Contributed by Christos O. Ioannides
According to the Cyprus Betting Law 2012 electronic betting services are only to be provided by a person who holds a Class B bookmaker’s licence, issued following the submission of a relevant application to the National Betting Authority (henceforth the ‘Authority’). This licence authorises the provision of the electronic betting services, excluding slot machines, online casino games of chance provided with a direct link, spread betting, betting exchanges and electronics horse-racing.
Class B bookmaker’s licence and application
A person interested in the provision of electronic betting services must first submit an application for the issue or renewal of a Class B bookmaker’s licence. Where the same person applies for the issue of a Class A and a Class B bookmaker’s licence, the applications must be submitted on separate forms for each licence and are examined through separate procedures. Applications to renew a Class B bookmaker’s licence must be submitted three months prior to the date that the licence expires.
No Class B bookmaker’s licence is issued or renewed unless the Authority is satisfied that the applicant, the officer, the ultimate beneficial owner(‘UBO’) and the holder of a significant interest of the legal person (i) has not been convicted in respect of a related offence by a competent court; and (ii) has reached the age of 25, in the event that any such persons is a natural person.
An application for a Class B bookmaker’s licence may only be submitted by a company, established either in the Republic or abroad and which has a branch (overseas company) in the Republic of Cyprus, the main activity of which is to carry out bets and for which the issued and paid-up share capital is at least 500.000 euro.
The application must also be accompanied by a bank guarantee from a commercial bank conducting banking business in Cyprus or in a Member State of the European Union or a cooperative bank, for 550.000 euro, the validity of which extends for a period expiring six months after the bookmaker’s licence that has been applied for expires.
The bank guarantee must be such as to create an irrevocable obligation on the bank or on the cooperative bank to pay any amount the licensed bookmaker is obliged to and omits to pay (i) to a player who has participated in a bet and has won, (ii) to the Republic of Cyprus as betting tax and (iii) to the Authority ascertains that the bank guarantee does not cover 100% of the annual turnover of the Class B licensed bookmaker, it may request an increase of such an amount to cover 10% of its annual turnover.
Furthermore, applications must be accompanied by specific particulars with regard to the applicant, the ultimate beneficiary, the officer and the holder of significant interest, whether it concerns a legal or natural person, including (i) the terms and regulations on the basis of which the applicant intends to provide betting services to the players, (ii) their financial information, (iii) statements as to participation in other lawful commercial activities, (iv) their criminal record, (v) information in respect of all their financial and other interests, and (vi) any additional information and information and documents that the Authority may deem necessary to request.
The Authority, when examining the application for the issue or renewal of a licence, having found that the legal or natural persons concerned meet the prerequisites as provided for, may take the following into account, for the purpose of ascertaining the suitability of such persons, namely (i) the current financial condition and background, which includes, but is not restricted, to the financial resources at their disposal for the provision of specific betting services and (ii) in the event that their criminal record is not clean, the nature of previous convictions, and the type and level of the sentence imposed.
A person is capable and suitable to obtain the Class B bookmaker’s licence if the Authority find that such a person:
- has, or may obtain, satisfactory resources and retains the minimum required reserves, as defined by the Authority, so as to ensure the payment of winnings to the players;
- maintains a suitable control and accounting system for the provision of betting services;
- applies terms and regulations when providing betting services, which in the opinion of the Authority, ensure satisfactory protection to the player; and
- ensure the suitability of any other equipment proposed to be used.
The Authority may thereby approve the application and impose any necessary conditions, or dismiss the application. Once issued, a Class B bookmaker’s licence may not be transferred or assigned in any manner to any other person and it may be valid for one or two years from the date of its issue or renewal depending on the time specified in the application. The Authority maintains a register of Class B licensed bookmakers, which contains the information mentioned in the application, and it posts a list of Class B licensed bookmakers on its website.
The fee to obtain a Class B bookmaker’s licence, determined by the Regulations for a validity of one year, is fixed at 30.000 euro, and at 45.000 euro for a two-year licence. The fee is payable at the same time as the submission of the application for the issue or renewal of a Class B bookmaker’s licence and is refundable in case the application is dismissed, but in such cases the amount returned will be reduced by 25%.
The prior approval of the Authority is required before a Class B licensed bookmaker effects any significant change, such as the obtaining or release of significant interest in the bookmaker, or a change of the UBO, or a change in the Board of Directors or the officers in the bookmaker’s management, or even a change or variation in the information or particulars submitted to the Authority for the purpose of issuing or renewing a Class B bookmaker’s licence.
