Costa Rica

If we were to look into the definition of the term “jurisdiction”, we would have found a number of different sources — legal textbooks, dictionaries, guidelines — leading us toward a similar definition.

Let us take the authoritative Oxford Dictionary, for example. It says that jurisdiction is “the official power to make legal decisions and judgments”, “a system of law courts; a judicature”, and “the territory or sphere of activity over which the legal authority of a court or other institution extends”.

Building on this comprehensive explanation, if we were to set the criteria to evaluate an online gambling jurisdiction, we could define them as:

•  Implementation of existing gambling laws;
•  Efficient presence of national regulatory body;
•  Established professional procedures for operators’ business;
•  Systematic quality control and evaluation of gambling practices.

Speaking with the benefit of industry and the players in mind, it would be difficult to describe such principles as an unprofessional. To the contrary. Majority of the world’s leading jurisdictions are based on the very same standards.

And IF we were to apply them to the letter, we would have found it challenging to fit Costa Rica iGaming jurisdiction to this frame.

Some may say that we don’t live in such to-the-letter world, but then again, go and tell it to the player with grievances in need of redress, and you’ll get quite the opposite opinion.

Since Costa Rica is nowadays the major hub for online gambling, we are introducing you to its jurisdiction so you can have the complete picture of iGaming market in this beautiful Central American country and nation.

Legal Framework

The Costa Rica gambling, in general, is regulated by Ley de Regulación de Apuestas, Casinos y Juegos de Azar (Expediente N.° 17.551), the Costa Rican gambling law enacted in 2010.

The law prohibits native citizens to gamble for real money at land-based casinos and allows them to play in online casinos as long as they’re not licensed in Costa Rica. Foreigners are welcome both online and on the ground.

On the other hand, legal stipulations to establish and run any kind of company in Costa Rica are regulated by Código de Comercio (N.° 3284), the Commercial Code of Costa Rica.

Type of business entities available for aspiring online gambling operators are:

• SA (Sociedad Anonima), an equivalent of a Limited company; and,
• SRL (Sociedad de Responsabilidad Limitada), the equivalent of an LLC.

LLC is the most common choice since it, conveniently enough, offers protection from claims against personal assets. The minimum share capital is not defined, although a minimum of 25% of the issued capital must be paid upon incorporation.

Tax-wise speaking, the tax legislation says that if a business entity generates revenues outside Costa Rica it is tax exempt. Since only revenues made within Costa Rica are subject to tax authorities, iGaming operators don’t pay taxes nor any additional gaming taxes.

Enforcement-wise, Costa Rica Gambling Commission is the regulatory body with a mandate to develop legislation that regulates the market and, in addition, to control and supervise gambling practices.

Licensing

So, to become part of the Costa Rica jurisdiction that enables operators to target global online gambling market the aspirants will, therefore, follow these steps:

• Establish LLC or invest in the existing local company;
• Activate offshore accounts and banking services arrangements including payment processing channels;
• Open a physical office in Costa Rica;
• Procure an online gambling license; and
• Start operations.

This is where things become interesting, to say the least.

License for online gambling is actually…

…the data processing license issued by a selected local municipality (municipalidad).

The license is not given at the state level nor obtained through any centralized channel. Therefore, it is not only safe but also prudent to say that…

…the online gambling license in Costa Rica jurisdiction is NOT a gambling license in a true sense of the word.

License fees vary based on the specific needs, but go between $5,000 and $10,000 per year with an additional quarterly license fee of ~$100 per period. Estimated duration of the process is one month.

The license is accepted by most of the online processors in the world.

Upon obtaining a license, the operator is no more subject to supervision from authorities. The data processing license itself is not regulated by Costa Rica Gambling Commission.

There are, however, certain restrictions.

It is desirable to block Costa Ricans IP addresses from accessing operator’s servers, but this can be circumnavigated by keeping servers in another country. Another one is to be careful in targeting US players though not because of local but due to US laws.

Once the operator goes through the process it is ready to go alive.

That is all it takes to run an online casino in Costa Rica. All that’s necessary to host worldwide players, to manage their money — emblazoned with their skills, knowledge, hopes, and wishes — and to become the sole ruler of their luck.

Player Protection

What is advertised by local and specialized law firms as the “low level of difficulty” to attain online gambling license is fundamentally done at the players’ protection expense.

In fact, measured by this category, one might argue that Costa Rica jurisdiction is an oxymoron. If this might appear to be a harsh comment, let’s see what we do have here:

• There is no quality control on software code, algorithms, RNG procedures, or source code testing procedures, nor are integrated software payment solutions audited;
• It appears that there are no documented assurances about the configuration of payout tables, odds, nor any inspection, test, and certification of payout tables;
• No reportable information has to be provided by operators to the governing body when it comes to relevant financial data, duration of a session, equipment, identification of software version, nor business processes and practices;
• There are no communication guidelines regarding marketing messages the players;
• It appears that self-exclusion is not available and the players are without any specialized support service for problem gamblers in place.

With the not-so-agile Costa Rica Gambling Commission, the operators are left to self-regulate themselves in a business ecosystem that is enticing to anyone. And that is the issue.

To-the-letter Revisited

In fact, that is a serious issue.

It gets even more compounded when you add cryptocurrency into the mix. Based on the decentralized network with very peculiar regulation, cryptocurrencies are thriving choice for online gamblers in regulated jurisdictions. But here, in Costa Rica, players just may find themselves in…

…no man’s land.

So much that you can find a number of websites not recommending you to play at Costa Rica jurisdiction at all. Therefore…

…yes, we found it demanding to fit Costa Rica iGaming jurisdiction into worldwide standards.

We even found it challenging to connect this jurisdiction with goals, missions, and visions of a reputable online jurisdiction that places the following values first:

• Players’ empowerment;
• Utilizing technology advances to both players and casinos benefits;
• Rewarding the best operators with appropriate market shares; and
• Creating the community based on fairness, responsibility, and maturity.

To be just, there are online casinos in Costa Rica that fit this bill — to the letter. They are on par with worldwide standards and criteria. Unfortunately, they are in minority. Like, endangered species kind of minority.

Therefore, choose wisely from our list of online casinos licensed by the Costa Rica jurisdiction, pay attention to their rating, and to our members’ experience before you deploy your valuables — and more importantly, luck — into unknown.