The Isle of Man is a self-governing British Crown Dependency in the Irish Sea between Great Britain and Ireland. The island lies roughly equidistant between England, Ireland, Scotland and Wales.
The Pool Betting Act (Isle of Man) 1961 was introduced in 1961 to provide a legal framework for the operation and supervision of pool betting schemes and was subsequently updated by the Pool Betting Act (Isle of Man) 1970 to address the evolving regulatory landscape.
The Betting Act 1970 was introduced a decade later to govern various aspects of betting activities such as licensing requirements, regulatory measures and compliance standards for operators.
The Gaming (Amendement)Act 1984 amended and refined the regulations with a focus on fairness and integrity within the gaming sector.
The Casino Act 1986 (CA 1986) was enacted to provide comprehensive regulation for the operation of casinos on the Isle of Man, covering licensing, operational standards and consumer protection. The Casino Regulations 2011 introduced further regulations in accordance with the Act to provide for the operation and control of casinos and set out a list of prescribed games that may be played in the gaming room of a casino
The Gaming, Betting and Lotteries Act 1988 (GBLA)) consolidated regulations related to gaming, betting and lotteries into a single regulatory framework.
The National Lottery Act (1999) established a legal framework for the operation of the national lottery on the Isle of Man, outlining rules, regulations, and oversight mechanisms.
Online gambling activities are regulated by the Online Gambling Regulation Act 2001 (OGRA), which introduced a regulatory framework specifically tailored to online gambling activities.
In 2001, the 1988 Act was amended and adapted with the Gaming, Betting and Lotteries (Amendment) Act 2001.
The Gambling (Amendement) Act 2006 introduced various amendments and enhancements to the existing legislation to address emerging challenges.
Gambling Supervision Act 2010 was enacted to establish the Gambling Supervision Commission, further reinforcing the regulatory framework.
It was followed in 2018 by the Casino (Amendement) Act 2018 which was enacted to contend with contemporary issues related to casino operations and ensure the regulatory framework remained responsive to industry changes.
Finally, the Gambling (AML and CFT) Act 2018 was enacted to combat money laundering and terrorism financing, introducing measures to strengthen the integrity of financial transactions associated with gambling activities.
A number of other important regulations under the various Acts complete the regulatory framework. They may be found here under ‘Regulations’.
The Gambling Supervision Commission is an independent statutory board established in 1962. In addition to the licensing and regulation of land-based gambling operations (casino, amusement and slot machines, betting offices and lotteries), the Commission also regulates all online gambling activities.
Similarly to other regulators, the Gambling Supervision Commission upholds a number of core principles which include ensuring a crime-free gambling industry, protecting the young and vulnerable and guaranteeing that services provided by licence holders are fair, with players receiving their rightful winnings.
All forms of online gambling and gaming are potentially licensable under OGRA with the exception of spread betting (regulated by the Isle of Man Financial Services Authority), as set out in the Online Gambling (Prescribed Descriptions) Regulations 2007.
Licences are issued for a five-year duration, with the Gambling Supervision Commission retaining the authority to revoke it at their sole discretion should any terms be infringed upon.
Various licence types are available under OGRA:
Full Licence
The Full Licence can be considered the ‘standard’ licence. Full Licence holders register their own players, keep their player data and are responsible for the related anti-money laundering (AML) and know your customer (KYC) requirements. Full Licence
holders may allow other businesses to sub-licence or white label under them, with no limitations as to their number.
Sub-Licence
Sub licensees must enter into an agreement with a Full Licence holder in order to operate and can only offer games they have produced in-house and/or games the full licensee has the rights to offer. White label services can be offered by sub-licensees, where they handle player data and are responsible for their AML and KYC compliance as though they were a Full Licence holder.
To qualify as a sub-licensee, the operator may only use the services of one Isle of Man-licensed software/platform provider at any given time.
Network Licence
A Network Licence operates in precisely the same manner as a Full Licence, however Network Licence holders have added B2B options providing opportunities to sub-licence and White Label.
Network Licence holders can enter into agreements with operators located in other jurisdictions (Network Partners). Network Licence holders can then allow the Network Partner’s registered players to play their games without being required to re-register them. They also do not have any AML or KYC responsibilities for these players, as this responsibility lies with the Network Partner.
No fees are due to the Gambling Supervision Commission (GSC) for adding Network Partners, however the Commission will need to be reassured about the Network Partner’s control systems before being added. Network Partners are not liable to pay any duty or fees to the GSC – normal practice is for a revenue sharing agreement between the Network Licence holder and Network Partner to be in place.
