Online gambling has witnessed considerable growth over the last decade, both in terms of participation and range of available options. While many countries have passed legislation to regulate online casinos, some players still choose to take their action to offshore gambling businesses. The practice is also common among people who seek to gamble remotely but live in jurisdictions that heavily restrict or outright prohibit online gambling.
The term ‘offshore casino’ refers to a gambling website that operates from a jurisdiction other than your own, often in contravention to local laws and regulations. Such businesses hold licenses issued in foreign jurisdictions with lenient regulations and lower levels of consumer protection compared to domestically licensed operators.
Offshore-licensed gambling companies do not participate in the economies of the countries where they operate. They do not pay taxes on the revenue they generate from local players since they practically service them without authorization from domestic regulators.
While not all offshore operators are fraudsters, there are still some risks you should be aware of before you start gambling on such websites. But first, let’s examine the most common licensing jurisdictions for offshore casinos.
Licensing Jurisdictions for Offshore Online Casinos
One widespread misconception about offshore casinos is that they operate without any licenses whatsoever. While this is indeed the case with some websites, most offshore gambling businesses obtain licenses from the authorities of the countries where they base their operations.
If they set up shop in a given jurisdiction without any authorization, they risk being brought to prosecution. The trouble is most offshore casinos gain licenses from countries with low tax rates and more lenient regulatory oversight, such as Costa Rica and Panama. Such jurisdictions usually take no issue with their licensees servicing customers from gray markets.
Costa Rica
Antigua and Barbuda
Curacao
Panama
Costa Rica
Why do operators choose this jurisdiction?
- Nearly non-existent regulations
- Low tax rates and absence of annual license fees
- No requirements for software audits
- Quick and hassle-free start of operations
Situated in Central America, Costa Rica has so far licensed over 400 online casinos and sportsbooks. However, it lacks specific legislation that regulates the conduct of remote gambling. Operators looking to set up shop in the country must obtain licenses for data processing rather than actual online gambling permits.
The only conditions such companies must meet are to have physical offices registered in the country and not to offer their services to Costa Ricans. Local laws allow this because the wagering activities take place outside Costa Rica despite the casinos’ servers being physically located there.
No annual licensing fees or taxes are imposed on the revenue the businesses generate outside Costa Rica. The operators can register and launch their websites within three or so weeks. In the absence of regulatory oversight, Costa Rican operators are not even required to test their gaming software for fairness.
Antigua and Barbuda
Why do operators choose this jurisdiction? - A respected licensing jurisdiction in the Caribbean region
- A single interactive gaming license covers a broad range of gambling products
- Low fees for interactive gaming licensees
Located in the West Indies, this island country has been issuing remote gambling permits since 1994. It has established itself as one of the most popular licensing jurisdictions in the Caribbean region. Wagering activities are regulated by the Directorate of Offshore Gambling, which operates as part of the local Financial Services Regulatory Commission (FSRC).
The Directorate grants two types of permits, starting with interactive wagering licenses issued to remote sportsbooks. The second type is for interactive gaming and covers a wide range of products, including online casino games, slots, poker, and lotteries.
The level of regulatory oversight is higher here since Antigua and Barbuda is part of the British Commonwealth of Nations. The jurisdiction appeals to offshore operators with its low tax rates. The annual fees imposed on interactive gaming licensees stand at $100,000 and do not fluctuate based on yearly revenue.
Curacao
Why do operators choose this jurisdiction? - License requirements are friendly to small startup companies
- Interactive operators can quickly obtain licenses (within 2 to 4 weeks)
- Master licensees can distribute white-label sub-licenses to other companies
- Some of the lowest tax rates in the world
- Licenses are all-inclusive and cover multiple gambling products
Located in the Southern Caribbean region, Curacao was originally part of the Netherlands Antilles until the latter dissolved in 2010. The jurisdiction has been issuing remote gaming licenses since the early 2000s and has established itself as a well-known name worldwide.
To obtain a license, applicants must register their companies in the country, provide some ownership information, and team up with a local representative. At least one server of their online gambling business must be physically located in Curacao.
Companies that hold master licenses can lease them to other operators as white-label permits. In addition to these advantages, Curacao has some of the lowest gambling taxes in the world. Licensed companies are taxed at a meager 2% of their net profits.
Panama
Why do operators choose this jurisdiction? - Low initial licensing and renewal fees
- Online operators are exempt from taxation
- Limited liability and lenient regulation
Panama first started licensing online gambling in the early 2000s. Offshore operators seeking to obtain Panama licenses must file their applications with the Gaming Control Board, which is part of the local Ministry of Economy and Finance.
There are few requirements licensees must adhere to. Remote operators benefit from full tax exemption on condition they do not accept wagers from Panamanian players. Applicants must have a locally registered company and present proof of sufficient financial capacity.
The application costs only $1,000. Those approved must cover the initial licensing fee of $40,000. Interactive gaming permits are valid for seven years, and operators can renew them for $20,000 at the end of this period.
