Gambling law in Cyprus – Recent Gaming Bill Proposals
Gambling Law in Cyprus
All companies that actually run an online sportsbook and casino operation are offshore (not within Cyprus). It is best to check with the laws of the country your company is in for authority to own and operate a casino. Also, it is worthwhile to look at the TAX structure.
A GAMING LICENSE IS REQUIRED from the state/country you are based in order to take wagers on the internet. Some governments do not require a gaming license, while others do.
The Collective Gambling Regulation Act 75 (I) 1997 regulates the operation in the Republic of Cyprus of the Sports Betting Providers and imposes taxes for the said bets. As the law stands now, a limited liability company that is registered in Cyprus with exclusive purpose to operate as betting company and accepts collective bets, and it’s issued and paid up share capital is minimum €170.100, can apply to the Cyprus Ministry of Finance to obtain a licence to operate as a betting provider company.
- Requirements to obtain a betting provider licence
The application to obtain such a licence must be filed until the 30th of September of each year and such licence is issued by the Minister of Finance (approximately €8.000 should be paid with the deposition of the application to the Ministry).
In order for a betting licence to be issued, the following are required:
a) The applicant company should be registered in Cyprus according to the Companies Law Cap.113.
b) An agreement between the applicant company and the betting company should be presented. The said agreement shall state that the applicant company is duly authorized by the betting company to act as its representative and accept on its behalf and for its account collective bets.
c) The applicant shall submit a bank guarantee from a Cyprus Commercial Bank for an amount of money defined by the Minister of Finance and which cannot in any way be less than €340.000. Pursuant to the Bank Guarantee, the Bank undertakes to pay any amount of money to any person who participated in a betting game and won. According to the law under certain circumstances the submission of the said Bank Guarantee might not be necessary.
d) The applicant shall submit a bank guarantee from a Cyprus Commercial Bank for an amount of money defined by the Minister of Finance and which cannot in any way be less than €51.260. Pursuant to the Bank Guarantee, the Bank undertakes to pay any amount of money to the Government of Cyprus that the applicant is obliged to pay as taxes according to the Law.
- Online Betting – legal gap in Cyprus
On the other hand, there is not any law – regulations regarding online betting and/or gambling and the requirements for someone to qualify for a licence to operate and/or promote such games are not straight forward.
However, a Bill is currently being prepared, by the House of Representatives, that will regulate online betting and offer control over gambling; however it will not ban it.
According to European Law (Cyprus is member of the EU since May 2004), it is very difficult to ban online gaming, because it affects the free movement of services. However, justified restrictions to the free provision of services could be compatible with EU Law under some circumstances. It remains to be seen when and whether the said Bill will become an Act and how it will regulate the said section of services.
- Conclusion
In 2007, the Cypriot government began preparing a bill that would impose a stricter set of rules for the licensing of online gaming in their country. A previous bill had been submitted to Parliament in 2006, but it was soundly rejected by the parties involved.
After months of waiting for a decision, the Cypriot cabinet has approved a controversial draft bill that will ban most types of online gambling. Conclusively, as the law stands now, it is to be said that a Cyprus Company can, under certain circumstances and if it fulfills the requirements set by the law, obtain a licence to operate as a betting provider. The Bill provides for the creation of a gaming board that will regulate betting within Cyprus.
To ensure that the government does not incur loss of tax revenue, the Bill designates that licensed gambling venues on the island will be taxed at 3% of turnover instead of 10% on profits. And to show how serious the Cypriot government is about the ban, punitive measures are included, with fines of up to EUR 170,000 or a five-year prison term or both.
However, due to the gap in the Cyprus Law regarding the matter of online betting it contains risks for someone who wants to proceed with it. The Gaming Bill is full of holes and cannot be implemented effectively as it stands. Prosecution for illegal betting, implementation of legislation, handing out licences, suspension or revocation of licences and regulating personal licences are only some of the gaps in the Bill.
Cyprus Lawyers N. Pirilides & Associates LLC (http://www.pirilides.com/)