Compared to other European jurisdictions, Cyprus has been relatively slow to legalise land based gaming and launch online sports betting. But now that it has begun to open up its gambling market, David Schollenberger of Healys sees great potential ahead for the country.
Prior to the passing in July 2015 of the Law to Regulate the Establishment, Operation, Function, Supervision and Control of Casinos and Related Matters of 2015 (Law) and the Casino Operations and Control Law (General) Regulations of 2016 (Regulations), casino gambling was illegal in the Republic of Cyprus. Historically there have been a number of illegal casinos in operation in the Republic of Cyprus, along with a number of poorly regulated casinos in the neighbouring Occupied Territory of Cyprus.
Land based market opens up
Following a competitive tender process to select a suitable operator, conducted by the Cyprus Government, the Law provided the authority to the Cyprus Casino Gaming Commission (CGC) to issue a licence for a 30 year term with a 15 year exclusivity period for a single Integrated Casino Resort (ICR). The Law requires the ICR to have a minimum of 100 gaming tables and a maximum of 200 gaming tables, as well as a minimum of 1,000 gaming machines and a maximum of 2,000 gaming machines. A casino tax of 15% of the gross gaming revenue of the casino is levied on the ICR’s gaming operations. Gaming machines may only be operated within the casino and the satellite casinos — any machines operated outside of these premises will be illegal. The tender process was completed in April 2017 and the ICR licence has now been issued to Melco International, a Hong Kong-based operator. The ICR, following a two to three year development period, will be located in Limassol, near the Limassol Marina and the coast. The ICR, when completed, will be the largest casino in Europe and the only true Integrated Casino Resort in Europe. The project will be the largest investment in history in relation to Cyprus tourism and will have an iconic design. In alignment with Las Vegas, smoking will be permitted in gaming areas of the casino as well as complimentary drinks. The Law does not prohibit credit from being issued, but ATMs must be outside of the casino floor. In addition, upon issue of satellite casino site licences by the CGC, Melco will be licensed to operate four satellite casinos, three with up to 50 gaming machines only and one with up to 50 gaming machines and five gaming tables. One satellite casino may be operated in each of Nicosia, Larnaca, Paphos and Ayia Napa. Melco will be permitted to erect a temporary casino during the period of development of the ICR, at a location approved by the CGC.
The ICR should greatly increase year-round tourism in Cyprus, will enhance hotel and restaurant occupancy both at the ICR and near it, and encourage additional residential and commercial retail development investment near the ICR. The ICR will create jobs for designing, constructing, supplying, providing services to, providing property for and staffing the ICR, the temporary casino and the four satellite casinos. Illegal casinos and illegal gaming machines will be dealt with more severely under the Law, with more stringent enforcement and penalties than previous legislation. The Law also addresses different forms of cheating and fraud, contains provisions to ensure responsible gambling programmes are put in place by the operator and ensures that anti-money laundering provisions and procedures required under Cyprus and EU law are followed. The legal age to use the ICR casino games and gaming tables is 21. Similarly to Las Vegas, minors will be able to cross the casino floor to reach other parts of the ICR such as hotel accommodations, restaurants and non-gaming entertainment facilities.
Slow progress for online sports betting
Land based and online sports betting is legal and regulated under the Betting Law 2012. The Betting Law 2012 repeals the previous betting legislation. It provides for the establishment of a central National Betting Authority (NBA), which is the regulator for land based and online sports betting. The NBA accepts and examine applications from betting licence applicants and approves licences, audits and controls prospective betting shops and online betting operators. Two types of betting licences are available: Class A, which regulates land betting services provided within physical premises; and Class B, which regulates online betting services. The roll-out of Class B online betting licences has been slow. Up until 2016, the NBA had not issued any licences for online betting. In November 2016, bet365, Bet On Alfa and Gambling Malta’s Stoiximan were granted full licences and GVC Holdings’ Sportingbet brand and Tain’s winmasters brand transitional online betting licences. In March 2017, further full licences were granted to Paddy Power Betfair’s Betfair brand and to Meridian Gaming (CY), which operates the Meridianbet brand. Approved online sports betting operators must pay a direct tax of 10% of GGR plus 2% to Cypriot sporting bodies, plus 1% to fund responsible gambling initiatives. Licensees must pay annual fees of €30,000
and have capital reserves of €500,000 to obtain a licence. The application must be accompanied by a bank guarantee of €550,000, expiring six months after receipt of the licence. The legal age to use land based and online sports betting services in the Republic of Cyprus is 18.
