“Bullsh*t” or Benefit, Curaçao Reform Roundtable
For decades the Caribbean island of Curaçao, a former Dutch colony, has had a controversial reputation in the gambling industry, with many companies claiming a presence on the iGaming haven; while appearing on “badlists” all over Europe and Australia – and paying minimal tax to the country.
A proposal is now on the table to introduce new legislation and a new licensing system that the island nation’s government hopes will improve the island’s standing – and strengthen player protection.
IGF spoke to leading industry representatives (below) to understand what the reform might mean for the wider iGaming community and–to quote their hard-hitting responses–query if the proposed changes were “bullshit” or would bring benefit .
Nora Galstyan, Head of Compliance at Technamin (NG)
Phil Pearson, CEO of soon-to-be launched White Label Casinos (PP)
Ismail Vali, Founder and CEO of Yield Sec (IV)
Paul Jerram, Head of Compliance at Sportingtech (PJ)
Curaçao is in the process of overhauling its gaming laws. Given the island’s controversial reputation, how important is this move for the public and iGaming industry?
NG: “The wider public is perhaps less informed about the details regarding Curaçao, and their reaction, as a result, may not be that notable. Nevertheless, I believe that the Curaçao regulator is fully conscious of public opinion and will need time to upgrade its reputation. As time-consuming as it may be, it will amount to positive changes for sure, as it has always been known for having a rather liberal system and relatively low barriers for entry.”
PP: “Curaçao should absolutely try and solve its reputational issues. The truth is: Various companies and ‘master licences’ have been a sham since the beginning. With the ease of operating, and the lack of player-focused protection, the licence itself holds little-to-no value, outside of being able to more easily secure game content and payment providers and banking.
“Curaçao should undergo a full upheaval. Not just be progressive in its actions, but show the recent countries who are licensing and over-regulating just how it should be done. If they create a global ‘one stop shop’ for licensing, and turn themselves into an actual hub, like China for manufacturing and Ireland for the new tech companies based there, they could go a long way to changing the gambling landscape.
“If they can create a sensible solution, with fair and protected player values and directives, merged with a fair pricing system and operator responsibility, then they’ll be in a great place, as they can licence this to other countries. If they let other countries select the tax model they want from the GGR profits of operators and providers, then they’ll have a clear entry into tens of markets around the world legally. It baffles me that no one tries to merge the gaming world closer together.”
IV: “Recent times have seen a surge in regulation, re-regulation and review of gambling legislation around the globe, and it would be easy to be tricked into thinking that what Curacao is currently doing is reform or re-regulation. However, this couldn’t be further from the truth as Curaçao has effectively had no legal licensing or regulatory system in place before, and this has created havoc within the international betting, gaming and lottery ecosystem.
“This has led to undeniable damage to revenue, taxation, player protection, AML and audience safety for dozens of legal gaming jurisdictions across the world, and provided a hub for grey and bad market operators to ‘claim’ that they are licensed when in fact little to no supervision of these companies is in place. Instead of applauding this ‘overhaul’, we should ask ourselves why these offshore hubs for gambling licensing even exist? As more jurisdictions choose to introduce local regulation, these hubs should become less important, and the focus should instead be on bringing the industry onshore for jobs, consumer protection, regulation and oversight.”
PJ: “It’s incredibly important, and what’s more, there appears to be the political will to make this the case. Last November, while attending SiGMA in Malta, I had the pleasure of witnessing a speech delivered by Curaçao’s finance minister, Javier Silvania, which I’m sure will be remembered as a pivotal moment in the industry. He appeared enthusiastic about introducing a no-nonsense approach to a revised licensing regime under the proposed law called the National Ordinance on Games of Chance, which is expected to enter into force in Q2 2023. Ideally, this will regulate gambling activities, responsible gaming, and the supervision and enforcement of licences, but also the establishment of a new gaming authority – the Curaçao Gaming Authority (CGA).
“This will see a formal 18-month transition period for the outgoing regime, whereby the CGA will issue licences to operators that meet their stringent measures. Those who are denied a licence must cease operations. This will go a long way to rehabilitating Curaçao’s reputation, and clearly illustrates how important local lawmakers consider the situation.”
Do you think Curaçao will be able to reform and become a new respectable gaming hub, to compete with the likes of Malta and Gibraltar?
NG: “I think having stricter rules and regulations will definitely help with the process of becoming more reliable, allowing Curaçao to compete with the likes of Malta and Gibraltar. Again, this will take a considerable amount of time. But we are already seeing positive changes on the horizon.”
