There are many types of industries and business verticals that are considered high risk by financial institutions and card networks. They range from the seemingly innocuous, such as subscription boxes and events, to the more obvious such as online gaming, the adult industry and CBD/THC products. They are considered high risk for several reasons, but the most prevalent is that these types of businesses typically have an elevated risk for chargebacks.
When we talk about offshore and onshore, we refer to where the business is registered to operate. The term ‘onshore’ refers to tier one countries, such as The United States, Canada, Australia, New Zealand, The United Kingdom, Germany, France, Switzerland, Austria, Sweden, Finland, Norway, Belgium, Spain and Italy. The term ‘offshore’ refers to territories and countries typically considered as tax havens, such as Panama, Malta, Caymann Islands, Curacao and Costa Rica.
So why would you want to have an offshore business? Well, there are many reasons, here are just a few examples:
- The tax entitlements may be more attractive than in your home country
- The income could be tax free
- The costs of starting the business could be lower
- There is more privacy and confidentiality
- There may be limited liability for business owners
- There may be specialist industries that the host country actively encourages and provides excellent services and regulatory bodies for
- There could be better business opportunities than in your home country
- And lastly – it may not even be possible to trade in your chosen field in your home country.
While many high risk industries may be perfectly legal in a particular country or jurisdiction, certain other industries may not be.
A prime example of this is online casinos. From a legal perspective, physical or online casinos may not be legal in your region, either entirely or in part. For example, it may be that online casinos are legal in one territory in a country, but not in another territory in the same country, and it may not be permissible to use the services of the online casino if you do not live in that territory. An offshore online casino is a viable option for both players and operators, as in most instances there are no laws against depositing and playing in an offshore online casino. Of course, there may be exceptions to this and you should always ensure that you abide by the laws of your local jurisdiction.
Online gaming is very lucrative and going from strength to strength, with some predictions of the global online gambling market reaching as much as 160 billion USD by 2027. Betterments in technologies, especially mobile devices, cryptocurrencies, internet access and broadband speeds are also major factors in the growth of the industry as players now have more options than ever before.
Several countries such as Panama, Malta and Curacao have seen the huge potential in the online casino market and have invested heavily in encouraging online casino businesses to set up in their regions, offering very attractive financial benefits and excellent regulatory standards. These countries and territories are working very hard to ensure that the online casinos that they register operate at a very high standard, making customers feel safe as well as providing an excellent business environment for the operator.
There are several advantages in setting up an offshore casino business, for example:
- Flexible and affordable licensing options
- Excellent regulatory standards
- Easier access to financial services
- Tax optimization
- Prestige, reputation and legitimacy
- Streamlined setups
- Variety of payment options
- Lower overheads
- Customer convenience
- Wide game variety
Setting up an online casino business is not a cheap endeavor, and businesses need to invest heavily in web and game development, marketing, IT and cyber security, to name just a few things. It is however a lot cheaper than building a brick-and-mortar casino.
If you are seriously considering getting into the online gaming industry or expanding your existing business to include an offshore model, talk to us at Baers Crest about the offshore licensing options that could be available to you.