We often associate gaming with fun, ease and a hobby that gets us through a very stressful reality called life. If gaming is entertainment, then getting a gaming license should be a cakewalk, right? We can only wish for gaming licenses to be that simple because regulatory authorities aren’t taking their roles lightly.
The global online gaming sector has been growing exponentially, making it a great time to lure businesses into the profitable area of virtual casinos, sports betting, skill games, and fantasy sports. But one area that is regularly misunderstood — or perhaps too simply understood — is the licensing for online gaming and the legal environment surrounding it.
While online start-ups and even established operators often make this mistake, it is easy to believe that acquiring a gaming license is simple. When they approach a gaming attorney, the bubble is broken, and they realize that they’ve been surrounded by common misunderstandings about the gaming license, its application area, and the types of activities that the license permits. Even a single misunderstanding of these rules can result in regulatory fines, payments not being accepted or cleared through the payment gateway, or even criminal liability.
We’re about to bust common myths associated with online gaming licenses by stating a few important facts. In this article, we aim to offer clarity on some of the issues commonly faced by operators when it comes to understanding their obligations as online gaming license holders.
1. One Gaming License Means Global Access
There is a common fallacy among the public that obtaining an online gaming license in one jurisdiction (Curacao, Anjouan, Isle of Man, etc.) grants the operator permission to operate or provide services to users anywhere in the world.
In fact, one of the fundamental principles of gaming regulation is that they are territorial. Each nation, and sometimes regions within a nation, has its own jurisdiction with different regulations governing gambling, betting and gaming activities.
Curacao is one of the most preferred licensing jurisdictions for gaming operators. However, holding a license from Curacao does not permit gaming activity in many countries, including the United Kingdom, the United States, India or many European Union nations. Some countries even blacklist or officially ban operators who use foreign licenses without obtaining the necessary local approvals.
Moreover, payment processors, advertisers, and app stores seek a level of legal gaming license recognition in the customer’s country of residence. This means companies must look at every target market individually, while considering geofencing, local representation, and compliance on a country-by-country basis.
2. Online Gaming Licenses are Easy and Quick to Obtain.
Many people believe that obtaining an online gaming license simply involves submitting an application along with some documents and a small fee. While few jurisdictions may have lower barriers to entry, most reputable regulators, such as Malta, the Isle of Man, Alderney, or Gibraltar, set high application processes.
These might include:
- Comprehensive background checks and due diligence on shareholders and directors
- Detailed business plans and financial models
- Audits of software systems (e.g., Inherent RNG validation, customer fund protection)
- Internal policies on anti-money laundering (AML), counter terrorism financing (CTF) and responsible gambling
- In such jurisdictions, operators can expect the licensing process to take an average of three to six months, followed by more follow-up inspections and compliance onboarding.
3. Skill-Based Games Do Not Need Licensing
Another common misconception is that “skill” games, such as fantasy sports, poker, and trivia, do not require licensing. The legal definition of a game of skill, as distinguished from a game of chance, can vary widely by jurisdiction.
Some countries distinguish between games of skill and games of chance, and they exempt skill games from gaming laws. Other jurisdictions include games of skill and chance in their regulations, especially if the game is played for real money. For example:
In India, several states have banned or restricted real-money rummy and fantasy sports.
In the United States, fantasy sports and online poker are regulated by state authorities, and several jurisdictions require a license.
In the UAE, all games with cash prizes may violate anti-gambling laws, even if some of the games are based on skill.
Given all uncertainties, operators of skill-based games should conduct a jurisdiction-by-jurisdiction legal review and seek registration, exemption certificates or licenses wherever necessary.
4. A License Encompasses All Gaming Activities
Some operators believe that once they obtain their online gaming license, they are free to operate any type of gaming content, including sports betting, casino games, poker, slots, and lotteries.
Most licensing regimes have category-specific authorizations, and a license for sports betting does not automatically mean that you can run an online casino or have a live poker room. For example, in Malta, licenses are classified into different classes depending on whether the games are based on chance, skill, or peer-to-peer interactions.
If you operate outside of the license scope, you can expose your platform to regulatory sanctions, penalties, and even a revocation of the license. This obviously raises serious compliance risks with payment gateways and banking partners, who often consider the scope of the license when onboarding new operators.
5. White Label Arrangements Provide Total Legal Protection
White label solutions, where an operator utilizes an issuer’s infrastructure and license, are widely popular in the gaming industry. Many brand owners mistakenly assume that white label solutions remove them from legal and regulatory liability when the reality is that some legal liabilities may still apply to the brand owner, particularly in relation to:
- Marketing to, and acquiring customers
- Protecting user data and overseeing responsible gambling
- Complying with advertising, AML, and KYC laws in the jurisdictions they target.
In addition, many white label arrangements do not actually grant any sublicensing rights, and regulators may deem the arrangement as illicit sublicensing. Brand owners should scrutinize similar arrangements and spend the time to ensure they are within the legal confines of any actual jurisdictions.
6. Crypto-Only Gaming Platforms Are Unregulated
Some people think that with the rise of blockchain-based games and crypto casinos, gambling regulators cannot regulate platforms that only facilitate cryptocurrencies, which is a dangerous misperception.
Most regulators are coming to view virtual assets or virtual tokens as functionally part of fiat currency. When it comes to gaming, whether the platform uses Bitcoin or allows redeemable dollars, if it facilitates games of chance or gaming with a monetary reward, the platform will be subject to gaming laws without fail.
Furthermore, regulators may require crypto-friendly platforms to implement robust anti-money laundering (AML) policies, wallet diligence, and monitoring of suspicious transactions. In some jurisdictions, crypto usage may be regulated by gaming regulators alongside financial regulators.
7. VPNs, Disclaimers, and Geo-Blocking Are Sufficient Protections
Some operators believe that implementing VPN detection technology or simply publishing a disclaimer stating that certain jurisdictions are excluded is sufficient to shift liability. However, in many cases, it is not.
A lot of regulators assess whether users in a jurisdiction can sign onto the platform, and not whether they were meant to in the first place. Even passive availability, unintentional friction points, or third-party affiliate marketers seeking to target a jurisdiction that one is attempting to exclude can serve as enforcement points for most regulators.
Numerous nations have initiated legal proceedings against companies for not adequately enforcing geofencing, irrespective of their intentions or disclaimers. Operators are required to actively restrict access, prohibit payments, and oversee location-specific traffic to mitigate legal risks.
Licensing is not a mere formality in the online gaming realm- it’s a foundational pillar affecting every aspect of your business, from platform design to marketing and user onboarding. Misunderstanding licensing requirements can expose a company to legal risk as well as loss of banking relationships, reputational damage, and potentially the shuttering of operations.
Operators are expected to continually assess their legal context and are responsible for structuring their business in compliance with the increasingly complex landscape of gaming laws. Furthermore, licensing should not be treated as merely a ‘checkbox’ but viewed as a business strategy with long-term risks and potential growth in mind.