Best Jurisdiction for a Sportsbook

[AdamSelene]

What is the best jurisdiction to incorporate a Sportsbook?

Not necessarily to base operations from, that can be subcontracted out to a Customer Service center in Costa Rica, or wherever is most convenient.

But a jurisdiction to create the corporation and registered office from which to book the revenue (nominal physical presence required).

Are there jurisdictions similar to the way Costa Rica was prior to the "special taxes", that had no specific leglislation or licensing for gaming, and therefore required only incorporation and a normal business license?

If the Asamblea Nacional passes the so-called "universal taxation" provisions in the proposed fiscal plan -- taxing Costa Rican Sociedad Anonimas (corporations) on all foreign source income -- then any sportsbook currently using a local S.A. to book wagering revenue will need to redomicile in another jurisdiction.

 

[wolfie_cr]

That question seems to be like "what would be the best place to incorporate a company", apparently Gibraltar is pretty good

You have the benefits of having an European corporation without the heavy taxes that countries like England impose to your revenue, also access to top notch banking systems

I think Grand Cayman or Turks and Caicos could be a good option as well but by being closer to the States I think they might be subject to heavy scrutiny in case the owner is an US citizen

 

[AdamSelene]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by wolfie_cr:
That question seems to be like "what would be the best place to incorporate a company"<HR></BLOCKQUOTE>

Actually that is specifically NOT my question.

I'm well versed in offshore jurisdictions. What I'm not versed in is legislation regulating, licensing or prohibitting accepting wagers in various offshore jurisdictions.

For example, Hong Kong is a top-rate offshore jurisdiction, however Internet wagering is strictly prohibitted.

Antigua, Netherland Antilles and Isle of Man have specific gaming licensing regimes; as does Gibraltar.

Panama, I've heard all sorts of rumors about their setup. For example that you must use approved software, and only IQL is approved??

Costa Rica became a primier destination because there was no red tape -- just incorporate and you're set to go, and a business with exclusively foreign source income doesn't even report financials, let alone pay tax on it. That may change.

Where is there another jurisdiction that does not prohibit gaming, does not have a licensing regime, and has a territorial tax system (does not tax foreign-source income)?

 

[AdamSelene]

There are purportedly operators in Nicaragua, Dominican Republic, and Jamaica. None have formal licensing regimes, but I am unaware of their tax regimes.

Bermuda bans wagering operations.

Does anyone know what the deal is with Panama?

 

[wolfie_cr]

ok but you are talking about subcontracting the customer service as a possibility, you can effectively have a corporation in Gibraltar that does only act as a management company and subcontracts the betting operation to a different company or am I missing a point here?

If the customer service (That for all reasons and purposes is the visible part of the operation) is in say Guatemala and you have the "main operation" elsewhere what would matter is the laws in Guatemala regarding the operation of the call centers

The licensing regimes apply AFAIK to having employees that actively take the wagers which would be for all reasons and purposes the customer service staff

 

[wolfie_cr]

Malta and Cyprus could be researched, as far as Latin America I doubt few (if any) countries use the "global rent" model

 

[AdamSelene]

Malta has a pending licensing regime, no operators AFAIK, as does Seychelles. Can't find info on Cyprus.

What's the "global rent" model?

 

[wolfie_cr]

"global rent" was my translation from spanish to english of your term "universal taxation"

I doubt that it will pass in the Asamblea Legislativa and even if it does, they can't even tax properly from money already in Costa Rica, they will not even know where to begin looking for money offshore

Cyprus has one operator at least that I know

Also I heard/read somewhere that Uruguay and/or Chile were thinking about setting laws for taxing/regulating internet betting so those two might be off the list

 

[AdamSelene]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by wolfie_cr:
ok but you are talking about subcontracting the customer service as a possibility, you can effectively have a corporation in Gibraltar that does only act as a management company and subcontracts the betting operation to a different company or am I missing a point here?
<HR></BLOCKQUOTE>

Certainly you could setup a separate management company if you wanted/needed to, wherever -- although such companies in Canada have been prosecuted as effectively running the operatations of their subsidiaries/contracteees.