Software Supplier Licence
If the proposed business model involves selling B2B services to other iGaming businesses, the operator may elect to apply for the Software Supplier Licence.
This licence is optional rather than mandatory, however many software businesses choose to become licensed in order to demonstrate adherence to Isle of Man standards, giving reassurance to B2B partners such as operators, banks, payment processors, investors, shareholders and others.
With this licence a software supplier can list their products as approved on the GSC’s website and any Isle of Man B2C operator can then deploy these games on their site without needing to acquire RNG testing certificates which will already have been supplied to the GSC by the software supplier.
This licence-type may also apply to other service providers in the gaming industry such as aggregators.
Some of the standard licence conditions such as server location, KYC and AML do not apply to the Software Supplier Licence, as long as no player data is held.
No gaming duty is due as long as no bets are taken, however most other requirements such as having Directors located on the island still apply.
There are two types of Software Supplier Licence:
- Standard fiat platforms/software
- Token/blockchain enabled platforms
Non-licensable Business
Certain businesses are not deemed as licensable by the GSC. The most common form of non-licensable business is a White Label.
As White Labels are treated as non licensable, there are no licence fees or gaming duty due. As no player data is held, there are no AML or KYC requirements either. All regulatory responsibility lies with the licence holder.
Since the 6th July 2023, as provided for by the Online Gambling (Licence Fee) Regulations 2023 which revoked the Online Gambling (Licence Fees) Regulations 2009, operators are required to pay a flat, non-refundable application fee on the grant of the licence, as well as annual licence fees payable on the grant of the licence and on each anniversary of the licence.
Under the current legislation, licences are considered operating licences only, with no separate B2C and B2B categorisation.
According to the Online Gambling Duty Regulations of 2008, every person liable to pay duty under the Act shall furnish to the Collector a statement for each period, or part thereof, during which dutiable online gambling is conducted, no later than the fifteenth day after the last day of the period to which it relates.
Favourable Taxation
The Isle of Man offers an extremely competitive fiscal framework. The current corporate tax rate for a gaming company incorporated in the Isle of Man is 0%. Licence holders also enjoy 0% capital gains tax.
Gaming Duty is based on profit, not turnover. Depending on the type of activity, duty is paid on ‘stakes minus winnings’ or ‘retained profit’.
With written approval from Customs and Excise, operators may be authorised to exclude affiliate payments from their duty calculation.
Reputable Jurisdiction
The Isle of Man has an impeccable international reputation as a jurisdiction that enforces high-standards and ensures operators play by the rules.
An Isle of Man licence is invaluable to a company seeking B2B partnerships, investment or financial servicesIt as it demonstrates exceptional standards of corporate governance and compliance with AML/CFT regulations.
Additionally, the jurisdiction has a flawless record with regards to player protection, ensuring players feel confident their funds are secure with an Isle of Man licensee.
The Isle is also on the OECD White List and is a member of the World Trade Organisation.
Qualified Service Providers
The Isle of Man has a vast network of professional service providers able to support iGaming businesses. This includes banking, payment services, corporate service providers and world-class data hosting centres.
Political and Economic Stability
The Isle of Man enjoys political, social, and economic stability. As mentioned, online gambling is a significant part of its GDP and there are unlikely to be any changes to the industry that might hamper its growth. A company that chooses an Isle of Man gambling licence can be assured of operating in a stable and supportive environment.
Progressive Regulations
The Isle of Man has demonstrated a firm commitment to innovation and a willingness to adapt the regulatory framework to emerging technologies such as blockchain, cryptocurrencies and AI:
- Incorporating digital currency into Anti-Money Laundering and Crime Legislation
- Granting permission for digital currencies and other assets to be deposited and withdrawn.
- Licensing the first blockchain-based lottery
- Establishing the Blockchain Office and Sandbox
- Building the world’s first International Business Centre dedicated to developing regulatory structures and licensing for debt- and investment-based crowdfunding platforms.
- Introducing Digital Isle of Man awards across various tech sectors
Quality ICT Infrastructure
Licence holders operating on the Island benefit from a safe and secure environment to do business. The Island’s ICT infrastructure is world class with fast and reliable bandwidth connectivity. The Island’s National Broadband Plan aims to ensure that 99% of premises will be equipped with ultrafast fibre broadband, ensuring high-speed internet access. Connectivity to Europe and the USA is assured via seven undersea cables.
Supportive Authorities
The Isle of Man Government provides ongoing support and guidance to the eGaming sector by having a hands-on approach and guiding every potential new licensee through the licensing process and beyond, it prides itself on having an open door policy at all times.
