Electronic Betting (On-line Betting)
Cyprus Republic enacted in 2012 Betting Law (106(I)/2012), the relevant law which applies to the supervision of sports betting. The National Betting authority (‘NBA’ www.nba.gov.cy) is the regulator for all betting activities, land-based and on-line.
As per August 2012 the NBA issues licenses for land-based (Class A) betting services, for bookmaker’s licenses and authorised representatives. Particularly it has issued 10 Class A licenses currently and a number of authorised representative’s licenses.
Very recently the NBA announced that on the 1.10.2016 and onwards will accept Class B applications for licences. Class B bookmaker’s license will apply for the provision of betting services on line. It is quite significant to note that persons or entities who hold licenses to process electronic bets issued by a member stated in the European Union, will be prohibited to provide betting services and to operate within the context of the law unless they will submit an application to obtain a licence in accordance with the provisions of the Law within one (1) month from the notification of the date, the Authority accepts applications, thus until 1.11.2016.
- Application for a License
2.1 Who can apply for a Class B license to provide electronic bets
In Cyprus, in order to operate electronic bets, an entity does not necessarily have to be registered in Cyprus or be a locally formed private company. An application for a Class B bookmaker’s licence may be submitted by a company with shares, established abroad and which has a branch (overseas company) in the Republic of Cyprus, and its main activity is to carry on bets and its issued and paid up share capital, is at least five hundred thousand euro (€500.000,00). Such company Law (Cap. 113) and need to maintain a local managing director.
An application for a Class B bookmaker’s licence is accompanied by a bank guarantee from a commercial bank conducting banking business in Cyprus or in a member state of the European Union or a cooperative bank, for five hundred and fifty thousand euro (€550.000,00), the validity of which extends for a period expiring six (6) months after the bookmaker’s licence applied for, expires.
The applicant for a Class B licence, in addition to his application, submits particulars and information concerning his obligation as to installing a back-up server in the territory of the Republic of Cyprus, which shall be simultaneously linked with the main facilitator and which shall deposit in real time the particulars and information established by the Authority, including a computerised support system of the same. The use and technical specifications of the electronic equipments are established and may be revised by the Authority.
In order to facilitate the submission, process the NBA has only recently issued directives 13-16/2016 which provide guidelines for all the applicants. Particularly, directive 13/2016 provides materials and information as to installing a back-up server as well as for the use and the technical specifications of the electronic equipment. Directive 14/2016 provides guidelines concerning the website that the prospective applicant should maintain and the obligation to maintain a specialised website, accessible only through internet addresses ending in ‘.com.cy’. Directive 15/2016 provides the minimum terms and regulations that the Class B applicant should satisfy when providing betting services, which in the opinion of the Authority, should ensure satisfactory protection to the player while Directive 16/2016 gives information regarding the method that the books should be recorded as well as the time that statements should be submitted to the NBA by the licensee.
Finally, each applicant should according to the law pay a fee fixed at thirty thousand euro (€30.000,00) for a one (1) year licence and forty-five thousand euro (€45.000,00) for a two (2) year licence.
2.2 Summary of applicable time limits, suspension and revocation
A Class B license shall be subject to renewal every year or two year, depending on the validity time of the initial application and on the fee paid. NBA could suspense the licence for a period of 6 months, if without any justification the Class B bookmaker violates the terms of the license and/or omits to comply with its economic obligations.
Finally, NBA has the power to revoke on the condition that Class B bookmaker violates the provisions of article 22 of the national law.
2.3 What restrictions are placed upon any licensee?
A Class B license holder providing electronic betting services remains liable and responsible at all times for its operations and should comply at all times with the law and directives of the NBA.
Licensees should refrain from operating online casinos services, providing betting exchanges services, spread betting services as well as services carrying dog races.
2.4 What are the tax and other compulsory levies or contributions?
Article 71 of the current legislation imposes an obligation on every Class B licensed bookmaker to pay gaming tax and a contribution to the Authority in relation to the bets carried out by.
Particularly, the amount of betting tax, in every accounting period, amounts to ten per cent (10%) on the net proceeds from the licensed Class B bookmaker’s bet for the corresponding period. Further to the gaming tax, the Class B licensed bookmaker pays as a contribution, amount to three per cent (3%) of the net proceeds from bets from a Class B licensed bookmaker for the corresponding accounting period which is distributed accordingly and as provided for the strengthening of the youth teams and a fraction for the protection of minors.
2.5 What are the broad social responsibility requirements?
Minors are not allowed and are prohibited to maintain account and register as a betting player. Therefore, Class B licensed bookmakers should require personal data information from all applicant’s so as to verify their age.
Further, 1% of the said payable contribution should be invested for the making and strengthening of programmes and mechanisms for the protection of minors as well as of ‘pathological’ betting players.
2.6 How do any AML financial services regulations or payments restrictions restrict or impact on electronic betting companies?
Based on the AML law, a service provider is forbidden to enter into a business relationship or to carry out a transaction if (1) it has not performed a customer due diligence, (2) it is not able to carry our customer due diligence or (3) the results of the customer due diligence do not comply with the requirements.
Furthermore, article 56 of betting law stipulates that a Class B bookmaker extends the due diligence obligations of the service provider to the betting service provider or Class B bookmaker as well. The following information needs to be provided so as a player could be registered: (1) Certification and proof that the payer is over 18 years old;(2) identity of the player;(3) place of residence of the player;(4) valid email address;(5) declaration that the player has accepted the terms and conditions of betting provider. The Class B bookmaker should at all times maintain in an electronic form, secured list of the players and of their personal information. Failure of the Class B bookmaker to comply with the law is punishable with imprisonment and/or monetary fine under the AML law, the criminal Law as well as the betting law and added to that, the NBA has the power to suspense and/or revoke the License.
In general, NBA’s systems of AML preventive measures is yet incomplete and lacks coherence and effectiveness and it is indeed that the regulation situation will improve any time soon.
The NBA shortly will issue the first on line betting bookmakers’ licenses and expects and aims to represent one favourable betting and tax regime. It is expected that such move will attract a number of the international players-entities in the sector which are expected to apply for such a license. It is to be noted that the NBA will need to create conditions of proficiency and certainty and therefore will need to conclude and improve the regulatory and legislative situation any time soon.
Our teams are ready to discuss the above developments with you and offer support and advise for the implementation of your business scheme.