PP: “The differences between Curaçao and Malta/Gibraltar are quite small. Sure, Curaçao is more lax with KYC and similar responsibilities. But the truth is these are all non-localised licences which have been, and could still be, used around the world. I think they can rid themselves of the questionable tag, just like various countries have done on the FATF lists. But to do it they need to get it right the first time. They need a simple but detailed enough plan for players, operators, and companies to survive and thrive. There is no point doing MGA 2.0 or Curaçao 2.0 as those directives are so vague you could defecate somewhere in them, and no one would smell it for years. If I can get around the Swedish Government inside of a weekend, then surely an entire Regulatory Team should be able to come up with something that can be used in the EU or similar. If not, I’m available for a call any time!”
IV: “No, it will not. Again, we must ask what the appetite is for gaining a licence from Curaçao, as, even with the suggested changes, it will not permit operators immediate legal access to regions in the EU or the US. At best, some territories may allow operators to be based in, licensed from and operating remotely from the island, as long as they also gain a local licence and pay taxes and other fees in the country. This latest reform is of no legal merit. Simply having a licence ‘somewhere’ does not permit an operator to target and take revenue from a jurisdiction in which they are not locally licensed. The same goes for offshore jurisdictions, such as Malta or Gibraltar, so the ability to compete becomes irrelevant. There is no such thing as a ‘grey market’. It’s a term invented by illegal operators, and the industry should move away from this approach and focus on becoming licensed and compliant in regulated markets.”
PJ: “With continued pressure from the Netherlands for Curaçao to maintain a European licensing model, we can certainly expect this to be the case. During the pandemic, Curaçao received a significant degree of financial aid from the Netherlands. The trade-off was that the former Dutch colony align itself with the licensing practices of a European model. Also helping to make this a certainty is that the former head of Malta’s gaming regulator, Mario Galea, has been consulting for Curaçao. Along with a European-style licensing model to enhance the jurisdiction’s reputation, end-users are also benefiting from European-style campaign and claims groups that actively pursue operators for player losses. For example, the Foundation Representation of Victims of Online Gaming, which targets Curaçao-licensed operators, appears to have successfully bankrupted 1XBet via its Curaçao entity (1xCorp N.V.). This is another stark warning to Curaçao-licenced operators that may have inadequate compliance controls.”
What value does it bring to operators and suppliers when a jurisdiction like Curaçao considers new legislation to increase government oversight?
NG: “I believe the stronger the rules and regulations of the licence, the better for the licensee and their reputation. For example, if the licence requires strong AML/CFT policies, procedures and controls and ongoing screenings, the company will be more protected from the risks arising from those factors. This will benefit everyone, really; from providers to operators and, of course, end-users. Ultimately, our goal is to provide safe experiences for users, and it’s refreshing to see that this is where everyone is headed in the industry.”
PP: “No company in gaming complains about oversight. Most of us–and I include myself here, as I openly call for it– would expect better regulation and a better service from both the EU and local countries we operate in. The fact is that someone needs to take the lead here before we end up with a situation that is uncontrollable. If we liken this situation to plugs, there are four main plug sockets around the world. It can be the same with gambling. We can have ultra-strict UK/Germany style regulation, the softer Sweden style, the more player-friendly Curaçao approach (we hope), and then whatever money grab the US are up to. At the end of the day, the governments care about money, while seeming to care about players. The operators care about money, while partly caring about players, and the charities and gambling haters care about players but don’t bother to learn enough about gambling to be taken seriously.
“What is needed is a very open forum, and someone to side-step the political and geopolitical bullshit well enough to be able to offer something actually usable. All we do right now is play into the hands of the super large companies, or the unlicensed money launderers. And if you look deep enough, there isn’t that much difference between the two.”
IV: “We should of course applaud moves to remove crime-and future criminal potential–from the revenue and supply chains of our global business if the change is recommended and actioned on a sober and serious basis across the entirety of the iGaming supply and infrastructure chain.
“However, are these latest Curaçao changes even remotely believable? or simply political rhetoric that will create the illusion of change? A criminal hub to the bad market for nearly 30-years, as Curacao has been and remains, will not simply give up its worst offenders and, locally, its most valuable economic contributors overnight. Jurisdictional changes can bring value to operators and suppliers, but I suspect these changes will be insignificant as a whole, and Curaçao will continue to be a blight on the international, but now locally realised industry.”
PJ: “Aligning licensing practices with European jurisdictions will undoubtedly provide positive value to the industry. These outcomes include prompting the exit of operators that cannot demonstrate appropriate compliance cultures – for instance for those without adequate responsible gambling and financial crime controls. Curaçao’s finance minister makes no bones about bidding farewell to operators failing to make the grade with the new licensing conditions. Sportingtech has a thorough understanding of the situation and sees the bigger picture of what awaits the industry. We’re staffed with professionals steeped in knowledge of European licensing models, so they’re more than ready to help clients navigate what lies ahead. This is truly historic stuff and should be taken seriously.”