The GSC is available to offer guidance on the process and discussion around the interpretation of the OGRA rules at every stage of the application process. Additionally DfE offer supplementary help and support regarding the set-up of any online gambling business in the Island.
Legal Entity
An Isle of Man company will need to be incorporated and will hold the licence. Two (2) resident Directors are required as well as either an Operations Manager or Designated Official resident on the Isle of Man – it is possible for one of the Directors to fulfil this role.
The GSC retains the right to reject applicants that seem to be establishing a nominal presence solely for OGRA licence approval without a genuine commitment to the Isle of Man.
The GSC requires a clear understanding of ownership structures and relationships between involved companies (incorporation, memorandum and articles of association), whether direct or indirect. This includes details on those controlling the companies and any shareholdings, regardless of size.
For beneficial owners using nominee companies or trusts, notification to the GSC is necessary for due diligence. In group structures, a comprehensive description, potentially in diagram form with accompanying notes, is expected. All entities within the structure must be fully identified.
Due diligence
Directors, D.O., Money Laundering Reporting Officers and beneficial owners owning 5% or more of the company will be subject to due diligence obligations involving verifying their competence in held offices and ensuring their integrity.
As part of the process, the GSC conducts Disclosure Barring Service (DBS) checks.
Companies associated with the application undergo thorough due diligence to verify their legitimacy and authenticity as bona fide businesses. For each company, explicit details such as the company’s name, trading name, ownership, incorporation date, and place of incorporation are required.
Financial Analysis
The financial accounts undergo a comprehensive analysis requiring detailed forecasts for a minimum of three years, including audited accounts for established businesses covering the previous two years, including plans for future funding, forecasted profit and loss, cash flow and balance sheet. Declaration of funding sources is essential to verify availability and legitimacy, ensuring funds have not arisen from illicit activities.
Contingencies to address potential financial difficulties should also be outlined.
Operational Requirements
Licence holders are responsible for formulating their Terms and Conditions (T&C’s), including an overview, definitions, cross-referencing to specific game rules, provisions for the acknowledgment by customers of any modifications to the T&C’s, dispute resolution mechanisms, handling breaches, applicable governing law, agreements on age limits and gambling legality, rules for problem gamblers’ self-exclusion, acknowledgment statements during registration, player registration methods, KYC identification requirements, abandoned account procedures, error handling, account limits, betting limits, maximum pay-outs, and self-exclusion from related sites.
For licence holders offering a diverse range of games, two sets of Game Rules are required. The general game rules encompass aspects like settlement of bets or games, procedures for event or game cancellations, dispute resolution mechanisms, handling of errors or omissions, details of betting limits, maximum pay-outs and consequences for customer rule breaches. Additionally, each specific game offered must have its set of rules outlining gameplay, regulations, and when (applicable) pay tables.
Submission of procedures and manuals detailing internal controls and systems is expected with the application.
Full compliance with Isle of Man data protection law is mandatory and operators with affiliate relationships holding customer contact information must have mechanisms to ensure excluded players do not receive affiliate marketing material.
Licensees must ensure the protection of player deposits and the prompt payout of winnings to Isle of Man registered players. During the application process, the Inspectorate assesses the chosen ring-fencing vehicle’s appropriateness for safeguarding player funds (bank guarantees, trusts, client accounts). Operators must ensure protection mechanisms cover the total value of player funds.
In addition to evaluating the financial aspects of player protection, the Inspectorate assesses the procedures for managing player complaints and inquiries. Operators are expected to have a mechanism for recording complaints, including date-stamping, player submissions or summaries and recording the resolution status. Maintaining records of all correspondence is best practice. Operators should also offer options for appeals or arbitration to address player concerns.
The analysis of the payment schematics involves examining the flows of money within the applicant’s business, between players and the operator as well as among the operator and business partners. The GSC’s approval is required for all payment methods outlined in the schematic. Additionally, the banking arrangements are scrutinised, emphasising that banking should not be situated outside the Isle of Man without explicit permission from the Isle of Man Government’s Treasury Department.
The applicant company must ensure that its planned website incorporates specific elements. The home page should prominently display the full name and address of the registered office, the original grant date of the OGRA licence and a statement confirming regulation in the Isle of Man. Furthermore, it should feature the Isle of Man Government crest linked to the official gambling page and provide hyperlinks to resources assisting with problem gambling. Additionally, there should be links to summaries of registration arrangements, statements preventing underage participation and information about the enforceability of online gambling debts in the Isle of Man. The website must offer mechanisms allowing players to self-exclude, limit stakes, and contact the company at any time. It is crucial to comply with advertising regulations, ensuring content is not indecent, offensive, deceptive or misleading.
