Netherlands Forcing Curaçao to Get Online Gambling Regulation Under Control

  • The Netherlands has been providing pandemic relief to Curaçao this year
  • The third wave of payments is conditional upon creating a real gaming regulatory system
  • Current Curaçao licensees follow almost no rules
  • Conditions include establishing an independent regulator and collecting fees and taxes
Large yellow and blue Curaçao sign
To continue to receive COVID-19 relief from the Netherlands, Curaçao must establish an effective online gambling licensing regime to replace the current one that has almost no controls. [Image: Shutterstock.com]

Conditions put on pandemic relief

Curaçao, long a haven for online gambling companies that prefer to avoid the gaze of industry watchdogs, may finally implement a proper regulatory system. Part of the Dutch Caribbean, the island nation has received financial support from the Netherlands to help get it through the COVID-19 pandemic. But now that support is coming with conditions, namely that Curaçao must get its online gambling licensing regime under control.

become more “financially, economically and administratively resilient”

The first two rounds of funding, called Landspakket or “Country Package,” had no strings attached. With the third round, discussed this summer, things changed. The Netherlands told Curaçao that it needed to make structural reforms to become more “financially, economically and administratively resilient” lest it not receive the third tranche of relief funds.

In October, Curaçao agreed to implement measures to crack down on financial crimes, including passing laws to authorize an independent regulator for its online gaming industry. Everything must be in place by March 1, 2021.

Need to control licensees

Curaçao technically has an online gambling licensing structure, but there is little to no actual enforcement of any rules. There are five companies, all telecommunications firms, that are called “master licensees.” They often try to make themselves looks like official regulators, but they still just licensees.

sites licensed in Curaçao are often among the worst actors in the industry

These master licensees, in turn, hand out “sub-licenses” to essentially anyone and everyone who wants one. The sub-licensees, of which there are thousands, operate with virtually no oversight. With some exceptions, sites licensed in Curaçao are often among the worst actors in the industry.

The third wave of relief from the Netherlands is contingent on Curaçao putting an independent regulator in place to rein in the licensees and ensure everyone plays by established rules. The regulator will have until September 2021 to enforce regulations, though with so many current sub-licensees just using Curaçao as a rubber stamp for their flimsy licenses, it is expected to be a daunting task.

Licensees must follow regulations

One rule that the new regulator will need to enforce is to make sure licensees abide by the laws of the jurisdictions in which they operate. Right now, most licensees don’t care – if a country does not permit operators not licensed within its borders from operating there, Curaçao licensees still accept customers from that country.

If Curaçao licensees do not go through the proper steps to follow regulations in other jurisdictions, they will be limited to mainly accepting customers from Curaçao itself, which only has about 160,000 residents.

The other major enforcement issue for the independent regulator is the collection of gaming taxes, corporate taxes, and licensing fees. The master licensees pay ANG240,000 ($133,770) per year for their licenses, but the sub-licensees pay their fees to their master licensees. On top of that, many sub-licensees operate out of other countries and thus don’t pay taxes in Curaçao. The government is cut out of the loop for most income it should be generating.

Curaçao wants to charge ANG7,500 ($4,180) for a sub-license and a 2% tax on corporate profits. It is estimated that if the independent regulator is effective in its efforts, ANG100m ($55.7m) could be injected into the federal government’s coffers each year.