Costa Rica Jurisdiction profile
Costa Rica description
Located in Central America, Costa Rica is home to over 200 gaming and betting operators. These companies started showing an interest in setting up offshore businesses around the mid 1990’s, after the creation of internet gambling. Most of these companies were attracted to Costa Rica for a variety of reasons, including the educated, bilingual staff, a tolerant government, a diversity of goods and services and a good telecommunications infrastructure.
The situation in Costa Rica regarding online gambling is quite complex. On the one hand, local citizens are not allowed to take part in any form of gambling, including online gambling. On the other hand, there is no specific legislation governing online gambling, despite the large number of operators in the country. The Costa Rican government believes that as long as the services offered by these operators means that the physical act of gambling does not take place within the country’s borders, they have no problem with the issue.
Because of the lack of legislation surrounding online gambling, operators are not subject to any form of monitoring, testing or regulations, as they would be if they were dealing with tougher offshore governments. Nor is there any official taxation for betting of gaming, and instead companies operate under a ‘data processing’ license.
In recent years, world media has touted Costa Rica as the “Mecca of Offshore Wagering”. This increased media attention has forced the government to address the complexity of the issue once and for all, with the need to decide between two different paths – to prohibit new and existing companies from operating in the country altogether or to regulate the industry and create new legislation in the process.
In 2007, a new bill was passed by the Costa Rican government that would essentially tax sportsbook and electronic betting companies based on the number of employees on their payrolls. The fee ranges from around $20,000 for a company that employs ten staff members, to nearly $55,000 with more than 61 staff members on their books. In this way, the government is not directly taxing the industry per se, but is still managing to fill its coffers from these betting operators.
The country is also in the process of developing a licensing scheme that would demand that online gambling companies register with the Ministry of Economy, Industry and Commerce.
To create an online casino business in Costa Rica, operators need to take a number of steps in order to fulfill the standard requirements. Firstly, they need to create a corporation in the country, with a physical address, and provide network administration or intranet administration. Secondly, operators need to block all IPs located in Costa Rica to ensure that no citizens can access and play at the site. Thereafter, an offshore merchant account should be opened.
Operating an online casino is not illegal in Costa Rica as long as local citizens don’t gamble at these sites, the games don’t take place physically in the country and all financial transactions are properly accessed and take place outside the country’s borders.