenomenon has to extend online. And this would seem as even more natural extension with Cyprus being a prominent hub to online Forex operators. On a grassroots level, it is a certain fact that many Cypriots choose to gamble on the Internet. Yet authorities did not take any action in regards to online provisions of The 2012 Betting Law for over 4 years. Anyone following events on the island is aware of its divided status and challenges following economic downturn that could help explain the delay. Finally, well into 2016, National Betting Authority announced October 3rd as the date when they start to accept the applications for first online sports betting licenses.
One would assume that given the population size, regulator would set out some lenient entry conditions. But Cyprus legislators thought otherwise and came up with rather heavy capital requirements. Potential applicants would have to ante up hefty Euro 500,000 in paid up capital and consequently produce a Euro 550,000 bank guarantee for application to be accepted. On top of that comes Euro 30,000 license fee for 1-year license or Euro 45,000 for 2-year license. Taxes are not exactly featherweight either with combined rate of 13% of Net Proceeds from bets. This rate consists of 10% gaming tax proper and 3% contribution to Authority. 2% of contribution would be redistributed among Cyprus Sport Federations. Remaining 1% would go towards Programs for protection of underage and problem gamblers.
On the tech side, NBA commands the use of .com.cy domain extension. Unlike some other island jurisdictions Cyprus opted not to insist on placing the full gaming system server infrastructure on the island. Instead, NBA would require installation of at least one backup server providing Authority with real time oversight of the operation. Officially Greek, English and Turkish are official language wise. However, with Turkish being used a lot less in the Government controlled part of the country, this localization would likely be left up to discretion of the operator.
Territorially, the licenses are primarily designed to cater to local players. In terms of acceptance of international players, as in other jurisdictions, it is expected that the Authority will encourage operators to run own compliance checks with regulations of respective countries. There would almost definitely be no go jurisdictions, ones that are strictly locally regulated or have expressly pronounced ban on online gambling. However, it becomes less rock solid regarding countries with no relevant iGaming regulator or one with no internationally publicized or unclear policy towards gambling. For example, given that Turkish language is one of the official and its northern neighbor not even recognizing Cyprus as a country after all the turbulent history – would they likely raise official complaint? Obviously, only time and experience can provide full answers to such borderline situations.
Reportedly, what could help offset the hefty capital requirements is that NBA has the capacity to process applications quite swiftly. Some optimistic estimates according to our information suggest approval timelines as short as 2 weeks for issuance of provisional licenses. That would, of course, be in optimal case scenario of applications lodged with well-prepared supporting documentation including full KYC and reputable applicant profile. If that foresight confirms, this would set a timeframe benchmark hard for other jurisdictions to compete against. As per insight circulating in financial circles, regulator encourages Cyprus banks (who previously did not accept gaming company accounts) to extensive consultations on the topic. Obviously, Authority and Central Bank would need financial sector to support upcoming licensees by providing banking and processing facilities to licensed operators. After all, what signal would it send to other gaming friendly EU jurisdictions if local financial institutions would not serve locally licensed companies?
So who could potentially be interested in obtaining a Cyprus online bookmaking license? Based on the available info, it is evident that Authority seeks to attract primarily renowned, established, well heeled applicants. Be it leading international online operators or bookmakers with solid footing in land based industry in the country, this seems to be the preferred profile of applicant. Even for mid-size operators, shelling out in excess of half a million for license in country with population not even twice the amount could seem a bit of stretch. However, once factoring in the above mentioned gambling spirit of Cypriots, this could help tick the box for some of them as well.
About the author:
Lenny Borodin has over 5 years over of experience in iGaming advisory and licensing matters. Prospectacy comprises network of companies with team of professionals assisting with international corporate, legal and business consultancy with solid clientele in iGaming industry.