Gambling License in Cyprus

Obtaining a gambling license in Cyprus offers several advantages for online gambling companies:

EU membership
Cyprus is a member of the European Union, and a Cyprus gambling license allows operators access to the EU market.

Favorable tax rates
Cyprus provides favorable tax conditions for companies in the gambling industry. The corporate tax rate is competitive, making the country attractive for online gambling.

Reputation and credibility
A gambling license from Cyprus enhances the reputation and credibility of an online gambling operator. A license indicates compliance with strict regulatory standards and can inspire confidence in players and business partners.

Stable regulatory environment
Cyprus maintains a stable and well-regulated environment for the gambling industry. This stability provides a predictable legal framework for operators, reducing the uncertainties associated with legal compliance.

Effective licensing process
Cyprus has established a relatively efficient licensing process. By maintaining high standards, regulators aim to simplify the application and approval process, allowing operators to start operations more quickly.

Technology infrastructure
Cyprus has a strong technological infrastructure, including reliable internet connectivity. This is crucial for the smooth operation of online gambling platforms and for ensuring a positive user experience.

Consumer protection
The regulatory structure in Cyprus emphasizes consumer protection, ensuring that operators adhere to responsible gaming practices. This can be attractive to players who value a safe and secure online gambling environment.

Obtaining an online gambling license in Cyprus involves a structured application process and compliance with specific requirements set by the National Betting Authority (NBA). The list of requirements includes:

• registration of a company with shares in Cyprus whose main activity is gambling;
• if the company is not registered in Cyprus, it is required to either open a branch office or enter into a partnership agreement with a Cypriot company;
• residence in Cyprus. Operators wishing to provide their services to Cypriot players must be residents of Cyprus. In case the company is a foreign legal entity, a local director whose domicile is in Cyprus must be appointed to deal with the competent authorities of the country and enter into contracts on its behalf;
• an impeccable reputation of the applicant and a high financial level of the company to ensure timely payments to players;
• a minimum paid-up share capital for the applicant company of €500,000 (approximately US$538,982). This requirement applies to both Cypriot and foreign companies;
• opening a bank account with a bank in one of the banks in Cyprus, into which the operator will have to deposit funds from players. Licensed online gambling operators will only be allowed to make payments to players through payment systems approved by the NBA;
• a bank guarantee from a bank in Cyprus or another EU member state for 550,000 euros (approximately $592,880) valid for six months after the license is granted. This guarantee obligates the bank to pay any amount that the licensee fails to pay to the player who wins the bet, as well as to pay taxes to the Cypriot government and NBA dues;
• adherence to the principles of protection of minors, as well as controlling the content and distribution of promotional materials and venues.

In addition, applicants for a Class B license are required to attach to their application information the availability of a backup server in Cyprus. This server must be linked to the main server and perform real-time backup of all necessary information, as required by the Cyprus National Betting Service. In addition, the characteristics and use of the equipment must be clearly defined and may be reviewed by the NBA as necessary.

Application for a gambling license in Cyprus is only possible for companies with shares registered in Cyprus. To obtain or renew any type of license, an application must be made to the NBA. If the same person is applying for Class A and Class B betting licenses, the applications are submitted and processed separately as individual applications.

The application must contain the following information:

• the type of license to be obtained;
• the mailing address in Cyprus;
• the identity and place of residence of the ultimate beneficiary, the managing officer, and the owner of the substantial interest, in the case of an application by an individual, or the authorized representative, if a legal entity is the applicant;
• the terms and conditions based on which the applicant intends to provide betting services to punters;
• financial information;
• description of internal procedures for the prevention of money laundering and terrorist financing;
• certificates of criminal records of shareholders, directors, and ultimate beneficiaries;
• information on the financial and other interests of the ultimate beneficiaries, directors, and owners of a significant portion of the company’s shares.

A one-year license for a Class A or Class B betting shop costs €30,000 (about $32 339) and a two-year license costs €45 000 (about $48 508).

If the application is rejected, 75% of the fees paid are refunded, which represents favorable terms compared to other European jurisdictions.

