Costa Rica

Gambling License

Costa Rica offers a Data Processing License for international gambling operators, making it a cost-efficient and straightforward option for businesses. Here's a quick overview:

• Key Benefits: No tax on offshore income, low initial costs starting at $6,500, and a fast 5-6 week approval process.

• Requirements: Local office and server hosting, AML/KYC compliance, and IP blocking for Costa Rican residents.

• License Types: Covers both B2C (casinos, sportsbooks) and B2B (platform providers) under one license.

• Renewal: Annual updates with fees starting at $5,000 and adherence to compliance standards.

• Unique Model: Focuses on data processing rather than direct gambling regulation, offering operational freedom but requiring self-regulation.

This licensing system is ideal for startups and smaller operators entering the global market, but it comes with limitations like limited access to payment systems and potential reputational concerns. Keep reading for a step-by-step guide, costs, and regulations.

License Requirements

To obtain a Costa Rica gambling license, operators must meet specific criteria related to company setup and adherence to regulations under the Data Processing License model.

Setting Up Your Company

Costa Rica offers a straightforward licensing process, but operators need to fulfill key requirements to operate successfully. Businesses must register as either a Sociedad Anónima (S.A.) or Sociedad de Responsabilidad Limitada (S.R.L.) and appoint a local resident agent - usually a lawyer.

Here’s what you’ll need:

• Certified corporate documents and shareholder identification

• A valid office lease agreement

• Accounting records maintained in Spanish, as required by Costa Rican law

The company registration process generally takes about three weeks, followed by an additional five business days to apply for the Data Processing License. Once registered, operators must stick to strict compliance measures to meet global standards.

AML and KYC Rules

Operators are required to establish strong anti-money laundering (AML) and know-your-customer (KYC) protocols in line with OECD guidelines. These include:

• Systems to monitor transactions

• Verifying customer identities

• Maintaining detailed records of deposits, bets, and transactions

CONASSIF and SUGEF oversee AML and counter-terrorism financing (CTF) compliance for gambling businesses. Additional requirements include:

• Blocking access for Costa Rican residents using IP restrictions

• Hosting servers within Costa Rica

• Submitting regular AML compliance reports

Failure to comply can result in penalties, including the potential loss of the license. Meeting these obligations ensures operators stay compliant while benefiting from Costa Rica’s licensing framework.

License Pros and Cons

The Costa Rica gambling license comes with a mix of benefits and challenges that operators need to weigh carefully before committing to this jurisdiction. Knowing these factors can help operators make informed choices about where to establish their gambling operations.

Comparison with Other Jurisdictions

Looking at Costa Rica alongside other licensing hubs like Malta and Curacao highlights its distinct approach. While Malta and Curacao enforce strict gambling regulations, Costa Rica adopts a more relaxed stance that appeals to certain operators.

This hands-off model is particularly appealing for startups and smaller companies. With initial costs starting at $6,500 and a licensing process that takes just 5-6 weeks, Costa Rica offers a quicker and more affordable option compared to jurisdictions requiring more documentation and higher investments.

However, this simplicity comes with trade-offs. Costa Rica’s approach shifts more responsibility onto operators, especially in areas like dispute resolution and player protection. This can influence:

• Business Partnerships: Some payment providers and software companies may hesitate to work with operators licensed in Costa Rica.

• Market Reach: Platforms licensed here may face restrictions in tightly regulated markets.

• Operational Independence: While oversight is minimal, operators still need to ensure compliance with AML/CFT standards.

With over 300 offshore licensees operating under its jurisdiction, Costa Rica has proven its ability to support large-scale operations. It’s a great fit for those prioritizing lower costs and faster setup. However, operators must carefully weigh these benefits against the potential limitations to align with their market goals.

How to Apply

Getting a Costa Rica gambling license is a step-by-step process that usually takes about 5-6 weeks. It starts with a legal review to ensure your business meets Costa Rican laws and international compliance standards.

1. Legal Review

This first step involves:

• Deciding on your company's organizational structure.

• Ensuring the company satisfies the rule that Costa Rican residents cannot own gambling businesses.

• Reviewing compliance requirements for international markets.

• Evaluating technical infrastructure needs.

2. Company Setup

Setting up your company requires specific documents and infrastructure. Here's a breakdown:

3. License Application

The next step is submitting your application to the Ministry of Economy, Industry, and Commerce. This includes:

• Registration Fees: An initial payment of US$6,500 for the first year.

• Technical Documentation: Information about server location within Costa Rica and data processing systems.

• Compliance Framework: Anti-money laundering (AML) and know-your-customer (KYC) protocols.

• Operational Structure: Details about your management team and corporate governance.

4. Final Steps

The process concludes with a review that takes 3-4 weeks, followed by 1-2 weeks for verification, and final approval within a week.

It's important to keep all documentation organized and comply with international standards for long-term success. Financial records must be maintained in Spanish, as required by the Commercial Code.

Once licensed, operators can shift their focus to launching operations and meeting ongoing compliance and renewal obligations.

