Costa Rica gaming company licensing: What you need to know

The online gaming industry continues to expand at a rapid pace, and companies around the world are looking for reliable jurisdictions to establish their businesses. Costa Rica has long been a popular destination for iGaming operators due to its favorable legal environment, flexible company structures, and cost-effectiveness.

However, there is often confusion about the licensing requirements in Costa Rica, as the country does not issue specific gaming licenses. Instead, gaming companies can operate legally through a corporate structure that allows them to conduct business under favorable conditions. In this article by iGaming consultant Ron Mendelson, Fast Offshore, sheds some light on the matter. 

1. No specific gaming license

Costa Rica does not issue a formal gaming license. Instead, operators establish a legal entity in the country and include “iGaming” or “internet gaming services” as part of the company’s objectives. This approach fundamentally differs from countries like Malta or the Isle of Man, where companies must apply for specific gaming licenses, undergo rigorous background checks, and meet various regulatory requirements.

In Costa Rica, starting an iGaming company involves creating a standard business corporation or a Sociedad Anónima (S.A.). The key is to structure the business appropriately to conduct online gaming services. This legal setup allows companies to operate while maintaining compliance with Costa Rican law, which does not prohibit online gambling as long as the services are offered to players outside of the country.

2. Legal requirements for forming a gaming company

To establish a gaming company in Costa Rica, you must go through the process of forming a corporation. The following are the key steps:

a. Registering the company

The first step is registering a company with the Costa Rican National Registry. The most common legal entity for gaming companies is the Sociedad Anónima (S.A.), which is similar to a limited liability company (LLC). This corporate structure provides flexibility, allows for multiple shareholders, and limits personal liability.

b. Drafting the articles of incorporation

The next step is drafting the company’s Articles of Incorporation, which should clearly define the business’s purpose. To ensure compliance, it is essential to specify that the company’s activities will involve “online gaming services” or similar language. Costa Rican authorities will not object to this, provided that the company’s services are directed to players outside of Costa Rica.

c. Obtaining a legal representative

Every Costa Rican company must appoint a legal representative responsible for acting on behalf of the company. This representative does not need to be a Costa Rican national, but they should reside in the country to handle any legal or administrative matters that may arise.

3. Tax obligations for Costa Rican gaming companies

One of the most significant advantages of establishing a gaming company in Costa Rica Costa Rica operates on a territorial tax system, meaning that income generated from foreign sources is not subject to local taxes. This is a crucial benefit for online gaming companies, as they typically target players in other countries, allowing them to enjoy tax savings while operating legally.

a. Corporate tax

Costa Rican companies are required to pay corporate taxes on income earned within the country. However, this is generally not a concern for gaming companies since their revenue comes from foreign players. This makes Costa Rica an attractive jurisdiction for iGaming operators looking to minimize their tax liabilities.

b. Annual fees

While Costa Rica does not impose a specific gaming tax, gaming companies are required to pay standard corporate fees, such as an annual corporate tax and registration fees with the Costa Rican National Registry. These costs are relatively low compared to other jurisdictions, making Costa Rica a cost-effective option for iGaming operators.

4. Regulatory environment

Costa Rica's regulatory environment for online gaming is relatively flexible compared to other jurisdictions. The government does not actively regulate online gambling operators, provided they do not offer services to Costa Rican residents. This “light-touch” approach allows companies to operate with greater freedom, but it also means that operators must take responsibility for ensuring compliance with international standards.

a. No government oversight of online gaming

Because Costa Rica does not issue gaming licenses, there is no formal government body that oversees the operations of online gaming companies. This lack of direct oversight can be an advantage for operators, as they are not subject to the stringent requirements found in other jurisdictions. However, it also means that companies need to implement their own systems to ensure responsible gaming, anti-money laundering (AML) measures, and fraud prevention.

b. Compliance with international standards

Even though Costa Rica does not regulate online gaming operators, it is essential for businesses to adhere to international standards and best practices. This includes implementing strong AML policies, ensuring fair play through certified random number generators (RNGs), and protecting player data with robust cybersecurity measures. By maintaining high standards, operators can enhance their credibility and build trust with players and partners.

5. Banking and payment processing challenges

One of the main challenges facing gaming companies in Costa Rica is finding reliable banking and payment processing solutions. Many local banks are reluctant to work with iGaming operators due to the lack of a formal license in place.  As a result, operators often consider crypto payments for their online gambling site. Fast Offshore can provide advice and guidance on how to navigate payments for your Costa Rica iGaming company.

a. Offshore banking solutions

Offshore banking solutions can be a choice for Costa Rican gaming companies. These banks understand the unique needs of the iGaming industry and can offer services such as multi-currency accounts, international payment processing, and crypto-friendly banking options.

b. Cryptocurrency integration

Cryptocurrency has become an increasingly popular payment method for iGaming operators in Costa Rica. Digital currencies such as Bitcoin and Ethereum offer advantages such as faster transaction times, lower fees, and enhanced privacy for players. Moreover, cryptocurrencies bypass the restrictions imposed by traditional financial institutions, making them an ideal solution for gaming companies operating in Costa Rica.

6. Advantages of operating in Costa Rica

Costa Rica offers several key advantages for gaming companies, making it one of the top jurisdictions for iGaming businesses:

a. Cost-effective setup

Setting up a gaming company in Costa Rica is far more affordable than in other jurisdictions like Malta or the Isle of Man. The lower cost of incorporation, combined with minimal ongoing regulatory fees, allows operators to allocate more resources toward business growth and player acquisition.

b. Favorable tax environment

As mentioned earlier, Costa Rica’s territorial tax system provides significant tax advantages for gaming companies that generate income from foreign sources. This enables operators to retain a more significant portion of their earnings and reinvest in the business.

c. Business-friendly legal framework

Costa Rica’s business-friendly legal framework allows iGaming companies to operate with minimal regulatory burdens. The absence of a formal gaming license requirement, combined with the lack of government oversight, gives operators greater flexibility to run their businesses as they see fit.

d. Stable political environment

Costa Rica is known for its political stability and solid legal system, providing a safe and secure business environment. This stability, combined with the country’s focus on innovation and technology, makes Costa Rica an attractive destination for gaming operators looking for long-term growth opportunities.

Conclusion

Establishing a gaming company in Costa Rica offers numerous benefits, from its cost-effective business setup to its favorable tax environment and flexible regulatory framework. While the lack of a specific gaming license may initially seem like a drawback, it provides operators more freedom to run their businesses without the heavy oversight in other jurisdictions. By adhering to international standards and utilizing reliable banking solutions, gaming companies in Costa Rica can successfully operate on a global scale while maintaining compliance and credibility.

To get the process started and for expert advice every step of the way, Fast Offshore is here to help. Contact us for all your gaming licensing and corporate service needs.