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Sublicensing opportunities in global gaming

Yes, the recent experience of regulatory changes in Curaçao has made everyone involved nervous and shaken up the entire gaming business. Some holders of former licenses in Curacao were not ready for drastic and significant changes, so they were forced to consider alternative options. But despite the new obstacles in the gaming market, entrepreneurs are still constantly looking for effective ways to attract customers and expand their opportunities. One such way is sublicensing, a strategic practice that allows companies to reduce costs and bring their products and services to market quickly. In this article, we will consider the essence of sublicensing in gambling, its advantages and disadvantages, as well as the world experience of sublicensing.

 

What is sublicensing?

Gambling sublicensing is a process by which a gambling business operator grants another company (the sublicensee) the right to use its license for gambling. The main company remains the owner of the license and the controller of the activity, but the sub-licensee can use it under its own brand and for the purpose of carrying out its own gambling operations. A vivid example of sublicensing existed until recently in one of the most popular gambling jurisdictions - Curacao. Previously, there were 4 Master Licensees in Curaçao, it was a kind of monopoly, because no one except these 4 Master Licensees could issue sub-licenses. In practice, although the requirements for obtaining a sublicense in Curaçao were general, each master licensee could impose its own additional requirements, since the master licensee bears full responsibility for each company to which a sublicense was issued.

 Who needs it?

First of all, for companies just starting out in the gambling industry, sublicensing can be an attractive option, as it allows them to quickly enter the market without having to obtain their own license. However, also, companies that already have a successful gambling business and want to expand their capabilities can use sublicensing to introduce their brand to new markets or to develop new products. Or, for example, some companies may have limited financial or human resources to conduct gambling operations. Sublicensing allows them to use the resources of other companies to expand their capabilities.

Therefore, sublicensing has a number of advantages, such as:

• quick start, because sublicensing allows you to quickly enter the market, reducing the time for obtaining your own license.

• the use of a sublicense can be economically more profitable compared to the costs of obtaining one's own license and maintaining the gambling infrastructure.

• risk reduction, as the master licensee remains responsible for compliance with regulatory requirements, but the risks associated with gambling operations are shared between him and the sub-licensee.

However, as always, there are two sides to every coin. Although, at first glance, sublicensing looks like an ideal option for starting a business, this type of licensing also entails certain limitations.

So, for example, the interests of the master licensee and the sublicensee may not always coincide, which can cause conflicts and negatively affect cooperation.

In addition, sublicensing can raise legal issues, especially in regions where gambling laws are complex and changing.

International experience of sublicensing

Currently, one of the few jurisdictions available for sublicensing is the Isle of Man. The Isle of Man offers several types of licenses, with the option of both a full license and a sub-license. Isle of Man sub-licensing is designed primarily for operators with no prior business experience in the gambling industry who wish to operate B2C. Within this jurisdiction, the sublicense holder binds itself to the full license holder by signing an agreement. The main advantage is that the sublicense holder's registered players have access to the software or games provided by the full license holder. At the same time, the presence of a sublicense does not prevent its owner from applying for a Full license at any time. And last but not least, the annual fee for a sub-license is significantly less than for a full license at £5,250. By comparison, a full license that covers B2C activity, all types of games and enables partnerships with sublicense holders and offers White Label costs £36,750 per year.

Therefore, sublicensing in gambling is an important tool for companies that want to develop their business quickly and efficiently in this field. It can be beneficial for both newcomers and established brands but requires careful attention to regulatory aspects and a detailed analysis of potential advantages and disadvantages before deciding on sublicensing

 

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This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.

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