The question is where to setup the company that
is legally booking the wagering revenue.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>The licensing regimes apply AFAIK to having employees that actively take the wagers which would be for all reasons and purposes the customer service staff<HR></BLOCKQUOTE>

Not necessarily true, but that's an important distinction.

For example, this may be true of Costa Rica or Panama (CR's current tax is based on number of employees); therefore these may still be good jurisdictions provided no physical operations there.

However, other jurisdictions, such as Antigua, license/regulate Internet wagering specifically. Online Casinos have no "employees actively taking wagers."

To setup the booking company in Antigua and customer service in Costa Rica would not help, as you'd fall under the licensing regime of both countries.

 

[wolfie_cr]

Back in 2000 there was ONE antiguan bank that used to deal with gaming (SwissAm that later changed their name), since then they don't even want to touch gaming with a stick that is certainly not a regime that could be used for both accepting revenue and running the customer service operation

Many sites have a corporation set up in Europe to deal with processing banks (Acquirers) of the top of my head Paradise Poker does have such a "subsidiary", they dont need a gaming license per se for doing that even though Gibraltar does have licensing laws if you actually run the entire operation there

The problem from my point of view is what is "accepted" as a normal business operation, in Latin American countries gaming are considered "evil" while in Europe they are perfectly normal businesses, the minute they see big money starting to flow and they see that you are somehow involved in "offshore betting" they might freak

Setting up an office to take wagers/answer customer service emails/process their payments/ answer customers questions in a country that does not (as of now) have a law banning egaming and a financial office in a secure place might be the best way, I supose that you can find many countries in the Latin American area that do not have gaming licenses as of now but the minute they see two or three shops proffiting they will set a law really quick to catch some bucks

As a start may be these guys http://www.redseamanagement.com might be helpful telling you which countries have universal taxation and which don't, they are even on your side of town

 

[AdamSelene]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by wolfie_cr:
"global rent" was my translation from spanish to english of your term "universal taxation"
<HR></BLOCKQUOTE>

Ah, that's what I thought.

I'm uncertain that is true though. I know Panama and Costa Rica don't tax residents on foreign-source income (which is why they are top destinations for expatriates); but I thought the list of such countries was very small.

 

[wolfie_cr]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> I thought the list of such countries was very small. <HR></BLOCKQUOTE>

That would be interesting to know however the end result of having both no gaming license and on top no tax on foreign source revenue might be very small

It will probably be a matter of a couple of years at current rate before all viable countries have egaming taxes, also even if both conditions are fulfilled the place might not be suitable at all to run the operation either because of lack of proper human resource or lack of infrastructure

 

[wolfie_cr]

thinking about partypoker that have their customer service in India I wonder how are the laws there regarding universal taxation

I know they recently passed a tax specifically on call center services (taxing whoever handles dell,IBM etc support services)

party poker also has a financial subsidiary in Gib

 

[AdamSelene]

Forgive me, I've been ill and not running on all mental cylinders.

Setting up a parent/holding corporation in a tax-efficient jurisdiction, and then setting up an operating company as a subsidiary, and one or more financial processing subsidiaries; will accomplish the goal.

I was trying to avoid the financial subsidiaries, as setting up processing as a third-party seems cumbersome.

I also presumed the parent and/or processing companies would necessarily fall under any regulatory/licensing regime, but it appears that may not be the case in many jurisdictions.


So what is the best jurisdiction with a licensing regime?

Anyone know anything about Panama?

 

[AdamSelene]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by wolfie_cr:
thinking about partypoker that have their customer service in India I wonder how are the laws there regarding universal taxation
<HR></BLOCKQUOTE>

Doesn't matter, customer service is a cost center, not a profit center. Just as the the CR fiscal plan wouldn't force anyone to move their operations, just move their profit center (see above).