No change likely for online casinos or betting exchanges
Online casino gaming and betting exchanges are currently illegal under the Betting Act 2012. This is aligned with the current government’s position and is unlikely to change in the foreseeable future. The NBA is currently blocking around 2,500 gambling domains that are not approved to operate in Cyprus and that are operating illegally. These include many online casino gaming sites. ISPs that do not block blacklisted sites may be fined up to €30,000.
Lottery reviews ahead
The National Lottery in Cyprus is currently operated by the Republic of Cyprus Ministry of Finance. A review is currently underway by the government to consider privatising the National Lottery. The rationale of this proposal is to determine if public revenue can be safeguarded without requiring the involvement of the public services in a highly commercial activity. Lotto games such as Kino and Proto are currently provided exclusively by OPAP under a bilateral agreement between the Republic of Cyprus and Greece. OPAP was previously wholly owned by the Greek government but has now been privatised. This exclusivity has been challenged by some operators as violating EU law, fair trade practices and competition services. The government has indicated that the exclusive agreement may be replaced by legislation providing the exclusive concession to OPAP.
Peculiarities remain in Cyprus’ gambling laws
Horse race betting, spread betting, betting machines and dog race betting are all prohibited in Cyprus. Binary options services are legal and regulated in Cyprus. Binary option brokerage companies may obtain a licence from the Cyprus Securities and Exchange Commission (CySEC). So far, 20 such licences have been issued. All EU Member States recognise the CySEC licence of financial institution companies and as such the licence may be used across the EU. Cyprus is the first EU country to enact regulations for binary option brokers. The Republic of Cyprus, slow to legalise land based gaming and launch online sports betting, is now doing so on a grand scale. Many opportunities will be available to suppliers, service providers, land owners and developers arising from the ICR. International tourists should flock to the ICR. The increasing number of licences being granted to online sports betting operators will also make Cyprus an attractive place for online sports betting operators. If the tax rate is kept competitive and continuing liberalisation takes place, Cyprus may also start to become a popular post-Brexit alternative to non-EU regional gaming centre jurisdictions such as the Isle of Man and Gibraltar.
Healys Gaming Industry Breakfast Briefing – 30th November
Gaming in the Republic of Cyprus: Opportunities and Challenges
The Republic of Cyprus is embarking on a new era of becoming one of the hubs for gaming in Europe. Melco International will be developing and operating the largest casino and the only true integrated casino resort in Europe. Online sports betting licences are now available in addition to land based sports betting licences. The Cyprus National Lottery is in the process of becoming privatised and will be put to tender for a private operator. What opportunities will there be for gaming equipment suppliers, security companies, service providers, financial institutions, designers, hotel companies and developers? Will the ICR be a benefit or disruptor to the Cyprus hotel industry? What challenges will the government face? What challenges will the operators face? What benefits will the ICR, online sports betting and privatisation of the National Lottery bring to Cyprus. Our panel of experts will explore these topics and more.
Our panel of experts will discuss and evaluate these issues and how it will affect your business:
Moderator: Michael Caselli, Publisher, i-Gaming Business
Simon Oaten, Partner, Deloitte LLP
David Schollenberger, Partner & Head of Gaming, Healys LLP
Michael Pollock, Managing Director, Spectrum Gaming Group
Soteris Scholarios, Principal, Scholarios Consulting Ltd
Lefteris Eleftheriou, Senior Investment Promotion Officer, Cyprus Investment Promotion Agency
Places will be limited. Reserve yours today by contacting Adam Batchelor on 020 7822 4188 or email email@example.com by the 29th November 2017.