Difference #1: Bonus Size
Difference #2: Serviced Markets
Difference #3: Range of Software Suppliers
Difference #4: Country Restrictions
Difference #5: T&C Language
Difference #6: Payment Methods Range
Difference #1: Bonus Size
While there are exceptions to any rule, most offshore casinos bombard players with a barrage of promo codes from the moment they access their websites. Such operators are prone to offering massive bonuses, sometimes reaching several thousands of dollars.
The offers come with impossible-to-meet wagering requirements and multiple restrictions that prevent players from gaining full value from their bonuses. By contrast, domestically regulated operators offer fewer promotions but with player-friendly conditions, lower playthrough, and fewer game-related restrictions.
Difference #2: Serviced Markets
Some countries’ legislation lacks specific provisions on online gambling, neither outlawing nor allowing such activities. Offshore operators often take advantage of these legal loopholes and accept real-money play from gray markets, arguing they are not technically violating the law. Some would go as far as allowing registrations from black markets whose legislation expressly prohibits online gambling.
Conversely, highly regulated gambling businesses only offer their services in the countries where they hold licenses. Such companies normally obtain separate permits for each jurisdiction they serve. For example, they accept EU players with MGA licenses, British players with UKGC licenses, New Jersey customers with DGE permits, and so on.
Difference #3: Range of Software Suppliers
Many offshore operators work with a limited number of suppliers as more and more gaming software companies are starting to transition to regulated markets. This translates into a considerably smaller number of casino games by fewer suppliers, usually RealTime Gaming (RTG), Betsoft, Rival, and WGS Technology.
By comparison, strictly regulated casinos tend to offer thousands of games by dozens of software studios, including renowned brands that themselves hold licenses in multiple markets. Examples include NetEnt, Evolution, Microgaming, Quickspin, and Playtech, among many others.
Difference #4: Country Restrictions
The majority of offshore casinos operate globally, listing few countries as prohibited in their terms and conditions. Access is usually restricted only from jurisdictions with zero or little tolerance for offshore gambling businesses that lack domestic licenses. Common examples include France, Great Britain, the Netherlands, and the US.
Some offshore casinos accept real-money bets from US customers, only restricting players from states with very stringent regulations like New Jersey, Nevada, New York, and Maryland.
On the other hand, domestically regulated operators normally impose multiple country restrictions since they only take action from the jurisdictions that have granted them authorization.
Difference #5: T&C Language
While exceptions do exist, some offshore casinos resort to ambiguous, unclear, and misleading language that aims to confuse customers.
This often causes players to violate the terms of use or bonus participation, which in turn leads to terminated accounts, retained funds, denied payments of winnings, and a host of other nuisances.
To draw a parallel, domestic regulators like the UKGC or the DGE require licensees to use comprehensible and direct language when describing their terms of use and bonus conditions for the sake of preventing any misunderstandings on behalf of players.
Difference #6: Payment Methods Range
Players at offshore casinos often face a limited range of options when it comes to deposits and withdrawals. The reason why is that many jurisdictions, including the US, prohibit local banks from processing payments to unauthorized gambling businesses.
Due to this, US players often have their card payments blocked and cannot use e-wallets like PayPal at offshore casinos. The alternatives are restricted to solutions like bank wire transfers, checks, gift vouchers, and decentralized cryptocurrencies like Bitcoin.
Common Risks Associated with Offshore Casinos
We like to emphasize that not all offshore-licensed online gambling businesses are fraudulent. On the contrary, some stand out with great longevity, boast thousands of satisfied customers, and have faced very few consumer complaints over the years.
With that in mind, we regret to say there are indeed some bad seeds out there. Some offshore casinos play on the lenient regulations of the jurisdictions that license them. This can result in various issues for players, including the ones we describe below.
Separating the Wheat from the Chaff
We said this earlier but it is worth reiterating. An offshore license does not necessarily point to a rogue operation. Many gambling businesses licensed in the above-mentioned jurisdictions care about their reputation and protect it through transparency and fair treatment.
Nonetheless, there are some rotten apples in the barrel and you better learn how to spot them if you plan on playing at offshore casinos. Spare yourself the trouble and go through the checklist below. If your chosen offshore casino (and any casino in general) ticks off most of the boxes, you better play elsewhere for your own sake.
- Excessively generous bonus offers with impossible-to-meet terms and conditions
- Obscure and deliberately confusing language in the general terms of use
- Impolite, unprofessional, and consistently inefficient customer support reps
- Complete absence of any licensing and regulatory information
- Very high withdrawal limits paired with multiple restrictions on payouts
- Consistent record of slow or denied withdrawals
- Poor feedback and multiple complaints by fellow players
- Generally unresponsive to complaints
- Absence of a dispute resolution service players can use to settle issues
- Blacklisted by multiple online casino review portals
