Starting an iGaming business in the US comes with a unique challenge: navigating state-specific regulations. Unlike countries with national licences, the US regulates iGaming at the state level. This means that each state sets its own rules and requirements. Rob Palmer from Fundz.net explains:
"In the US, regulation takes place at the state level. New Jersey, Pennsylvania, and Michigan permit iGaming, while Texas and Utah don't."
Understanding this structure is essential before beginning the incorporation process. The state you choose will influence everything from licensing requirements to operational restrictions. Here’s a breakdown of the key steps to incorporate your iGaming business in the USA.
Step 1: Define Your Legal Structure and Business Goals
The first step is deciding where to incorporate and selecting the right corporate structure. Start by identifying a state where iGaming is legally allowed. For instance, states like New Jersey, Pennsylvania, and Michigan have established frameworks for iGaming. On the other hand, states like Texas and Utah prohibit such operations.
Once you've chosen a state, determine the best corporate structure for your business. Most iGaming companies opt for a Limited Liability Company (LLC) or a Corporation (C-Corp), depending on their goals. These structures differ in terms of tax obligations, liability protection, and operational flexibility, so choose the one that aligns with your business strategy.
Additionally, research the local market to understand trends and competition. A strong business strategy that demonstrates market viability can help you gain regulatory approval.
Step 2: Prepare and Submit Documents
With your legal structure and goals in place, the next step is preparing the necessary documentation. Regulators will expect a detailed business plan that outlines your key personnel, ownership structure, and funding sources. This plan should show that your business has the expertise, capital, and insight to operate responsibly.
Compliance policies are critical, especially for anti-money laundering (AML) and know your customer (KYC) procedures. For example, the Bank Secrecy Act (BSA) applies to US casinos with annual gaming revenues exceeding $1 million. Non-compliance can lead to hefty penalties, so your policies must be thorough and well-documented.
You'll also need technical documentation for your platform. This includes details about the games and software you’ll offer, any required certifications, and measures to promote responsible gambling. Lastly, gather personal documentation for all owners and key employees, as background checks are a standard part of the regulatory process.
Step 3: Complete Registration and Setup
Once you’ve received regulatory approval, it’s time to set up your operations. Start by establishing strong banking relationships and opening dedicated US business accounts for operations, player deposits, and regulatory reserves.
Next, implement robust compliance systems. These should include automated tools for identity verification, transaction monitoring, and reporting suspicious activities. Records must be maintained for at least five years to meet regulatory standards.
Ensure that your servers and critical operational systems are based in your chosen state. This is not just a legal requirement but also a step toward ensuring reliable operations.
Finally, set up ongoing compliance monitoring. The regulatory environment is constantly changing. In 2024, the global gambling industry faced £67,097,966 ($86.2 million) in fines for non-compliance. Additionally, casinos’ AML compliance budgets have risen by 74% over five years. Investing in regulatory technology can streamline processes like transaction monitoring and reporting, helping you stay ahead of evolving standards.
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