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Curaçao Gambling Law Reform

Article by Andrew Tait

Current Regime
Curaçao has long been a favourite .com jurisdiction for many online gambling operators given its quick, low-cost licensing process, wide array of authorised gambling products and light touch compliance regime.

The current regulatory system is based on 4 Curaçao companies with significant presence in the jurisdiction authorised to hold online gambling licences (Master Licences), who in turn grant sub-licences to their online operator customers. These Master Licensees bear the responsibility for their sub-licensees and therefore dictate the on boarding and operational requirements of their customer operators. Depending on their risk appetite this may involve some minimal infrastructure and varying level of due diligence and qualification criteria.

Only a few target jurisdictions are out of bounds (if sub-licensee operators don’t also hold a local licence there), such as The Netherlands and others including France and USA given those countries’ aggressive enforcement measures and the Master Licensees’ risk appetite.

The Status Quo: Under Pressure
Whilst the current regime may seem ideal for many operators seeking low barriers to entry into the global online market, this has inadvertently caused its demise. These pressure points have been:

  1. The Dutch government who have been financially supporting their ex- colonial Caribbean islands especially through COVID-19, have strongly voiced their concerns on the current lax regime, insisting that Curaçao brings its online gambling laws into line with stringent international standards; and
  2. Its relatively low jurisdictional reputation has caused many players, suppliers, and overseas regulators to back away and treat Curaçao operators with caution. No more so than banking and payment providers who are becoming reluctant or may flatly refuse to on board new Curacao operators even if they try sign up their merchant agreements via subsidiaries in EU or whitelisted jurisdictions.

There is also the looming review by the Caribbean Financial Action Task Force (CFATF) in the second half of 2024 which would in any event trigger the imposition of more stringent AML regulations and associated supervisory and enforcement measures.

Change is therefore inevitable.

The Future
Since late 2021 the Curaçao has proclaimed its intention to revamp its online gambling regime, this has turned into action in the form of draft legislation and a licensing fee framework both under consultation. Details of these can be seen in the InceSight Curaçao report.

The recent announcement by the Minister of Finance at the Sigma gaming conference in November 2022 gives a taste of what to expect. As a heads up, this will largely comprise of a direct licensing regime replacing the current master - sub licence system. The full details of the licence requirements are not yet finalised but at this stage it’s stated as requiring a Curaçao company as licence holder; physical presence in the jurisdiction; a robust application approval process including evidence of sufficient AML and responsible gambling controls; player complaints processes and segregation of player funds.

The presence requirements will prove a headache to some operators as they require a physical office (not just a domicile address) and at least one local key person initially, increasing to 3 by the end of the 5-year licence period. Finding suitable local candidates will be hard, so let’s hope work permits and immigration policies align with this change to facilitate relocation of staff.

There will also be an increase in fees, again these are set out in the InceSight Curaçao report and will start at equivalent of EUR 5,000 base application fee for all licences and base annual licence fees of EUR 8,500 for B2Cs and EUR 27,000 for B2Bs. Additional fees will be due proportionate to number of URLs, games and UBO approvals.

A specific B2B licence regime will be put in place to regulate the supply chain to Curaçao B2C operators.

It remains to be seen if personal licences will be required for key persons.

Existing sub-licences will benefit from a grandfathering process that will allow them to continue for a while under their existing arrangement (subject to providing certain due diligence) before they need to make the switch to a full direct licence application.

What this all means
This shift to a more onerous regime will no doubt shake up the extensive population of existing sub-licensee operators in Curaçao currently enjoying minimal licence maintenance effort and cost. We can expect the quantity of those moving to a direct licence to dramatically reduce, albeit the quality will no doubt improve.

This should have a knock-on effect to raise the reputation of the jurisdiction, in particular making it far more acceptable to banks and payment providers. Players will also be able to take comfort in the protections that will be afforded to them.

Javier Silvania, the Minister of Finance of Curaçao in his announcement at Sigma, mentioned that the new legislation will permit the sector to make and receive payments in crypto, which will be applicable until crypto regulations enter into force. 

These are all positive changes and will ensure that Curaçao now has a long and stable future for those operators willing to embrace this transition.