License Types: B2C and B2B

Costa Rica's Data Processing License allows businesses to run either B2C or B2B services - or even both - under a single license. This setup supports different business models while ensuring proper regulatory oversight.

B2C vs B2B Licenses

Costa Rica's regulatory framework is straightforward, making it appealing for startups. The Data Processing License covers both B2C and B2B activities, eliminating the need for separate licenses for B2B operations.

Here’s how the two differ:

• B2C operations: These focus on offering services like casinos and sportsbooks directly to consumers. They must adhere to stricter rules, including IP blocking for Costa Rican users.

• B2B operations: These involve providing services to other businesses. Regulations are generally less restrictive, focusing on standard business practices.

Managing B2C and B2B Operations

Businesses can handle both B2C and B2B services under one license, as long as they keep the two types of operations distinct.

For B2C operations, businesses need to:

• Use IP blocking to restrict access from Costa Rican residents.

• Keep client records in Spanish.

• Follow AML/CFT regulations, including regular audits and reporting.

• Ensure strict compliance with customer protection and transaction monitoring rules.

For B2B operations, businesses must:

• Adhere to general business regulations and maintain accurate records.

• Avoid working with unlicensed operators.

• Follow standard accounting and documentation practices.

Meeting these requirements is crucial for staying compliant, especially when renewing your license or navigating Costa Rica's gambling laws.

License Renewal

Renewal Requirements

Renewing a Costa Rica gambling license is an annual obligation to keep operations running. Like the initial application, the renewal process demands updated paperwork and strict adherence to compliance rules. This includes submitting necessary documents and paying quarterly fees tied to the Data Processing License. Here's what's needed:

• Updated company documents and financial records

• Current shareholder details

• Proof of a legal address

• Spanish-language client records

• Updated AML (Anti-Money Laundering) and KYC (Know Your Customer) policies

The costs for renewal are broken down in the table below:

The "Annual Lease" covers expenses related to maintaining the required local office setup.

Staying Compliant

To ensure a smooth renewal process, maintaining compliance throughout the year is essential. Companies are expected to meet several ongoing requirements to keep their license in good standing.

Key Compliance Steps:

• Keep detailed client records in Spanish and perform regular audits.

• Cooperate with inspections conducted by local authorities.

• Update AML/CFT (Counter Financing of Terrorism) protocols to meet international standards, as outlined during the initial licensing phase.

• Retain valid permits issued by the Ministry of Health.

Local municipalities also play a critical role by conducting regular inspections. Adhering to municipal regulations is non-negotiable to maintain operational status.

Timing Is Everything:

The renewal process can take several weeks, so starting early is essential to avoid interruptions. Timely submissions ensure operations continue without penalties. Missing deadlines could result in fines or even losing the license.

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Costa Rica Gambling Laws

Costa Rica manages online gambling through a Data Processing License system, which is quite different from the traditional licensing models found in other regions. The Ministry of Economy, Industry, and Commerce is responsible for issuing licenses and ensuring operators meet basic operational standards.

Rules for Operators

Operators in Costa Rica are not allowed to offer gambling services to local residents, focusing solely on international markets. The regulations prioritize essential operational guidelines while allowing operators some degree of flexibility.

Key requirements include:

• Maintaining a local office and server infrastructure

• Keeping detailed accounting records in Spanish

• Adhering to AML (Anti-Money Laundering), CFT (Counter Financing of Terrorism), and KYC (Know Your Customer) standards

• Paying annual corporation taxes (note: offshore income is not taxed)

Regulatory Framework

Costa Rica does not have a dedicated gambling authority. Instead, operators are expected to self-regulate while following international standards. This approach is attractive to international operators looking for fewer restrictions but demands a higher level of responsibility.

Key elements of the framework include:

• Self-monitoring compliance with relevant standards

• Regularly updating security protocols

• Cooperating with inspections by local authorities

• Maintaining valid permits issued by the Ministry

Since there is no dedicated gambling authority, players have no third-party recourse for disputes. Operators must fully understand these rules to stay compliant and avoid issues during license renewal.

Fees and Processing Time

Costa Rica's gambling licensing process offers a more affordable option compared to many other regions, with a relatively quick timeline that appeals to operators looking to enter the market efficiently.

License Costs

Here’s a breakdown of the costs involved in obtaining a Costa Rica Data Processing License:

In addition to these fees, operators should budget for other expenses like legal documentation, developing AML/CFT policies, maintaining office space, and meeting corporate tax requirements. Custom service packages, starting at $1,200, are available to cover essentials such as company formation, license registration, and legal assistance.

Application Timeline

The licensing process in Costa Rica is straightforward and typically takes about 5-6 weeks. It is divided into three main phases:

Legal consultants can help speed up the process, but the timeline may vary depending on factors like how complete the documentation is, inspection schedules, and ministry review times.

Being aware of the costs and timeline helps operators plan effectively, reducing delays and ensuring a smooth application process. Costa Rica's lower fees and efficient licensing make it a competitive choice for operators compared to other locations.