It should be noted that the Authority has the power to suspend or revoke a Class B bookmaker’s licence in the case of a number of events of inconformity with the provisions of the Law. One such event is the omission to pay the tax amounts or contributions due, within one month from the expiry of the time specified for payment, in accordance with the present Law or any other law in force.
Every Class B licensed bookmaker pays the Republic of Cyprus gaming tax and a contribution to the Authority in relation to the bets carried out by it. The amount of betting tax in every accounting period (namely every calendar month), amounts to 10% of the net proceeds from the corresponding period. The amount payable to the Authority as a contribution amounts to 3% of the net proceeds from the bets to a Class B licensed bookmaker for the corresponding accounting period. Every Class B licensed bookmaker is obliged to pay the Republic of Cyprus, at the end of every accounting period, any amount due as gaming tax and the contribution to the Authority.
The amount of net proceeds from a bet, for a particular accounting period, is equal to the total amounts paid to the Class B licensed bookmaker, in relation to bets carried out by the bookmaker, minus the total amounts paid by the Class B licensed bookmaker, as winnings to persons who bet, irrespective of when the bets were placed or played. It should be said that when calculating the amount owed to a player in relation to a bet, other benefits obtained by the player are taken into account and the expenses of the licensed Class B bookmaker are not taken into account.
Processing electronic bets: Class B
The right to participate in electronic bets is only permitted to a person who is registered as a player and retains an account. The person who is registered as a player may not retain more than on account. A Class B licensed bookmaker may register a person as a player provided such a person has submitted an application for registration electronically, in the specific form. The Class B licensed bookmaker must among other things:
- within a period of 30 days from the submission of the application for registration confirm the identity of the player and verify the information furnished;
- retain an account in respect of every registered player and credit the registered player’s account with all amounts received by or on behalf of the player, or owed by the Class B licensed bookmaker to the player,
- retain an account of every registered player for a period of five years from the date of the last transaction,
- not accept a bet, unless there are sufficient funds to cover the amount of the bet, in the account maintained in the name of the player,
- only process Class B bets using credit or debit cards, electronic transfers or electronic money. No cash transactions are permitted,
- not provide credit to a player or player portion or act as a representative of a person providing credit, in a manner to facilitate credit to a player or player portion,
- not make a payment of any amount from a player’s account to a player unless the identity, the address and the age of the player are all verified,
- at the request of the player in whose name an account has been created, remit the amounts due to the player within five working days from the date of the request, having first ascertained the player’s registration, carried out safety procedures in relation to the player’s account and ensured that there is compliance with the approved regulations in relation to the payment of winnings to players. It is noted that any amount paid to a player by a Class BB licensed bookmaker is only paid into the bank account from which the amounts to process the bet came from, and
- in the event that there is no transaction instigated from the player’s account for a period of 24 months, remit the balance in the account to the player to an account designated by the player, or in the event that the player cannot be traced, remit the amount to the Authority.
A Class B licensed bookmaker is obliged to maintain the player’s amounts separate from the own amounts, in a special client account, with a commercial bank or cooperative bank that carries on activities within the Republic.
The bookmaker’s website
A Class B licensed bookmaker is obliged to maintain a specialised website, accessible only through website addresses ending in ‘.com.cy’, the homepage of which must contain all of the following:
- the company’s registered name, address, official number and date of issue of the licence for the provision of betting services,
- a statement that the Class B licensed bookmaker’s activities are regulated by the Authority,
- internet links, such as the website of organisations that specialise in providing assistance to persons who are addicted to gambling, with the websites linked to being those that have been approved by the Authority,
- internet links to information such as terms and regulations on the basis of which the Class B licensed bookmaker offers betting services,
- that the use by children of the betting services provided by the Class B licensed bookmaker is expressly prohibited,
- information to inform the player that they may electronically notify the Class B licensed bookmaker to (i) determine the limit the player may bet on for a specific period of time; (ii) determine the limit the player may lose for a specific time, (iii) determine the limit of time within which player may bet and (iv) be exempt from betting for a specific or indefinite time;
- the procedure for submitting and the procedure for examining complaints by registered players, and
- any other information determined by the Authority.
Here it should be said that internet services providers are obliged to apply a blocking system to prevent their users from accessing betting service providers who do not hold a Class B licence.
Accounts and registers
Class B licensed bookmakers must submit to the Authority by 30 June at the latest every year, annual account for the previous year, audited by an approved accountant and which have been prepared in accordance with the International Financial Reporting Standards and the requirements of Cyprus’ Companies Law. Similarly Class B Bookmakers must record, in a designated book in electronic form, the details of every card or other document or electronic form handed to them and to submit, within the specified time and manner, a statement of the amounts collected, or that are collectable, either by the bookmaker or by any of its authorised representatives.