ISLE OF MAN: Business Establishment and e-Gaming License
The Isle of Man is a self-governed dependency of Great Britain found in the Irish Sea. Political stability, business-oriented legislation and a favourable regulatory environment make the Isle of Man a highly respected worldwide financial and international business hub. The island enjoys a customs agreement with the UK for trading purposes but at the same time it is separate from both Britain and the EU. When it comes to trading or investing in other countries, a firm based in the Isle of Man has a distinct edge.
The Isle of Man is a jurisdiction that encourages the production and retention of wealth while at the same time adhering to transparency requirements and anti-money laundering directives. Known for its economic stability and security and its reputation as an AA+ rated jurisdiction.
Accompanying the aforementioned is an extremely favourable tax system and world class local workforce in international law, accounting, consulting and business services along with excellent public sector cooperation and assistance.
If you're looking for an online gambling jurisdiction that has been around for decades, look no further than Isle of Man. Many online casinos and betting companies have opted to set up shop in this British Crown Dependency after it released its Online Gambling Regulation Act 2001. The Isle of Man's Tynwald (parliament) has placed a high value on the online gambling industry. The Isle of Man's economy relies heavily on online gaming. Globally, e-Gaming generates a whopping 21% of GDP, or over £1.1 billion of the total £5.3 billion.
The gaming sector on the Isle of Man quadrupled in size between 2006 and 2011 and became one of the main industries in the jurisdiction. Due to its autonomous status, the Isle of Man offers a variety of benefits for enterprises to transfer their operations there, such as VAT exemption, 0 percent corporate tax and minimal tax on gross gaming profit.
Types of Licenses
Network Services License
B2B software supplier license
Facilitates B2C operations and registering the company’s own players, as well as storing the data of those players. With this license the operator may offer the platform to other operators as sub-licensees.
This is the most basic license available. All B2C operations, player registration and data storage are permitted for full license holders. Through this license, license holders offer other operators in a form of a White Label Solution, a platform, content, and other business solutions, as well as freeing them from having to meet Isle of Man regulations themselves. In addition, full license holders can join together with other companies to provide them with games and applications. In this case, they bear no responsibility for the operators’ administrative and legal activities, but can provide them with a sub-license from the Commission. In addition to the £5,000 price for each partnership, full license holders can be attached to as many sub-licensees as they like. The full license covers the activities of the main licensee’s company and its subsidiaries.
Ability to partner with any number of sub-licensees and offer White Label solutions
Collecting and storing player data
Operation of proprietary technology (platform and games)
Operators can elect to sub-license a platform and its games from other full license holders instead of acquiring a full license themselves. This license is perfectly available to operators who have an already established database of players but have no gaming products themselves yet. In order to access software, games, etc., the operators pay a reduced charge and must be linked to a full license holder. If a sub-licensee wishes to become a full licensee, they can do so at any moment.
It's likely that newcomers to the gaming business who want to enter a new market and open their own online casino would go with a sub-license. For a corporation with a large database of potential customers but no gaming goods of its own, this sort of licensing is a smart alternative.
For the aforementioned reasons Sub-licenses are provided at a lower charge along with the requirement to be tied with the licensee to a full license holder through an agreement. Registered gamers of a sub-licensee can use the full license holder's software or games.
Access to full licensee’s technology (games, software, etc.)
Collecting and storing player data
Opportunity to partner with a full licensee
Network Services License
Network services licensees have the same rights and responsibilities as full licensees, with the exception that they can accept players from other jurisdictions that are registered with gaming sites (in those jurisdictions), thereby avoiding the re-registration process and facilitating the migration of player data from a source server to an Isle of Man-based server. Makes it easy for the licensee to expand into other markets.
Network services licensees have the same rights and responsibilities as the full OGRA license, but they can also welcome players from other countries without having to re-register. As a result of this transition procedure, players' data can be transferred to an Isle of Man server without the need for KYC or AML checks, but the chosen partner must adhere to these standards. As long as their actions are in compliance with Isle of Man gaming legislation, new partners are not charged for joining the network.
Since the network services license allows operators to accept players from other jurisdictions, it opens great opportunities to reach new target markets and potentially widen user databases.
Collecting and storing player data
Operation with own technology
Opportunity to accept players registered in other jurisdictions without re-registering their data
Opportunity to partner with any number of sub-licensees and offer White Label solutions
B2B Software Supplier License
As a result of the regulators' attention on innovation in the blockchain realm, this license can be separated into two independent licenses: a regular fiat platform license and a blockchain-based software provider license.
To provide software to Isle of Man licensees, a software provider license is not required. The license, however, gives providers from all over the globe the distinguished reputation of the Isle of Man business network.
A blockchain-based software provider license was added in 2019 in conformity with Isle of Man's online gambling law, in addition to the conventional fiat platform provider license.
Testing and certification are required for suppliers to receive a license in order to be included in the GSC games register, which shows operators and players their commitment to high quality standards. Software integration for Isle of Man licensees will be simplified as a result of this, since no further certification will be required.
Businesses without their own client base can use the software provider license. In order to register with the Gaming Services Commissions' Game Registry, they do not have to obtain this certification, but having it certifies that they comply to the Isle of Man's high requirements for corporate governance and game fairness. This simplifies their B2B operations since it allows license holders on the Isle of Man to use their games without further testing and provides them with better credibility as a result.
Software / platform development and supply
The gaming operator must be a company incorporated in the Isle of Man.
No restriction on the nationality of the ultimate beneficial owners of the company.
Must appoint 2 local directors, who must be individuals and not corporate directors.
Must appoint at least one resident Designated Official
Must maintain Isle of Man servers or operate under a network services license
Gambling and trading accounts located in a bank in the isle of Man.
Full license-£35,000 per annum
Sub-License-£5,000 per annum
Network Services License-£50,000 per annum
B2B Software Supplier Licenses-£35,000 per annum for fiat platform license -£50,000 per annum for blockchain based software
0% corporate income tax for Isle of Man companies
Online gaming exempt from VAT (no VAT is due on income; VAT is not recoverable on expenses and overhead. VAT rate is 20%)
Gambling duty as follows:
o 1.5% income >£20mil
o 0.5% income £20 mil-£40 mil
o 0.1% income >£40mil
o 15% Pool Betting
*DISCLAIMER: This article and its publication are intended to provide a brief introduction and act as a general guide. This is provided for information purposes only and cannot be utilized as a substitute for professional advice. This document does not represent a legal opinion and one must not rely on it without receiving independent advice based on the particular facts of its own case. No responsibility is accepted by the author or the publishers for any loss suffered from acting or refraining from acting based on the contents of this publication.
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