Technical Certifications
All games offered to players, whether directly or through third parties, must undergo certification by a GSC-approved test house, as mandated by OGRA regulations. The GSC accepts certification that adheres to its standards, either from its approved test houses, or from regulators with whom the GSC has a Memorandum of Understanding (MoU). While a licence can be granted before test certificates are provided, operators must ensure that uncertified games are not offered to the public. The GSC requires a test certificate for each game, and operators must submit these certificates. When introducing a new game, a test certificate is necessary unless the operator can prove that it is a reskinned version of an existing, approved game with tested RNG and game logic.
Technical Infrastructure
The Inspectorate conducts thorough infrastructure checks to ensure compliance with specific technical requirements outlined in the proposed model. This assessment involves verifying that the servers responsible for hosting games and handling betting transactions are situated within the Isle of Man jurisdiction.
Records
Applicants must ensure strict compliance with regulations governing games, lotteries and betting transactions. The system should meticulously record details such as participant identity, game start and end times, participant’s account balance at the game’s start, sums placed (with timestamps), game status, result (with timestamps), amount won or lost, participant’s account balance at the game’s end and the currency used for games and lotteries. Similarly, for sportsbook betting transactions, the system must maintain comprehensive information about participant identity, bet-taking, account balance, details of bets, amounts won or lost, currency used, records of large wins and transfers of funds exceeding specified limits set by the Commissioners.
AML/CFT
The analysis of customer due diligence (CDD) and Anti Money Laundering/Countering the Financing of Terrorism (AML/CFT) involves a thorough examination of the applicant’s procedures, including staff handbooks, to ensure compliance with AML/CFT regulations. An AML/CFT Compliance Officer and Money Laundering Reporting Officer (MLRO) must be appointed and may have to undergo a qualification and experience evaluation. The MLRO is expected to have independent access to the board or ownership. All business arrangements, even with third parties, must adhere to international AML/CFT standards to meet Isle of Man regulatory expectations.
Responsible Gaming
OGRA licensees are mandated to demonstrate their dedication and assistance in addressing problem gambling by contributing proportionately to organisations focused on researching prevention and treatment of gambling-related harm. Licensees must provide evidence of this commitment annually to the GSC throughout their licence duration.
IGA offers comprehensive support for the licensing process.
Our services include application assistance, due diligence checks, company formation, appointment of a local director, AML/CFT compliance, ensuring operational transparency, demonstrating financial stability, implementing data security measures, documenting operational policies, ensuring technical infrastructure compliance, keeping abreast of regulatory directives and providing strategic consultation and guidance.
Contact us for further information on how we can assist you.
Considering that the regulator aims to process applications within 12 weeks of being accepted, the expected timeframe for the application is on average 12-16 weeks although this timeframe relies heavily on the applicant’s ability to promptly furnish the required information.
Licences are issued for a five-year duration, with the Gambling Supervision Commission retaining the authority to revoke it at their sole discretion should any terms be infringed upon.
There are no limitations regarding the nationality of company owners or shareholders in the Isle of Man.
Within a month of incorporation, a company limited by shares (Limited Liability Company) in the Isle of Man must appoint at least 2 local directors who are Isle of Man residents.
The gambling legislation in the Isle of Man does not stipulate a specific minimum authorised capital requirement for companies seeking a gambling licence. Nevertheless, it is crucial to note that even in the absence of a minimum capital requirement, the GSC will evaluate the financial stability and viability of the company as part of the licensing procedure.
Regulatory changes implemented in 2017 enable individuals to open accounts with Isle of Man gambling operators using items of monetary value, encompassing both convertible and non-convertible virtual currencies (CVCs and VCs). Whilst the integration of CVCs and VCs is possible, the Gambling Supervision Commission (GSC) may establish specific controls through licence conditions due to the ongoing evolution of this technology.
Trading accounts are expected to be located in a bank in the Isle of Man, unless otherwise agreed. Operators licensed by the Isle of Man Gambling Supervision Commission may use regulated banks outside the Isle of Man for the holding of player funds in specially designated protection accounts – provided the Treasury has approved of the location where the funds are held.
Gambling companies in the Isle of Man are subject to audits and ongoing monitoring by the Gambling Supervision Commission (GSC). Regular audits and inspections are conducted to ensure that licensed gambling operators are complying with the relevant laws, regulations and licensing conditions.
At IGA Group, we are committed to providing the best possible service to our clients by using our wealth of experience and industry knowledge to maximise the potential of their business. We have years of experience in the gaming sector, through previous employment with gaming companies, through software companies providing technical solutions and through various consultancy engagements at the strategic, operational and regulatory levels.
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