The Commission may refuse to issue a license in the following cases:

• the applicant has been convicted of a relevant offense;
• the applicant is a natural person under 25 years of age.

It is important to emphasize that none of the licenses granted are transferable or assignable to another person in any form.

Applications for license renewal must be submitted 3 months before the expiration of your current license. During the term of your license, the NBA may amend, revoke, or impose new conditions on any type of license to improve compliance with the relevant regulations. In the event of such changes, the authority must first notify the licensee in writing and justify the changes. However, despite this, there is no need to worry about regulatory instability as the overall regulatory framework in Cyprus is completely fair for both businesses and consumers.

According to the Betting Law 2012, there are two main types of gambling licenses in Cyprus, each for different aspects of the gambling industry:

1. Class A bookmaker’s license, which regulates land-based betting on sports games. The license allows all betting except horse racing and online activities.
2. Class B bookmaker license, which regulates online betting and gambling, excluding slot machines, online casinos, and lotteries.

The NBA maintains a register of all gambling licensees in Cyprus, including information provided in applications, and publishes a list of these licensees on its official website.

The popularity of sports betting among Cypriots has led to the regulation of online and offline betting. In 2012, sports betting, both online and offline, was legislated in Cyprus. Under the Betting Law of 2012, the National Betting Authority (NBA) was established to process applications, issue licenses, conduct audits, and oversee potential betting shops and online betting operators.

Under current legislation, online casino gambling in Cyprus is considered illegal and is punishable by law. Unlike most countries, Cyprus prosecutes both operators and players. The only form of online gambling allowed in Cyprus is online sports betting, with betting on horse racing not permitted. Cyprus’ infrastructure provides a variety of services for online gambling operators and providers, including private high-capacity racks, private cloud services, specialized dedicated servers, and other hosting options.

In addition to the Betting Law, online gambling in Cyprus is governed by the following regulations:

• Gamblers, Minors and Pathological Gamblers Protection Regulations (2019);
• Advertising Standards Code (CA.02.2021) – establishes commission requirements for advertising and promotion of gambling;
• Rates (Charges Payable) Regulations 2019 (R.A.A.84.2019).

Cyprus also applies the laws on the prevention of money laundering and terrorist financing enacted between 2007 and 2018. These laws aim to protect the financial market from criminal activity by identifying and reporting suspicious transactions.

The National Betting Authority has the authority to review all filings and make final decisions on them. The NBA may revoke or temporarily suspend a license in case of violation of the provisions outlined in Article 24 of the Betting Law and as part of its policy to prevent money laundering and terrorist financing.

As part of its responsibilities, the NBA monitors gaming enterprises and services to ensure that they comply with the standards and regulations of the Cyprus Government. Regular compliance checks are conducted to ensure compliance with the terms of the license. Licensees are required to maintain a full audit trail for each player depositing with the operator, including details of financial transactions and individual bets. Gaming systems, including server software logs, must be available for inspection by third-party auditors. Game rules, results, and payouts must be available to the National Betting Authority for five years.

Gambling companies in Cyprus, according to Article 71 of the Betting Law of 2012, must pay a combined gambling tax of 13% on their net income. This tax consists of:

• 10% of net revenue as gambling tax in favor of the State;
• 3% contribution to the National Betting Authority, of which 2% is distributed to the Cypriot sports federations and 1% is allocated to gambling addiction programs.

While the gambling tax rate in Cyprus may not be the most favorable compared to other European countries, other tax rates prove to be very competitive. Many companies prefer to choose Cyprus as their home jurisdiction because of the low corporate tax rate, which is only 12.5% on their net profits. In addition, there is no income tax on dividends and interest paid to non-residents of Cyprus, as well as royalties paid to non-residents of Cyprus for rights not used in Cyprus.

Cyprus also has over 65 international double tax treaties which facilitate cross-border investment and reduce the tax burden for international entrepreneurs whose companies are tax resident in Cyprus.

If you would like detailed individual advice on obtaining a gambling license in Cyprus, do not hesitate to contact our lawyers. Get a comprehensive consultation today.