Businesses often establish their headquarters abroad for a variety of reasons. Usually, these companies seek benefits like a friendlier tax regimen, asset protection, or more flexible regulations. But having an offshore company comes with a few things that could be improved, too, like limited access to certain financial services, higher costs or even a less-than-ideal reputation.
Things change when it comes to online casinos and betting websites. In this area, being “offshore” is very common – and it doesn’t necessarily come with the shortcomings of other industries.
Let’s dive into what offshore casinos are and how they work.
What Is An Offshore Casino?
Back in the day, the term “offshore casino” was to be taken literally: it was a casino operating off the shore of a territory. Entrepreneurs (often of questionable morals) did this to avoid prohibitions or taxes. Today, the term is often used in online gambling for online casinos and betting sites that operate in a territory but don’t have a license. This is a common practice in countries without licensing schemes and comprehensive online gambling regulations.
Where Does the Term Come From?
The history of offshore casinos starts with Anthony Cornero Stralla, also known as “Tony the Hat” or “The Admiral”. He was a bootlegger during the Prohibition and built quite a reputation and clientele. He supplied high-profile night clubs and individuals with Canadian whiskey that he smuggled into the US using a small fleet of freighters – hence his nickname.
After the Prohibition was repealed, smuggling alcohol was no longer a lucrative business. So, Cornero switched to gambling. He bought land in Las Vegas and opened “The Meadows Casino & Hotel”, one of the first casinos in the area. Unfortunately, some of his former business associates (of the Mob kind) demanded their cut of the profits – and when The Hat wouldn’t pay, the casino fell victim to an unfortunate incident involving fire.
After leaving Las Vegas, he had the idea of creating the first offshore casino – literally. He bought two large ships and converted them into floating casinos. He anchored them outside the “three-mile limit” off Santa Monica and Long Beach, transporting the patrons to them by water taxis.
Why Offshore Casinos Are Frowned Upon?
Having an offshore license is not uncommon in the world of iGaming. As you can see in this Silversands Casino review, it doesn’t influence online casinos’ reputation and service quality. But many offshore casinos are still frowned upon – especially if they have licenses from jurisdictions like Curacao, the Antilles, or Costa Rica.
This has to do with the regulatory framework in these countries. The Curacao gaming authority itself is strict – but it allows sublicensing. And those who issue these sub-licenses are only sometimes rigorous with their checks. The regulations in the Antilles and Costa Rica are also lax. At the same time, they are cheap and easy to obtain. This makes them perfect for gambling businesses at the beginning of their road – and for scammers.
In the early years of online gambling, many casinos running under these licenses have become bad actors. While some casinos collapsed on their own, and the owners of some others were summarily arrested for fraud, these jurisdictions could never wash the stain off their reputation.
Reputable Offshore Jurisdiction
There are, in turn, quite a few offshore jurisdictions that are considered reputable. Casinos with licenses issued by these regulators are often considered trustworthy and legitimate:
- Malta is one of the best-known and most appreciated gambling regulators in the European Union. A license issued by the MGA is a good sign: the casino or betting site adheres to strict customer protection and anti-fraud regulations.
- The regulator in Gibraltar is another strict and reputable one. It not only requires the company to have its HQ in the country, but it also requires all the shareholders to have an “impeccable reputation”. It also requires entrepreneurs to have experience in the gambling industry.
- The Kahnawake Gaming Commission is a North American offshore regulator. It is considered one of the trustworthy ones, with strict requirements for responsible gaming and fairness.
Offshore casinos are operating beyond traditional regulatory frameworks. They offer unique opportunities within the iGaming industry, free from many constraints faced by land-based entities. While the term carries historical baggage, modern offshore gaming sites, especially those licensed by reputable jurisdictions, demonstrate that they can offer secure, fair, and enjoyable gaming experiences with proper regulation.
