Despite a global pandemic that brought many competitions to a grinding halt, the worldwide sports betting market has continued to grow. In fact, the online gambling market reached a record high of 67 billion dollars in 2020.
If you have an idea for a sports betting company, one of your first big decisions is to choose where you will set your business up. The rules around gaming in different countries can have a big impact on your company’s fortunes, so it is worth spending time exploring your options.
One of the most popular destinations for sports betting firms is Cyprus. Why is Cyprus such an attractive option, and what is the process for setting up your business there (including getting a license in Curaçao)?
Cyprus offers solid foundations for sports betting businesses
Since the introduction of the 2016 Cyprus Betting Law, the eastern Mediterranean island nation has provided a comprehensive regulatory environment for companies operating in the sector. A combination of factors makes it an appealing place for gaming firms:
- Political stability – Cyprus has a stable parliamentary democracy, is part of the European Union and uses the Euro as its currency
- Language – English is spoken widely in the country, alongside Greek and Turkish
- Low taxation - Online sports betting companies pay 13% tax on their revenues - one of the lowest rates in Europe
- Reputable – Cyprus’s National Betting Authority provides a firm but fair approach to regulation and offers a transparent environment to work in
- Technology – Cyprus offers reliable telecommunications infrastructure
- Lifestyle – The sunny Mediterranean island has a rich history, culture and scenery, and fast travel to Europe, the Middle East and Africa
At present there are nine companies with online sports betting licences in the country according to the NBA.
Mediterranean alternative: Setting up a gaming business in Malta
How to structure your Cyprus online sports betting company
If you have opted for Cyprus as the base for your online sports betting company, you have two main options for setting your company up:
- Set up exclusively in Cyprus
- Incorporate in Curaçao with payment processor in Cyprus
Let’s explore these two options.
Set up an online sports betting company in Cyprus
Cyprus's gambling laws define two types of licences. Class A Licenses are for physical gaming firms (such as physical casinos or betting shops) and Class B Licenses for online gaming. Class B licenses cover most sports betting (except horse racing) and a handful of games of skill like poker.
If you wish to set up a sports betting company online, you will need a Class B licence. The process is relatively straightforward and requires you to:
- Complete an application form from the NBA website
- Provide additional documentation as required including passport, CV, criminal record, business description and more
- Form a company in Cyprus
- Demonstrate that you have ample working capital to run a betting site (you need capital of at least €500,000)
- Locate at least some of your gaming equipment on the territory (servers running gaming software, customer data, etc.)
- Pay annual licensing fees
- Open an account with an EU or Cypriot bank
Assuming that all your paperwork is in order, the application process for a Cyprus online sports betting company should not take more than four months.
Setting your business up in Cyprus has many benefits, especially for more established sports betting companies or start-ups with solid financial backing. However, if you are looking for a more flexible and cost-effective option it may be worth considering the Curaçao option instead.
Curaçao licence with a Cyprus payment agent
As noted above, there are currently only nine online sports betting companies fully licenced in Cyprus. However, there are many more businesses whose licenses are provided in Curaçao, who then set up a payment agent business in Cyprus.
How does this company setup work and what are the benefits of doing so?
The Caribbean island of Curaçao holds a unique status as part of the Kingdom of the Netherlands, but without being part of the European Union. Curaçao offers one of the oldest and most reputable online gaming licences in the world, which lets you quickly and easily receive a license for almost any kind of online gaming business with 0% tax and low fees.
However, due to certain international regulations it is not possible for offshore companies to receive payments to their Curaçao company. They can, however, utilise a payment agent in a different country which then funnels the money to Curaçao. One of the most popular options here is to create a payment processing company in Cyprus where you will pay a negligible tax on the money you process to the Cypriot government.
Many gaming start-ups choose this option because it is one of the lowest tax business structures for online gaming companies. Opting for a gaming licence in Curaçao requires far lower start-up costs and up-front funding than if you were to set up in Cyprus exclusively. That means you can test the water for your technology and business idea without having to seek major financial backing.
Banking services for online sports betting companies
Whether you choose to set up your online sports betting business in Cyprus or Curaçao, you will need a way to process customer payments, pay staff and settle supplier invoices. Unfortunately, opening a bank account for emerging industries such as online gaming can be very challenging in Cyprus. Many banks are wary of offering services to businesses in a sector that they may view as risky.
And this is where Xace helps. Xace is a gaming friendly payment institution which provides all the services that you would expect from a bank and is specifically set up to process payments for gaming firms and online sports betting start-ups. We have an in-depth understanding of the banking needs of sports betting companies and the unique company structures that firms in this sector must implement.
If you are setting up a sports betting business in Cyprus - or need a Cyprus-based payment processor for your gaming start-up in Curaçao - ask about your banking needs today.