CYPRUS - ONLINE Focus
against online gaming companies that are currently operating from Cyprus. These companies had opted for Cyprus because it was convenient and tax- efficient.
Now the Inland Revenue could be investigating and because of the inefficiencies in the tax department many companies in Cyprus, including online gaming companies, get away with tax evasion.
The Cypriot government however now wants to amend the law again and delete online gambling from the permissible betting services from this year and enable them to deal with unlicensed and illegal online gambling sites.
In September last year the government presented a bill, the Betting Law of 2010, with the aim of retaining online sports and horse betting but banning all other forms of online gambling such as roulette, slots and poker.
The bill suggests the following:
• The implementation of a National Betting Authority within three months of the law being introduced which will consist of a chairman and six members. Term of office for the chairman and members is four years which can be renewed for a second period. The position of the authority will be to examine applications for bookmaker licenses and carry out checks and inspections and issue guidelines for the license holders.
• A Bookmaker’s Licence must be granted for those wishing to provide betting services. These will be divided into a Class A which authorises betting services apart from horseracing bets and a Class B for online betting (bookmaker’s license for online bets) but does not include slot machines, online casino games or horseracing bets.
However the current situation is now offering an online gambling free for-all. It is estimated that 95 per cent of electronic gambling services are currently operated illegally because they are provided over the internet. Around 400 locations around the island currently provide the means for online gaming under a ‘quasi-legal status’ owing to the absence of legislation. If the authorities raid a location and seize equipment the operators merely replace the computers and are back in business as quickly as the following day.
Online gambling in Cyprus currently has an estimated turnover of around €2.5bn per year yielding a gross profit of €400m. By 2012 this turnover is expected to be as high as €5bn with a gross profit of nearly €1bn.
If the ban goes ahead online gaming operators would need to relocate from Cyprus thus taking away jobs and income and some fear the negative consequences this will have on the economy. Reports suggest the government has already initiated action
G3 I MAY 2011 I PAGE 29
As online gaming via providers licensed from other EU
member states it is technically allowed (or rather not
disallowed) and due to an absence of
regulation in recent years a number of
gaming companies mainly from the UK have provided their online products.
• The Class A and B licenses will only be submitted where the applicant is a company registered by shares which were incorporated in the Republic or abroad and which has a branch in the Republic for the exclusive purpose of holding bets and a paid up share capital of at least €500,000. The licensees must also have a bank guarantee of €300,000.
• For Class B licenses there is a further requirement that the applicant must install within Cyprus a back up server which must be connected in parallel with the central server and store real data and information.
• Bookmaker licenses are valid for one
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