Why Costa Rica is a Prime Destination for Gaming Companies

When establishing an online gaming company, choosing a jurisdiction is one of the most critical decisions a business owner can make. Costa Rica, a vibrant and politically stable country in Central America, has emerged as a desirable option for gaming entrepreneurs. Despite the absence of a formal gaming license, Costa Rica offers a range of advantages that make it a prime destination for those looking to enter the online gambling industry. This article explores why Costa Rica remains a top choice for gaming companies and how its regulatory environment and business-friendly policies create an ideal testing ground for new ventures.

The Myth of the Costa Rica Gaming License

One of the most common misconceptions about operating an online gambling business in Costa Rica is the existence of a "Costa Rica Gaming License." Contrary to what some service providers might claim, the license does not exist! There is no formal regulatory framework governing online gambling in Costa Rica, and the government does not issue specific licenses for this purpose. Instead, companies can incorporate a business entity in Costa Rica with the objective of providing online gambling services to users outside the country.

A Business-Friendly Environment

Despite the absence of a gaming license, Costa Rica is highly appealing to gaming companies due to its business-friendly environment. The government takes a relaxed approach to online gambling, provided that services are not offered to Costa Rican residents. This allows companies to operate with considerable freedom without the burden of strict regulatory oversight.

Moreover, Costa Rica's legal system allows for the incorporation of a company with minimal bureaucratic hurdles. The process is straightforward and relatively quick. This ease of setup and a stable political climate make Costa Rica an attractive option for gaming companies looking to establish a foothold.

The Cryptocurrency Advantage

Costa Rica is particularly popular among gaming startups because of its progressive stance on cryptocurrency. The Costa Rican government has embraced digital currencies to the extent that employers are allowed to pay employees in crypto as long as the minimum wage is met in fiat currency. This openness extends to online gambling companies, which can operate using cryptocurrency without breaking local laws.

For gaming companies, the ability to accept and process payments in cryptocurrency is a significant advantage. It allows businesses to bypass traditional financial institutions, which are often reluctant to work with unlicensed gambling operators. Additionally, the use of cryptocurrency can attract a global audience, particularly in regions where fiat transactions are restricted or heavily regulated. Costa Rica’s crypto-friendly environment provides a perfect testing ground for companies that wish to explore the potential of digital currencies in the gaming industry.

A Strategic Sandbox for Startups

Companies can use Costa Rica as a "sandbox" to test their business models, software, and market strategies without the need to comply with strict regulatory requirements. This flexibility is invaluable for new entrants to the industry who want to experiment with different approaches before committing to a more regulated jurisdiction.

Startups can establish an online gambling company in Costa Rica, launch their platform, and gauge its reception among their target demographic. If the business proves successful, they can then consider applying for a license in a jurisdiction with a more developed regulatory framework, such as Curacao or Kahnawake. This approach allows companies to minimise risk and avoid the substantial upfront costs of obtaining a gaming license in a more regulated market.

Tax Benefits and Financial Considerations

The favourable tax environment is another major draw for gaming companies considering Costa Rica. Since Costa Rican law does not tax revenue generated outside the country, online gambling companies can operate without the burden of corporate income tax on their international earnings. This lack of taxation and the absence of a gaming license fee significantly reduce the cost of doing business in Costa Rica.

However, it’s important to note that the lack of a formal license means that traditional financial institutions, such as banks, are unlikely to open accounts for online gambling companies. This limitation necessitates the use of alternative payment methods, primarily cryptocurrency.

Due Diligence and Regulatory Compliance

Despite Costa Rica’s hands-off approach to online gambling, companies must still meet some compliance requirements. For instance, the law mandates that personal information about each shareholder and the ultimate beneficial owner (UBO) be disclosed to the Central Bank of Costa Rica. This information is not publicly available but must be updated annually and submitted through a secure platform.

Additionally, foreign nationals who own a Costa Rican gaming company must grant power of attorney to a local representative who can interact with the Central Bank on their behalf. While these requirements are relatively minimal compared to more regulated jurisdictions, they are essential for maintaining transparency and accountability within the business.

Potential Drawbacks

While Costa Rica offers numerous advantages, gaming companies should be aware of the potential drawbacks of operating in this jurisdiction. The most significant challenge is the inability to work with conventional payment providers, such as Visa and MasterCard. This limitation can make attracting a broad customer base difficult, particularly in regions where cryptocurrency adoption is still limited.

A Strategic Choice for Forward-Thinking Companies

Costa Rica’s unique combination of a business-friendly environment, crypto acceptance, and tax advantages make it an appealing destination for gaming companies, particularly startups looking to test their ideas in a low-risk setting. While the absence of a formal gaming license presents certain challenges, it also offers flexibility that is hard to find in more regulated jurisdictions.

Fast Offshore has been working in Costa Rica and online gambling for over two and a half decades; during this time, we have amassed extensive hands-on knowledge in all matters related to setting up and maintaining an online gaming company. We can provide thorough advice and assistance with all corporate matters in Costa Rica and other jurisdictions. If you’re considering starting an online gaming company in Costa Rica or you want an online gambling license elsewhere, let us help you.