Customer support that is *pure* support, not wager placement nor line management, can be outsourced to real customer service centers anywhere.

 

[WildBill]

On paper, I think Belize is probably by far the best. Their incentives are strong, they have theoretically good secure banking as well. In practice it hasn't gone so well. Its next to impossible to get employees to go down there and stay and the infrastructure is just plain horrible. As long as the current thinking lasts, it is nice to have a jurisdiction that has government representatives out actively recruiting, but who knows if other administrations will do the same.

I know a couple of guys down there and they say its the pits living there though, it is a place to save up some money (because you won't spend anything there) and enjoy the climate...then get the hell out in a few years once you can't take it anymore.

 

[wolfie_cr]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> Customer support that is *pure* support, not wager placement nor line management, can be outsourced to real customer service centers anywhere <HR></BLOCKQUOTE>

that applies for casinos/bingo/poker sites assuming that customer service is not in charge of collecting western unions

the thin line would be defining what cases require you to have a license for egaming and "where" is the wager taking place

I am not sure of the following for example

1) if company A has financial operations in a country where there are egaming taxes BUT not real staff because its outsourced elsewhere you would not need an egaming license (I am 80% sure that is the case almost everywhere)

2) if the servers are merely hosted in a country where there are egaming taxes but again there are no operations you would again not need it (this is pushing luck a little but I am 95% sure of that at least as of now)

3) even if its *pure" support, the fact that you are effectively having active part in the wagers even if it is to handle customer inquires you would NEED such license, CR law for example talks about call centers that "link" electronic wagers, there was a 1995 ruling that said that the transaction was legal as long as the money never touched CR soil so now it would be interesting that even though they dont want the money "here" they may want to tax it as "foreign source revenue" as part of universal taxation



the situation if my assumptions are true would mean that you simply set up a financial company that collects the revenue in a tax heaven and put (or outsource) your customer service operations to any country (preferably one without gaming taxes)

It all depends what do you consider to be where "the operation is", I know of a few companies that effectively "point the finger the other way" and in essence they are nowhere

 

[wolfie_cr]

I wrote a bunch of stuff only to read the post before the last one

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> I was trying to avoid the financial subsidiaries, as setting up processing as a third-party seems cumbersome <HR></BLOCKQUOTE> ,curbersome and very expensive, in Gibraltar you need an "actual" office, they dont allow situations such as when you could have 1000 corporations all having as an address/phone number an office where the accountant/lawyer would handle paperwork

you need effective presence at least there, in Grand Cayman who knows

About Panama it was rumored that you had to pay a 500k bond (now I am not sure about that) and that you would have to use approved software but obviously you can submit your own software for evaluation and in case it passes you could use it

In my opinion the "best" licensing regime is "none at all" , next one after that would be "the cheapest available", in America (the continent) not one country has REAL regulations where a player could submit a complaint and have the "gaming commision" to arbitrate, time after time there have been disasters in all countries where having a "gaming commision" made no difference at all so there is no difference when it comes to the players and regarding operators its simply another bill so no real benefit there either



Also the politicians of all countries specially in this area of the world get greedy and you could have a raise of the fee every year (3 years ago there was a number of sites that left Antigua for that very reason , they were thinking about taxing you with 3% tax retroactive a year or so plus the 100k dollars that you had to pay)

if India has no licensing regime thats the best in my opinion

 

[wolfie_cr]

wildbill, from what I have heard on several occasions belize banking is no longer friendly to egaming operations

 

[AdamSelene]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by wolfie_cr:
2) if the servers are merely hosted in a country where there are egaming taxes but again there are no operations you would again not need it (this is pushing luck a little but I am 95% sure of that at least as of now)
<HR></BLOCKQUOTE>

Yeah, "offshore hosting" is a big scam. People try to sell you offshore hosting, trying to claim the servers are where the business is. Never.

The United Kingdom has been very explicit that hosting in the U.K. in and of itself never constitutes domicile. The only country to claim the opposite is the United States; which claims jurisdiction over everything anywhere anyway.